Given the maintenance requirements and rapid depreciation of cars and other vehicles, it makes no sense to have them sitting around for months or years while probate grinds on, before they can be transferred to their new owners. That’s why, if your state allows it, it’s a good idea to name a transfer-on-death (TOD) beneficiary for your vehicles. That way, the vehicle can be transferred to the beneficiary quickly and easily, without probate court approval.
Several states offer car owners the option of naming a beneficiary, right on the registration form, to inherit a vehicle without probate. It’s a simple, effective way to pass on cars, trucks, and sometimes even small boats. It's easy and free to set up, and you can change your mind at any time. The only drawback is that you can't name an alternate beneficiary.
The process is simplicity itself. All you do is apply for a certificate of car ownership in "beneficiary form." The fee is the same as for a standard certificate. The new certificate lists the name of the beneficiary (or more than one), who will automatically own the vehicle after your death.
The beneficiary you name has no rights as long as you are alive. You are free to sell or give away the car, or name someone else as the beneficiary.
In Arizona, Kansas, Missouri, and Nevada, if you own the vehicle with someone else—say, your spouse—you can still designate a beneficiary. The beneficiary will inherit the vehicle only after both you and the other owner have died. In California, Connecticut, Indiana, and Ohio, however, transfer-on-death registration is limited to one owner. So you may want to own the vehicle in joint tenancy with the other owner now, which will avoid probate at the first owner’s death. Then the surviving owner can designate a beneficiary to inherit the car without probate.
In California, Indiana, and Ohio, the beneficiary form of registration is also available for small boats. (Cal. Veh. Code § 9852.7; Ind. Code § 9-31-2-30; Ohio Rev. Code Ann. § 2131.13.) The rules are generally the same as those that apply to other motor vehicles.
If you live in one of the community property states that allows TOD registration (Arizona, California, or Nevada), get your spouse’s (or registered domestic partner’s) consent before naming someone else as beneficiary. In a community property state, your spouse may own a half-interest in a vehicle even if it’s registered in your name. If you bought it with money you earned while married (or in a registered domestic partnership), it’s "community property," and you and your mate own it 50-50 unless you have agreed, in writing, to the contrary. If the vehicle is community property, and you want to name someone other than your spouse as the beneficiary, get your spouse’s written consent—and store it with your title slips and other important documents where they can be found after your death.
You are free to revoke a beneficiary designation at any time, but there are restrictions on how you can do it. Only two ways, in fact, are allowed. You can either:
You cannot revoke the beneficiary provision by leaving the car to someone else in your will or living trust. If you try, your efforts won’t have any effect.
EXAMPLE: Claudia registers her car in beneficiary form, naming her niece Arlene to inherit it. Later, after the two have a falling-out, Claudia writes a will leaving the car to her friend Hal. At Claudia’s death, the car will belong to Arlene, despite the will provision to the contrary.
When the owner dies, the vehicle belongs to the beneficiary listed on the certificate of ownership. To retitle the vehicle in his or her own name, the new owner must submit to the state motor vehicles agency several documents:
Once the new owner turns in these documents and pays the required fee, the state agency will issue a new certificate of ownership.
The beneficiary inherits any outstanding debts on the vehicle, as well as the vehicle. So if your car isn’t paid off at your death, the beneficiary will inherit your obligation to repay the loan.