This column first appeared in the San Antonio Express News on August 28, 2017.
Last week I wrote about new laws that are coming into effect in Texas very soon, starting with the Access to Digital Assets Act. Another new law, which will become effective on September 1, adds a new way to transfer title to your automobile should you die.
Transfer of an auto title was not excessively difficult before SB 869, so why was this new law necessary? Because it creates a non-testamentary method to transfer ownership, and protects the value of the auto from a Medicaid Estate Recovery claim. By way of background: an elder can own a car yet still qualify for Medicaid to help pay for a nursing home. However, when the elder eventually dies, Medicaid may legally bring a claim against any asset that passes under the elder’s Will. Sometimes the only remaining asset is a vehicle. SB 869 provides a method for the vehicle to pass to a family member instead of being claimed by the state as reimbursement for Medicaid expenditures.
To create a transfer on death designation, the owner must submit an Application for Title which contains a designation of beneficiary, to be effective upon the owner’s death. The Application will be available from the Texas Department of Motor Vehicles (DMV) and would be submitted to the DMV.
After the transfer on death designation is submitted, the owner retains full rights in the vehicle. The owner can still sell the vehicle. If the owner buys a replacement vehicle and wants that same beneficiary to be listed for the new car, the new Application for Title must say be completed and submitted to the DMV.
The owner can also unilaterally revoke or change the beneficiary designation. The owner does so by submitting to the DMV a new Application for Title specifying the new situation. The beneficiary never has to be informed if a change is made (but the owner should do so just to keep expectations consistent).
It is important that the owner tell the beneficiary about the designation. It is the beneficiary’s obligation to do title paperwork when the owner dies. The beneficiary must submit to the DMV the old title, a new Application for Title, and proof of the owner’s death (usually the death certificate) within 180 days. If the title lists two joint owners, the beneficiary must wait to claim title until both co-owners have died.
SB 869 also amends the Texas Estates Code, so that it is clear that a beneficiary designation over-rides any contradictory statement in the owner’s Will. So, if you file a beneficiary designation saying your car goes to your daughter, and a year later you meet with your lawyer to make a Will saying that your car should go to your son, who gets the car? Your daughter. The Will takes a back seat to the beneficiary designation.
What if your daughter does not want the car or dies before you? The car would then pass according to the terms of the residuary clause in your Will. So even if you do submit a beneficiary designation, you should still have a Will as backup (and to handle your other assets, like your home and bank accounts).
Whenever a person becomes incapacitated (so they can no longer manage their own finances), as a practical matter some other person must step forward to do that job. Legally, the court may appoint a Guardian to do so. However, Guardianship is slow and expensive. Many people correctly prefer to sign a Durable Power of Attorney naming an Agent to handle their finances. The legislature has just passed a significant update to the Durable Power of Attorney Act, which I will tell you about in the next column.
Paul Premack is a Certified Elder Law Attorney with offices in San Antonio and Seattle, handling Wills and Trusts, Probate, and Business Entity issues. View past legal columns or submit free questions on legal issues via www.TexasEstateandProbate.com or www.Premack.com.