The Colorado General Assembly, in its 2016 session, gave the Colorado Department of Revenue a homework assignment: Develop a new form by which the owner of a motor vehicle can designate a beneficiary to receive title to the vehicle at the owner's death.

The Department of Revenue has now completed this assignment, and the new form, DR 2009, can be found (along with 130 other motor-vehicle-related forms) at the department's website for motor vehicle activities, www.colorado.gov/dmv.

The new form is refreshingly simple. It calls for the vehicle owner's name and signature; the name of the transfer-on-death beneficiary; the year, make, model and vehicle identification number; and a notary attestation. That's it. Half a page, including the notary.

At the death of the owner, a named beneficiary will be able to present this form, along with a death certificate, to the county clerk's motor vehicle department and obtain a new title certificate, subject to any liens outstanding against the vehicle. Without this form, unless the vehicle is owned in joint tenancy, in which case the surviving joint tenant can also obtain a new title by presenting a death certificate, a post-death transfer of title to a motor vehicle is, at best, a cumbersome process, possibly requiring an otherwise unnecessary probate action.

Use of the new DR 2009 form will result in what is called a nonprobate transfer, meaning no probate court action is necessary to complete the transfer. In that regard, the form will work like a "beneficiary deed," a document allowing for a nonprobate transfer of real estate.

The vehicle transfer form and the beneficiary deed form allow the owner, while still alive and competent, to revoke the transfer designation, change the beneficiary, or sell the property free of any interest of the beneficiary.

There is, however, one major difference between the use of the motor vehicle transfer form and the use of a beneficiary deed: This comes from the fact that the beneficiary deed gets recorded in the county real estate records where the property is located and the property owner, while still alive and competent, can record a subsequent document revoking the transfer or changing the beneficiary. There is no similar procedure by which to record a motor vehicle transfer form or a subsequent document giving notice that the transfer has been revoked or the beneficiary changed.

That being the case, a motor vehicle owner using the DR 2009 form is best advised to hold onto the form and keep it with other important documents intended to be found at the time of the owner's death.

If the form is delivered to a named beneficiary during the owner's lifetime, and the owner later decides to revoke the transfer or change the beneficiary, the seeds could be planted for a legal dispute over the disposition of the vehicle.

Other frequently used nonprobate transfer estate-planning tools include pay-on-death designations in bank and brokerage accounts; beneficiary designations for life insurance policies and retirement accounts; and joint tenancy ownership. Although nonprobate transfers can provide a simple and inexpensive means by which to pass assets on to a chosen recipient, it's important to remember that assets subject to a nonprobate transfer will no longer be part of an estate intended to be transferred pursuant to a will.

For this reason (among others), you need to see an estate-planning professional before committing to any nonprobate asset transfer strategy.

-

Jim Flynn is a private attorney with Flynn Wright & Bentley LLC in Colorado Springs. He is the author of three law-related novels. Contact him at moneylaw@jtflynn.com.

Tags

Load comments