Joint Tenancy for Vehicles: Co-Owning a Car to Avoid Probate

If you're part of a couple—married or not—you might want your partner or spouse to own your car after you die. You can transfer ownership after death by using traditional estate planning tools like a will or a trust. But using a will means the car likely will go through probate. And trusts can be expensive and complicated to set up.

You can avoid using a will or trust through joint ownership of the vehicle as "joint tenants with right of survivorship" while you're alive. Under a joint tenancy, when one owner dies, the other one will own the vehicle without probate court proceedings. The transfer is quick and easy. But you should make sure you understand the drawbacks (discussed below) if you decide to go this route.

How to Create a Joint Tenancy for a Vehicle

In some states, like Illinois, you don't have to add any magic words to a car's title to create a joint tenancy. If an Illinois vehicle title lists co-owners, they are considered joint tenants with right of survivorship. If one of the owners dies, the survivor automatically owns the car. (625 Ill. Comp. Stat. § 5/3-107.1 (2023).)

In some states, like Kentucky, only married couples are automatically considered joint tenants with right of survivorship. Co-owners who aren't married need to make sure they title the car as joint tenants with right of survivorship if they want the surviving owner to automatically own the car after one owner dies. (Ky. Rev. Stat. § 394.225 (2023).)

In most states, though, both married and unmarried couples must specifically title a vehicle in a way to let the survivor inherit the car without probate. Usually, you must state in the car's certificate of title that you own the car together "in joint tenancy with right of survivorship."

Several states make it easy to establish a joint tenancy. Some states' title applications have a checkbox to indicate whether a vehicle's owners are joint tenants with right of survivorship. Texas, for one, includes on its certificates of title a right of survivorship agreement for joint owners to sign. (Tex. Transp. Code § 501.031 (2023).)

In states that don't have checkboxes or survivorship agreements, you might need to ask for help. Your state's motor vehicles agency (which goes by "DMV" in many states) should be able to tell you what words to use on your title to create a joint tenancy with right of survivorship. If the state agency can't help, you might want to talk to an estate planning attorney licensed in your state. An attorney can tell you how to establish a joint tenancy and whether there are any drawbacks to doing so.

Drawbacks of Adding a Co-Owner to Avoid Probate

Making someone the joint owner of a car solely for the purpose of avoiding probate isn't always a good idea. Keep in mind that you're giving away a half-interest in the car, which can have several undesirable consequences:

• If you change your mind and want full ownership, the other co-owner needs to agree to sell or give their share to you.
• If the other co-owner is on the losing end of a lawsuit or files for bankruptcy, a creditor could seize their interest in the car.
• In some states, a vehicle owner is liable for all accidents the vehicle is involved in—even if the owner wasn't driving. In other words, you (or your insurance) could be liable if the co-owner lets someone else drive the car and that person gets in an accident.
• If you give half ownership to another person, you potentially could face federal gift taxes. If the half-interest is worth more than the amount of the annual federal gift tax exclusion ($18,000 in 2024), you must file a gift tax return. But it's unlikely you actually will owe gift taxes because gift tax isn't owed until your total taxable gifts exceed the estate and gift tax exemption ($13.61 million in 2024).

How to Transfer Car Ownership After One Joint Tenant Dies

After one joint tenant dies, the surviving owner automatically owns the vehicle. But, as the new sole owner, you must still change the car title into your name alone. This process is sometimes called "clearing title."

Usually, clearing title is quite easy. The state motor vehicles department likely will require:

• a written statement from the surviving owner that the co-owner died (the state might provide a fill-in-the-blanks form), and
• proof of the death (a death certificate).

Some states issue a new certificate of title for free in these circumstances; others charge a small fee.