Title Options for Cars, RVs, and Mobile Homes (Arizona)
1. How do I verify ownership of a motor vehicle?
The Motor Vehicle Division (“MVD”) of the Arizona Department of Transportation issues titles for automobiles, recreational vehicles, and mobile homes not affixed to the land. These titles are evidence of ownership and are the basis for determining who will inherit the asset upon the death of its owner. There is no public registry of title information, so it is important to keep the title in a safe place.
2. What are the ways to title a car, RV, or mobile home owned by two people?
Arizona law permits three types of joint ownership on MVD titles. Presumably they are intended to simplify the choices available, but they can be rather difficult to tell apart. The types of joint ownership are as follows:
3. What is the best way for a married couple to hold title to a car or RV?
All things considered the most flexible titling method for a married couple is the OR designation. However, some may prefer the more cautious approach of the AND/OR designation to avoid unauthorized transfers.
4. Is it possible to name a “pay-on-death” beneficiary with the MVD?
Although relatively unknown as an estate planning tool, the MVD offers a form to designate a beneficiary of a car, RV, or mobile home not affixed to the land. See Form 96-0561 “Beneficiary Designation” available on the MVD website. If the proper form is stapled to and presented with the current title, the beneficiary designation is effective for title transfer after death (Note: if the current title is electronic, the form may be submitted alone when transferring ownership). Assuming this condition is met, the beneficiary may apply for a new title in the beneficiary’s name upon presentation of a death certificate. The form and its instructions are bare-bones simple, which diminishes the usefulness of the form as a flexible planning tool. For example, the beneficiary designation form may not be used when the title is held by more than one person. But there is a work-around: both owners could sign separate beneficiary forms if they agree who to name as beneficiary; one form would be discarded when the first owner dies.
5. What about titling a car in the name of a living trust?
Many people who establish living trusts want to know whether they should re-title their cars into the living trust. The general answer is no, unless the client’s total equity in "free and clear" motor vehicles exceeds $75,000. It is relatively simple to transfer a car after a death, provided the owner’s remaining property does not require a probate.
6. What about leased cars?
A leased car is a liability, not an asset. The car is titled in the leasing company’s name throughout the duration of the contract. In the event the lessee (the driver) dies, the lessee’s estate still has an obligation to pay the balance of the contract whether anyone drives the car or not. There are a few options. The person responsible for administering the estate could ask if the leasing company will assign the balance of the lease to someone else, or try to negotiate a lump sum payment to end the lease. The amount of the lump sum is usually determined according to a formula in the fine print of the lease contract. The latter option can be expensive, and feel unfair, but it often is the best option. As for assigning the lease, there is a small but legitimate market for lease assignments.
If the deceased person has no assets subject to creditor claims, another option is to just bring the car back to the dealership and refuse to pay the remaining obligation. Although the leasing company could sue the estate, there would be nothing for them to get. But this only works when the deceased person was unmarried and left no assets subject to the claims of creditors.
About the Author
Thomas J. Bouman provides legal counsel in the areas of estate planning, estate settlement, and asset protection. He brings a highly systematic approach to the practice of law, which is critically important when wading through the complex, and often bizarre, legal requirements associated with estate and trust law. Mr. Bouman is author of the Arizona Estate Administration Answer Book and a prominent member of Wealth Counsel, LLC, the nation’s premiere organization of estate planning attorneys.
The Motor Vehicle Division (“MVD”) of the Arizona Department of Transportation issues titles for automobiles, recreational vehicles, and mobile homes not affixed to the land. These titles are evidence of ownership and are the basis for determining who will inherit the asset upon the death of its owner. There is no public registry of title information, so it is important to keep the title in a safe place.
2. What are the ways to title a car, RV, or mobile home owned by two people?
Arizona law permits three types of joint ownership on MVD titles. Presumably they are intended to simplify the choices available, but they can be rather difficult to tell apart. The types of joint ownership are as follows:
- “John Williams or Susan Williams” – This form of ownership is commonly used by auto dealerships when they sell a motor vehicle to a married couple. During the owners’ joint lifetimes, either owner is authorized to transfer the vehicle. Upon the death of a joint owner, the surviving owner does not need to update the title because it is assumed that either owner has full authority to transfer the vehicle. Upon the death of the remaining owner, the vehicle is subject to probate.
- “John Williams and Susan Williams” – This form of ownership is rarely used. During the owners’ joint lifetimes, the signature of both owners is required to transfer the vehicle. Upon the death of either joint owner, the interest of the deceased owner is subject to probate.
- “John Williams and/or Susan Williams” – This form of ownership is also known as joint tenancy with right of survivorship. During the owners’ joint lifetimes, the signature of both owners is required to transfer the vehicle. Upon the death of a joint owner, the surviving owner does not need to update the title because of the right of survivorship, although a death certificate would be needed to transfer the vehicle. Upon the death of the remaining owner, the vehicle is subject to probate.
3. What is the best way for a married couple to hold title to a car or RV?
All things considered the most flexible titling method for a married couple is the OR designation. However, some may prefer the more cautious approach of the AND/OR designation to avoid unauthorized transfers.
4. Is it possible to name a “pay-on-death” beneficiary with the MVD?
Although relatively unknown as an estate planning tool, the MVD offers a form to designate a beneficiary of a car, RV, or mobile home not affixed to the land. See Form 96-0561 “Beneficiary Designation” available on the MVD website. If the proper form is stapled to and presented with the current title, the beneficiary designation is effective for title transfer after death (Note: if the current title is electronic, the form may be submitted alone when transferring ownership). Assuming this condition is met, the beneficiary may apply for a new title in the beneficiary’s name upon presentation of a death certificate. The form and its instructions are bare-bones simple, which diminishes the usefulness of the form as a flexible planning tool. For example, the beneficiary designation form may not be used when the title is held by more than one person. But there is a work-around: both owners could sign separate beneficiary forms if they agree who to name as beneficiary; one form would be discarded when the first owner dies.
5. What about titling a car in the name of a living trust?
Many people who establish living trusts want to know whether they should re-title their cars into the living trust. The general answer is no, unless the client’s total equity in "free and clear" motor vehicles exceeds $75,000. It is relatively simple to transfer a car after a death, provided the owner’s remaining property does not require a probate.
6. What about leased cars?
A leased car is a liability, not an asset. The car is titled in the leasing company’s name throughout the duration of the contract. In the event the lessee (the driver) dies, the lessee’s estate still has an obligation to pay the balance of the contract whether anyone drives the car or not. There are a few options. The person responsible for administering the estate could ask if the leasing company will assign the balance of the lease to someone else, or try to negotiate a lump sum payment to end the lease. The amount of the lump sum is usually determined according to a formula in the fine print of the lease contract. The latter option can be expensive, and feel unfair, but it often is the best option. As for assigning the lease, there is a small but legitimate market for lease assignments.
If the deceased person has no assets subject to creditor claims, another option is to just bring the car back to the dealership and refuse to pay the remaining obligation. Although the leasing company could sue the estate, there would be nothing for them to get. But this only works when the deceased person was unmarried and left no assets subject to the claims of creditors.
About the Author
Thomas J. Bouman provides legal counsel in the areas of estate planning, estate settlement, and asset protection. He brings a highly systematic approach to the practice of law, which is critically important when wading through the complex, and often bizarre, legal requirements associated with estate and trust law. Mr. Bouman is author of the Arizona Estate Administration Answer Book and a prominent member of Wealth Counsel, LLC, the nation’s premiere organization of estate planning attorneys.