An Unexpected Source of Liability after Divorce: Car Titles

We recently encountered a situation that caught a few of us off-guard at the office, and we thought we’d share it with everyone. A client came in asking if she needed to talk to us or a bankruptcy lawyer, because he thought he might be broke soon. As the story came out, we were all mildly shell-shocked.

This particular gentleman had recently gotten divorced, and was still in the process of getting his new life organized and moving forward. He hadn’t heard from his wife in a couple of weeks, and he had assumed that she was simply acting out (something she was prone to.) Then he got served — he was being sued by the victim of a horrible auto accident. He started calling around to get an idea of what was going on, and discovered a horror story.

His wife had put back one too many, gotten in the car that they co-owned, and promptly gotten in a wreck that had killed her and badly injured another person. Their insurance (which was minimal) didn’t cover a quarter of the medical bills that had racked up, and because our client was still on the car’s title — it hadn’t yet been transferred to solely her ownership — he was liable for all of the damages caused by his ex-wife’s irresponsibility.

Unfortunately for our client, he really was on the hook. If the couple had pushed to get the car’s title transferred into just her name as part of the divorce rather than treating it as an insignificant detail, he wouldn’t be in this trouble.

Don’t Wait For Divorce If There’s Trouble
This issue is actually more of a problem for married couples that co-own their vehicles, as most divorced couples manage to get their vehicles appropriately re-titled before disaster strikes. If you’re married and have a vehicle with both your and your spouse’s name on the title, think carefully about their driving record.

Are they prone to drive recklessly, or while intoxicated? Consider strongly getting the vehicle put in their name only. The court will still generally consider it martial property if you purchased it together, so the only real effect of the change is to prevent you from being sued for damages that your spouse alone caused. Note that this doesn’t apply if you live in a state that shares debt as community property: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Washington, Wisconsin, and sometimes Texas (they have quite complex laws about sharing debt).  It also won’t help you if you have a jointly-held primary account with your spouse.

The Major Hiccup
If your vehicle has a lien on it (generally because you haven’t finished paying it off), you may need permission from the lien-holder. Sometimes, that’s as easy as asking — other times, it can be more difficult, as having more names on the title means the lien-holder also has more people to go after if you default on your car payments. Getting the car refinanced can help; if that’s not an option, talk to a lawyer about how else you might be able to protect yourself.

This might not seem like a common enough problem to really worry about, but it’s very much like a ‘reverse lottery.’ You don’t have control over when your spouse gets in an accident, or how much they are held liable for in damages — take the time now to make a simple change to protect yourself. And while you’re at it, take the time to review your insurance and make sure you’re covered to a reasonable level.

If you’re concerned that your spouse may be opening you up to unsafe levels of risk, whether it’s because of your car title or something completely different, Gucciardo Family Law can help. Call today!