We’ve talked a whole lot on this blog about avoiding probate, and the different ways you keep assets out of probate. As we’ve discussed before, one way to do this is to add beneficiaries to property when you can. Sometimes, your opportunities to do this are really obvious, like when you get a beneficiary designation form for a retirement plan. Today, I’m going to show you how to add beneficiaries to something less obvious: a vehicle title.
Adding transfer on death beneficiaries
You can add transfer on death (TOD) beneficiaries using Missouri Department of Revenue Form 108, Application for Missouri Title and License. In order to add a beneficiary, check the TRANSFER ON DEATH (TOD) checkbox and enter the beneficiary’s name in the TOD BENEFICIARIES box. I’ve included an image of the first block of Form 108 with red arrows pointing to the required fields:
That’s all there really is to it. It’s easy to do this when you buy a new vehicle, since you’ll have to complete a new application for a title anyway. However, you can also add a TOD beneficiary to an existing title by filing a new application. Of course, before you do that, you should always consider how this affects the overall distribution of your estate, just like you would with any beneficiary designation.
A TOD beneficiary doesn’t take ownership of the vehicle until all of the owners die. Until that happens, the vehicle still belongs to the owners.
If there are co-owners
If several people own the vehicle, all of those people would have to die before the TOD beneficiary would get the vehicle. That’s because, unless it’s marked otherwise, joint ownership on a car title in Missouri is with “rights of survivorship.” That’s just a fancy way of saying that when one co-owner dies, the surviving owners get the deceased owner’s share automatically. So, if Alice and Bob and Carol all own a car together, and Alice dies, now Bob and Carol own the car. If Bob dies next, then Carol owns the car all by herself. When Carol dies, if there’s a TOD beneficiary listed, then the beneficiary gets the car. The nice thing about this process is that the the car never, in all these steps, goes through probate. You should just need a certified copy of the death certificate, a new title application, and the fee for the application.
In that last paragraph, you might notice that I said there’s a right of survivorship “unless it’s marked otherwise.” On Form 108, there is a box marked TENANTS IN COMMON. You can see it below:
If that box is checked, that “rights of survivorship” stuff we talked about before no longer applies. Instead, when one of the co-owners of the car dies, their interest in the car goes through probate. So, if Alice and Bob and Carol own a car, and they have selected to be tenants in common, and Alice dies, Bob and Carol and whoever gets Alice’s interest in the car own the car.
Also, if the owners select tenants in common, they cannot name TOD beneficiaries.
A word of caution, though
Of course, putting TOD beneficiaries on vehicles should be done in concert with a well-thought out estate plan. You should consider how the beneficiary designation affects the overall distribution of your estate. However, this can be an effective probate avoidance tool in a well-thought out plan.