Nearly all of us have a vehicle of some type. Although this information applies to boats and RVs, I'm going to use the word "cars" to refer to all three.
If you finance your car, your name, in whatever form you provide it to the lender, will be the way your car’s registration is listed and how you’ll have to have your insurance titled, too. Let me give you an example based on personal experience: I bought a 1996 Toyota and financed it for 60 months. My name was then Patricia R. Row (previous married name), that's how the lender's documents and files referred to me, and so too, did the State of Florida. I was in law school and soon thereafter began my application to the Florida Bar, discovering it would be quite a process to get my Bar license issued in the name “Row” and later change it to Voss, my maiden name. So, I legally changed my name to Voss while in law school, and then applied to the Florida Bar as Voss and had my driver license changed to Voss. But my car registration was still “Row.” I had to carry my name change order in the glove box (fortunately never had to use it) to explain why my driver license was different from my car’s registration. I got the car insurance company to issue my car insurance as Patricia R Voss, agreeing that the R stood for Row (my middle name is Ruth) so that my car insurance, car registration and driver license could be viewed in a similar light.
Now, I’m a single woman – what happens if I die with my car in my name alone? (OK, I traded in the 1996 for another Toyota and I’m Voss on all the relevant documents now!) While there are certain circumstances where a car can pass to a surviving spouse without probate, since I’m not married, there would be no surviving spouse, right? So, for my estate, my Personal Representative (that’s what Florida calls an executor of a Last Will), would have to include my car in my probate estate.
Is there something I can do before death to avoid probate exposure? Yes! Although the title transfer fee is nearly $100 in Florida, it’s a small price to pay to transfer the title to myself, for life, with the “remainder” to someone else. In this way, “someone else” is not a current co-owner (which has consequences in both liability for accidents and cost of insurance). A couple of years ago, Florida started using a new form; find it here at the Department of Highway Safety website. If you and/or your attorney decide this is the best form of ownership for you, check the box that says “Life Estate/Remainder Person.”
For married couples who are covered under the same insurance policy, having the car titled as Mr. "OR" Mrs. will allow for sale or disposal before or after the death of the first of them. Remember, this isn’t legal advice and no attorney client relationship has been established.
In 2018, the amount a person can pass at death, without estate tax, is $11.2M. You would probably expect someone with this much wealth, or more, to have an estate planner. But, if you’re reading this, you are probably not one of them. Most likely, you think your estate is too small to require a trip to an estate planner and I would disagree.
If you live in Florida, are single, widowed or divorced and you own anything of value in your own name, your estate will need to be probated after your death; or if you live in another state and own real estate in Florida in your own name, your estate will need to be probated. For this example, let’s say a probate attorney charges $300 per hour; and it takes 20 hours to open, administer and close a probate estate (about $6,000). If that item of value that you own in your own name is a $15,000 bank account, then the $6,000 it might cost to have that asset probated is a large percentage of your $15,000 account. However, if the account balance is $150,000, then the $6,000 attorney fees might hurt as much. It is true that he Florida Statutes presumes certain percentage fees to be reasonable but for a smaller estate, the percentage isn’t a living wage for an attorney, so finding an attorney to accept that percentage will be hard or impossible.
In Florida, for a married person who owns the home they currently live in, in their own name and then they pass away, the surviving spouse will need a probate attorney to have a judge determine what the surviving spouse’s rights are in the home. I’m not saying that every probate administration costs $6,000, some cost less and some a lot more. In this example, there would be no money in the probate estate (because it’s only the home) so the surviving spouse would have to pay the attorney fees him or herself.
In the case where a single parent dies, leaving behind a minor child and only has a life insurance policy with the minor child is named as the beneficiary, in Florida, if the life insurance is more than $15,000, a Guardian of the Property will have to be named. This guardianship will stay open and under court supervision, filing annual reports until the minor child turns 18 at which time, the insurance money minus the attorney and accounting fees, will be turned over to the child. The primary problem is that the attorney and accounting fees may use up a large portion of the life insurance proceeds. The other important issue is turning over a lump sum to an 18 year old.
In all three of these examples, a relatively small amount of money paid for some estate planning advice could save thousands in the future. This is why I believe that no estate is too small to need estate planning.