How To Title Your Cars To Limit Liability - Rodgers & Associates

How To Title Your Cars To Limit Liability

One of the benefits of creating a net worth statement is to determine what assets are owned, the value of those assets as well as who has title to the assets. Under­standing how your assets are titled is a major tool to protect your wealth. 

For instance, one of the most common misun­der­standings for clients is who should own the cars they drive. For married couples the rule of thumb is for each spouse to individ­ually own the car they drive. The reason for this is to limit liability in the event of an accident. Liability is assessed on the owner of the vehicle and the person driving at the time of the accident. If the owner and driver are one in the same liability can only be attached to that person. This shields joint assets from exposure to liability.

For most people their home is owned jointly and repre­sents one of the largest assets a couple may own. Joint assets can also include bank accounts, invest­ments accounts, vacation homes and collectibles.

One of the roadblocks to imple­menting this strategy is an outstanding loan on a jointly held car. In most cases the loan will need to be satisfied before change of ownership can take place. If you are planning to purchase a car it is important to under­stand this before financing. Assuming there is no loan on the car, the title can be trans­ferred through the Motor Vehicle Department for approx­i­mately $150. If you are an AAA member costs to transfer can be reduced by about $50.

If a spouse is unable to obtain a loan on a car or if multiple cars are owned and driven by both spouses joint ownership may be necessary. So what can you do if it isn’t possible to drive the car you own? In these circum­stances you may want to consider buying an umbrella liability policy. These policies cost a few hundred dollars, increase your liability coverage and manage the risk of increased exposure.