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Joint Ownership of a Car: What To Know

in Car Buying Tips
Man signing papers

Photo by Scott Graham on Unsplash

A co-owner is a person who shares ownership of an asset with another person. In the case of a car, the title lists both the owner and the co-owner together as equal owners.

Joint ownership of a car has its pros and cons, but it makes no difference whether just one of the owners is listed on the car’s insurance or registration for administrative purposes.

What Does it Mean to be a Co-owner and Why Should You Share?

One of the most commons reasons for joint ownership of a car simply comes down to household use. It’s easy to share a car with a family member and when it just takes adding someone to the existing owner’s insurance, it’s not a huge hoop to jump through.

When you decide to share a car with someone who isn’t a relative, this is where the trickiness can come into play. For example, if you decide to share with a non-family member like a coworker or a neighbor, many insurance providers will choose to not add non-relatives to existing policies.


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The legal basis for co-ownership can be established in two ways. Joint ownership of a car implies that both listed individuals own it, but if one dies, the other immediately gets it and the deceased’s share can also be passed to someone else.

It’s common to have the title state something like “joint tenants with the right of survivorship” if you’re a pair, whether married or not. That way, if one owner dies, the car will pass to the other owner without the need for probate court processes. The transfer process is fairly simple and quick.

The main downside of joint ownership of a car of course comes down to joint responsibility. Whether it’s damage or payment, regardless who caused the accident or let a monthly bill go by, both are equally accountable for it.

Just like sharing money with family (or friends) can be tricky, this is a worst case scenario you should at least be prepared for.

Making a Joint Tenancy Agreement

Joint ownership of a car can be regionally specific, and in certain places like Oregon, you don’t need to include any special terms in the title document.

If you jointly own a vehicle with someone else and one dies, it immediately passes to the survivor. For this scenario in Kentucky, this only happens if the co-owners are married.

However, in most places, you need an additional step so that the survivor can inherit the car without having to go through probate.

The certificate of title for the vehicle typically will need to state that you own it “in joint tenancy with right of survivorship.” Your state’s motor vehicles office or the seller should be able to notify you when you apply for a title certificate for the car.

In Texas, it will need to contain a “Rights of Survivorship Agreement Form” for married couples to sign on their certificates of title.


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Including a Co-owner to Stay Out of Probate

While it may not seem like all that significant to include someone else as a co-owner to avoid the transfer hassle, it can create problems of its own.

Many single, elderly drivers often consider adding a grown son or daughter as a joint owner of a car specifically to avoid probate, however, in many cases, this can cause more trouble than good.

Consider leaving other items behind for inheritance. A gift is irreversible and you won’t be able to acquire your portion of interest back unless the other co-owner agrees to return it. A creditor might confiscate the co-stake owner’s in the vehicle if he or she loses a lawsuit or files for bankruptcy.

You must file a federal gift tax return if the half-interest is worth more than the yearly federal gift tax exclusion level which is around $13,000.

Considering how rapidly new vehicles typically depreciate in value after a few years, this is something that should reallly only be taken into consideration if you’re sharing a brand-new vehicle that might be applicable for the gift tax. Even thought this would be unlikely, filing this out can be a chore.


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The Transfer of Joint Ownership after Death

When one of the owners dies, the car immediately passes to the surviving owner. However, the new single owner must still alter the vehicle’s title to his or her own name.

Clearing title is a term used to describe this procedure. It’s usually simple and all the state DMV agency will need is a written declaration from the new owner. Some additional paperwork may be required in addition to a death certificate, and some states may provide a new certificate of title to reflect the new ownership.

All in all, joint ownership of a car can make a lot of sense, but also not necessary for every scenario. It’s fairly common and an easy process with the state and insurance companies and will mainly require some analyzing of the pros and cons before you start the semi-easy paperwork.

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