On many of your assets, including retirement accounts or life insurance, you can designate a “beneficiary” to receive the funds upon your passing. There is now a new asset that you can allocate directly to an individual – your car. Texas law will now allow you to name a single beneficiary for any vehicle, registered in Texas, you own.
In order to accomplish this designation, you will need to complete an Application for Title and the Beneficiary Designation forms and submit them with your Texas Department of Motor Vehicles. If you complete and sign the forms, but forget to file them with the DMV, they will not be valid. If you decide to remove or change a beneficiary on your car at any time while living, you may do so. However, you will need to complete and submit new forms with the DMV, as well as pay additional fees.
As you may know, transferring a vehicle after the death of a loved one usually is not terribly difficult to begin with. However, according to this article, one of the benefits of this new law is that it “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.” The beneficiary designation form allows your vehicle to go to a beneficiary instead of being claimed for Medicaid expenditures.
The beneficiary can decide whether they would like to accept the vehicle or decline it. In order to accept the vehicle the beneficiary will have to submit Application for Title documents with the DMV and pay a fee within 180 days of your passing. If you decide to name a beneficiary, be sure to let them know you named them and that they will have a deadline to collect.
If you are considering designating a beneficiary for your motor vehicle, it is important to speak with an experienced estate planning attorney. This technique is typically done as part of a more comprehensive estate plan, and it is also import to discuss the potential limitations of a beneficiary designation for your vehicle with your estate planning attorney.
Nielsen Law PLLC provides family focused estate planning to individuals and families in Austin, Round Rock, Cedar Park, and the Central Texas area. For more information and to learn about our firm, please contact us.