New Law Automatically Transfers Car Titles at Death

Texas Senate Bill 869 went into effect September 1, 2017. The new law creates a “transfer on death” option for motor vehicles. The Texas Transportation Code now allows the owner of a motor vehicle to designate a beneficiary to whom title will pass upon the owner’s death.

To create a transfer on death designation, the owner must submit an Application for Title (available at your local DMV) which contains a designation of beneficiary, to be effective upon the owner’s death.

After the transfer on death designation is submitted, the owner retains full rights in the vehicle. The owner can still sell the vehicle, remove the beneficiary, or change the beneficiary designation by submitting a new Application to the DMV. The beneficiary has no right to the vehicle until after the owner passes away.

Within 180 days of the owner passing away, 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).

SB 869 also amends the Texas Estates Code to clarify that a beneficiary designation trumps any contradictory statement in the owner’s Will. So, if you file a beneficiary designation saying your car goes to your daughter, but you make a Will saying that your car should go to your son, who gets the car? Your daughter. The beneficiary designation would trump your Will.

However, if the beneficiary does not submit this information within 180 days, the car will pass according to the owner’s Will or the Texas intestacy laws if the owner had no Will

Why is this law great for Medicaid recipients? Because it allows the owner to transfer ownership of a vehicle outside of probate, protecting the value of the vehicle from the Medicaid Estate Recovery Program.

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