Car Titles

Many of my clients own their cars jointly with their spouses. This is a huge liability problem whether you are married or are divorcing.

The greatest source of potential liability for you is your car. Why? At what ever weight the vehicle has, when it's moving at the speed we drive on roads, it becomes a missile that can cause a great amount of injury.

In Michigan, if both spouses are on the title to the vehicle, but only one is driving or is in the car when there is an accident, both spouses are liable for the injuries. The best practice is to have the primary driver of the vehicle listed as the sole owner of the car. That way if the driver is also the owner and that person has the accident, then only that person is liable for the injuries and property damage. The other best practice is have the vehicle adequately insured.

Example: Wife needed a new car. This was a second marriage for this couple. Husband insisted that both their names be placed on the title. Wife had a very serious accident in which a child was killed. Husband was no where near the accident. The couple also carried minimal insurance, though they were quite well off financially. After the accident, because of the low level of insurance, the couple (not just wife) was sued, because husband was also on the title. Husband had significant personal assets, while wife came to this marriage with very little wealth. Since husband was well off, the injured party could sue to have their damages satisfied from wife's separate property (very little), husband's separate property (very much) and their combined estate (very much).

After a divorce, many people are preoccupied with many details of returning to single life. One project that they should consider seriously is getting the car titles organized according to the name of the party who is being awarded the vehicle. This is also a good time to consider transferring the title of any car driven by a child of the parties to that child if he/she is over the age of 18 years.

In Michigan, in order to transfer the title of the vehicle from both spouses to one spouse, the lien (debt) on the car has to be paid off or you need the permission of the lien holder to make the change. This can be a problem, particularly if the vehicle has been purchased or leased recently. Confer with your lawyer about ways that the car can be refinanced or ways to protect yourself if that is not possible.

If you are listed as an owner on a vehicle driven by a spouse who has a drug or alcohol abuse problem, you need to remove your name from the title to this vehicle as quickly as possible, preferably during the divorce. Let your lawyer know about this problem, if you have not mentioned it before.

In future, do not name more than one driver on the vehicle and carry sufficient insurance on any vehicles you drive.