Ways to Title a Car or RV in 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 motor vehicle? Arizona law permits three types of joint ownership on motor vehicle 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 – commonly used by auto dealerships when they sell a vehicle to a married couple – is better described as joint tenancy. 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 motor vehicle. Upon the death of the remaining owner, the motor vehicle is subject to probate.
“John Williams and Susan Williams" – This form of ownership is better described as tenancy-in-common. 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 better described as joint tenancy with right of survivorship. 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 motor vehicle. Upon the death of the remaining owner, the motor vehicle is subject to probate. The only substantive difference between the AND/OR and OR designations occurs when a surviving owner wants to transfer the title. Under the AND/OR designation, the surviving owner must present a death certificate for the deceased owner. This would not be required when the title uses the OR designation.
3. What is the best way to hold title? From an estate planning perspective, most people – when given a choice – prefer the AND/OR designation to prevent unauthorized transfers during lifetime. However, auto dealerships regularly suggest the OR designation because it provides the most flexibility, especially useful when a married couple assigns a used car back to the dealership in exchange for a new car. 4. Is it possible to name a “pay-on-death" beneficiary with the MVD? Although rarely used, the MVD does offer a form to designate a beneficiary of a motor vehicle. If the form is on-file, the MVD will reissue title in the name of the beneficiary upon presentation of a certified copy of the 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 MVD does not permit use of a beneficiary designation when the title is held by more than one person. 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 transfer their cars into trust. As a general rule, the answer is no. It is relatively simple to transfer a car after a death, provided the total equity in all of the deceased’s personal property is less than $50,000. A rule of thumb is to title a newly acquired car in trust if it is expensive and paid for with cash. 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 could 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 could be rather expensive, and feel unfair, but it generally is the best option. As for assigning the lease, there is a small but growing 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 leasing company 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.