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How to insure and transfer a car in your will

Car insurance will survive the policyholder, but it may not protect the new owner.

Dealing with an estate can be complicated. If you’re passing down a car, make the transition easier by naming a new owner, paying off the loan and choosing a car insurance policy your beneficiary can afford.

How does insurance work for a willed car?

Car insurance stays in effect after the policyholder dies, but the coverage doesn’t follow everyone. These are some of the most common situations, and how they impact car insurance:

  • A spouse dies, leaving a car to their surviving spouse

Most car insurance policies have provisions for surviving spouses. When the policyholder dies, the spouse can hold onto the policy, as long as they continue making premium payments.

As the surviving spouse, it’s your responsibility to call the insurance company to inform them about the policyholder’s death and ask to be listed as the named insured. You’ll need to provide proof of identity and a copy of the death certificate.

The clause only applies for the remainder of the policy term. After that, the surviving spouse can apply for a new policy, or let the coverage lapse.

  • A single policyholder dies, leaving a car to another listed driver

That driver is covered until the policy’s renewal date. Like the surviving spouse, they must contact the insurance company and submit identifying documents.

  • A single policyholder dies, leaving a car to a family member

If the new driver doesn’t live at the same address, they would need to get their own insurance after the car becomes their property.

  • A single policyholder dies, leaving a car to the estate

The same principle applies here. The executor of the estate inherits the policy. They’ll need to contact the insurer and submit the death certificate, probate form or executor of estate documents.

There are a few restrictions, though.

The executor is only covered when they’re driving the car for certain purposes. They’re responsible for protecting the state’s assets, so this includes taking the car for repairs, maintenance, titling or to court. They can’t drive the deceased’s car for personal use unless they’re listed on the policy, or give another party permission to drive the car, even if it’s for one of the estate-related reasons.

If the executor drives the car for an unauthorized purpose and gets into an accident, the claim will be denied. For this reason, if you plan to will the car to someone, it may be easier for the new car’s owner to be added to the insurance policy beforehand.

What if the estate or surviving spouse doesn’t have an insurable interest in the car?

If the new car’s owner won’t be driving the car, they can cancel the policy and sell the vehicle. It’s a good idea to wait until someone else takes over the title of the car before sending a cancellation request to the insurance company. If the deceased policyholder paid in full, ask the insurer if you’re entitled to a refund for the unused premiums.

How do I add a car to my will?

You can update our will at any time, as long as you’re mentally competent. The process varies slightly between states, but there are two ways to go about it.

  • Option 1: Prepare a new will

If you have a few modifications to make, it might be easier to revoke your old will and write a new one. Name the beneficiary for your car, and ask two witnesses to sign the will. Be sure to specifically state that you’re revoking all previous wills, and list them by date. It’s your duty to get rid of any copies of your older wills, too — and your state law will dictate how to do this.

  • Option 2: Write a codicil

A codicil is a separate document that’s attached to your will, and it’s best for those who want to make a minor change — such as leaving your new car to a beneficiary. Think of it as a professional “P.S.” to your will.

The same formalities apply. You’ll need to demonstrate “testamentary capacity” or a clear understanding of the effects of the codicil, and spell out the change. If your state requires it, you’ll also need two witnesses to sign the codicil.

What is a transfer-on-death beneficiary?

A transfer-on-death beneficiary receives the assets you’ve designated them at the time of your death.

If your state allows it, you might want to consider naming a transfer-on-death (TOD) beneficiary for your car. That way, they’ll inherit the car without having to wait around for probate court approval.

It’s easy to set up. All you need to do is name a beneficiary on your car registration form at the DMV.

The beneficiary has no control over the car while you’re alive. They don’t even need to be notified, though it’s probably a good idea to let them know anyway. You can sell the car, or change the beneficiary at any time. You cannot leave the car to someone else in your will or living trust.

If you’ve named a TOD beneficiary, the car will go to them when you die, even if you amended your will at a later date. That’s unless the beneficiary is a minor; in most states, that person would get the car when they come of age at either 18 or 21, depending on the state.

The option is available in these states:

  • Arizona
  • Arkansas
  • California
  • Colorado
  • Connecticut
  • Delaware
  • Illinois
  • Indiana
  • Kansas
  • Maryland
  • Missouri
  • Nebraska
  • Nevada
  • Ohio
  • Oklahoma
  • Vermont
  • Virginia

In Arizona, Kansas, Missouri and Nevada, you can still designate a beneficiary if you co-own the car (with your spouse, for example). The beneficiary inherits it only after you and the other owner have died. In California, Connecticut, Indiana and Ohio, TOD registration is limited to one owner.

Do I need to add my car to my will?

It’s up to you. Unless you spell out who should inherit your car in your will, it will be handled as a nonprobate asset or according to your state’s rules of intestacy. You may want to leave your car in your will to be sure it goes to the person you want to have it.

  • Intestacy

In this case, the court decides. Once the deceased’s assets are added up and the estate’s bills and taxes are paid, the probate court distributes the remaining assets. If you have a surviving spouse or children, they’ll most likely inherit the car. The intestacy rules are outlined in the estate laws of each state, and can vary.

  • Nonprobate

Typically, most of the deceased’s property is passed on to the beneficiaries, without the probate court stepping in. For example, joint property, such as a car, automatically goes to the surviving spouse. But if the car title was held solely in the deceased’s name, the probate court overseeing the court has to apply the rules of intestacy.

Either way, the new owner will need to pay registration fees and transfer taxes.

Must Read: How does the car transfer process work?

So, you’ve inherited a car. As the new owner, this is what you need to do:

  1. Go to the DMV. To claim the deceased’s car, you’ll need to go to the state motor vehicle department to transfer the title. If you’re the surviving co-owner of the car, the process should be pretty straightforward. Bring proof of your identity, a completed title (including the odometer reading), and supporting documents, including the will, death certificate and other certified court documents. If the car was passed down by intestacy, you’ll need to present letters of administration from the estate.
  2. Get new title. If everything checks out, the state issues the new title in your name.
  3. Pay transfer fees. At this point, the DMV will charge you registration fees and transfer taxes.
  4. Consider car insurance. The policyholder may have had car insurance. If so, the policy will stay in force until the renewal date, as long as you make the premium payments. You also have the option to cancel it. If you want to insure the inherited car with your insurance provider, contact them to add the car to your policy.

What if I want to sell the car?

As the executor of the estate, you have the authority to advertise the car, set a selling price, and transfer the title of the car. You don’t need to change the title on the car. Once you find a buyer, sign your name on the back of the title, just like you would for your own car, followed by “Executor for the estate of [name of deceased].” The buyer then takes this title to the DMV, and the state issues a new title in their name.

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Bottom line

When you die, your beneficiary can continue making the premium payments on your car insurance, or they can cancel it. To help, name the new owner as a listed driver and choose a value-for-money policy by comparing multiple providers.

Frequently asked questions about insuring a willed car

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