Law Articles

TOD Beneficiaries on Motor Vehicle Titles

We have written articles about non-probate property.  These assets pass outside of probate court to beneficiaries by virtue of a title designation which is activated upon death. TOD Beneficiaries on Vehicle Titles A common example is a bank account which has a transfer-on-death (TOD) beneficiary listed on the account’s signature card.  It is an easy and efficient way to pass assets without probate court involvement.
Many people, however, overlook their motor vehicles.  It is unfortunate when the only probate asset in an estate is a vehicle and heirs must seek court approval for its transfer.
Ohio law provides that owners may name transfer-on-death beneficiaries on their motor vehicles, watercraft, and outboard motors.  The owner must go to the local title bureau with their original title and designate a beneficiary (or more than one beneficiary) who will become the owner of the motor vehicle, watercraft, or outboard motor upon the owner’s death.  The designation is not required to be supported by any consideration (money or other assets paid by the transfer-on-death beneficiary to the owner).  Further, in Ohio the owner is not required to deliver any paperwork to the transfer-on-death beneficiary in order for the designation to be effective. 

The TOD designation passes no present ownership interest to the transfer-on-death beneficiary.

It is only effective upon death of the owner.  Accordingly, the TOD’s beneficiary’s creditors cannot seize the vehicle while the owner is living.  The owner can change beneficiaries at any time or revoke the beneficiary designation altogether without notifying the beneficiary. If the owner sells the vehicle, the TOD designation simply goes away.

Upon the owner’s passing, the TOD beneficiary simply needs to present the title bureau with a certified copy of the owner’s death certificate and the original title.  The title bureau will then issue a new title in the TOD beneficiary’s name. If the TOD beneficiary does not survive the owner, then the vehicle, watercraft, or outboard motor must be included in the probate estate of the deceased owner.
There are a few restrictions on the TOD designation process.  Current law provides that the vehicle’s title must be in the name of one owner only.  So, joint owners of a vehicle cannot name a TOD beneficiary.  There is a pending bill in the Ohio legislature, however, which will allow joint owners of vehicles to name TOD beneficiaries.  The proposed bill also expands the use of TOD designations to recreational-type vehicles like all-purpose vehicles and off-highway motorcycles.
Also, a TOD designation does not limit the rights of any creditor of the owner of a motor vehicle. 
A lien on the vehicle is not extinguished by the transfer to a TOD beneficiary.
Moreover, since a lienholder holds the original title (owners only receive a memorandum of title until the lien is paid in full), it is difficult for an owner who is financing their car to designate a beneficiary.  The owner must seek cooperation from the lienholder to obtain the original title to establish the TOD designation. Depending on the policies of the lienholder, this may be a very difficult task.  

If you are exploring ways to efficiently pass your vehicles upon death (and don’t forget that outboard motor), Laribee & Hertrick, LLP can help.

Contact an Attorney in Medina, Ohio
This article is intended to provide general information about the law. It is not intended to give legal advice.  Readers are urged to seek advice from an attorney regarding their specific issues and rights.

Need a lawyer or have legal questions? Contact Attorneys in Medina, Ohio from Laribee & Hertrick, LLP.
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