Elderly couple taking a drive out on a road.

There’s a new form in town:  Beneficiary Designation for a Motor Vehicle.

If you own a vehicle registered in Texas, then you can name a beneficiary who will take title to the car when you die.

How do you make this happen?  For now, you will probably have to stand in line at the county tax assessor-collector’s office to submit the forms.  You must submit the beneficiary form  an Application for Texas Title form, the title application fee and valid ownership evidence.  Note that you cannot just fill out the beneficiary form and leave it in your desk – it has to actually be submitted before you die to be valid.

Now for the beneficiary’s rights – just kidding, the beneficiary has no rights at all to the vehicle until you die.   The beneficiary has no right of possession, no right to sell or mortgage the vehicle, and no right to any proceeds from the sale of the vehicle.  You don’t even have to tell the beneficiary about the designation.  You can revoke or change the beneficiary at any time.

Inheriting your vehicle may be a mixed blessing to the beneficiary, especially if it there is a lien on it.   The lien goes along with the title – meaning that if the lender isn’t paid, it can still repossess the vehicle.   On that happy note, your beneficiary may decide to decline any interest in the vehicle.

The type of ownership matters; you have to own the car individually (as opposed to through a trust or business) for this to work.    Things get a bit more complicated if you are just a co-owner of the vehicle.  Joint owners also have to have a Rights of Survivorship Agreement form, and record it with the Department of Motor Vehicles.

Your beneficiary has to survive you by 120 hours in order to take the title.  To actually get the title, your beneficiary has to submit a title application form within 180 days of your death, together with the title application fee, the original Texas title (or a print-out from the county tax assessor-collector) and a death certificate.  The state is pretty serious about the timing on this – the beneficiary loses out if the form is not timely submitted, and the car will then have to be transferred through an heirship or probate proceeding.

Practice pointer – if you make a beneficiary designation, tell somebody or at least leave the information where someone can find it before the 180 days expire.

Like beneficiary designations on bank accounts and investments, the beneficiary designation for a motor vehicle trumps the provisions in your will.  Suppose you make a beneficiary designation on your BMW title to your son, Adam, but in your will you leave your BMW to your daughter, Alice.  Adam wins.  It doesn’t matter if you made your will before or after you submitted the title beneficiary designation.