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November 4 2008

How Should You Own Your Vehicles

By Neil L. Kimball

As a general rule, you should own your car in your own name alone. The primary reason for this is to limit your liability exposure. If your car is involved in an accident, most likely you will be the one driving at the time. If someone is injured as a result and they bring a claim for negligence that exceeds your liability insurance coverage, then only your individually-owned assets will be exposed to that claim. If you are married, your spouse's assets and many of the assets you own jointly with your spouse will be protected because your spouse is not responsible for your negligent acts. However, if you own your vehicle jointly with your spouse, almost all of your assets, your spouse's assets, and your joint assets will be exposed to the liability (there are exceptions for certain retirement assets). As an owner of a vehicle, your spouse is responsible for the acts of those operating the vehicle. Therefore, the way to best limit your liability exposure is to have the vehicle titled solely in the name of the person who operates the vehicle most often.

While assets titled in your name alone at death usually result in probate proceedings through probate court, that is not true if the only assets titled in your name alone are one or more cars with a total value of under $60,000 and one or more boats with a total value under $100,000. So unless you have very expensive vehicles or leave other assets in your own name alone requiring probate, your "next of kin" (spouse or children) can simply transfer title to the vehicles at the Michigan Secretary of State's office without probate or other legal expenses.

If you have cars or boats above the dollar limits mentioned above or if you feel your family may argue over how the title should be transferred, you should consult with an estate planning attorney about your options to minimize liability and avoid disputes. It may be that having your vehicles owned by a revocable trust is an appropriate solution.

If for any reason it is not practical to own a vehicle in one name alone, then you should ask your insurance agent about an umbrella liability policy that will provide additional coverage above your homeowner's and auto insurance policies. It is fairly reasonable and can provide some peace of mind.