- How are cars split in divorce?
- Removing a name from a car title post-divorce
- Document checklist
- How does the state I live in impact who gets the car?
- Infographic: Car titles & divorce
- What happens to a joint car loan in a divorce?
- Changes to your insurance policy
- FAQ
In divorce, you and your spouse must split any assets that are considered to be "marital assets." In most situations, the court views cars and similar vehicles as marital property. The title to your family car (or cars), therefore, will likely need to be updated as soon as possible because a car title serves as proof of ownership.
The question is, how do you decide whose name shall remain on the car title, and how do you make an official change?
How are cars split in divorce?
First, it's important to identify who holds the title for a vehicle: you, your spouse, or both of you. If the title is only in your spouse's name, most states still consider it marital property if the vehicle was purchased during the marriage. In that case, it would need to be split somehow between the two spouses. One person could keep the car while the other receives comparable assets, or the pair could sell the car and split the proceeds.
If the car was owned by your ex before the marriage, however, your ex would likely be able to keep the title in their name. The same goes for you. If it was your property pre-marriage, you would probably be able to keep it as your own.
Bear in mind that you can decide what to do with the car title before your divorce is finalized. In other words, you and your spouse could decide together who gets the car, and this could be noted in your marital settlement agreement.
Notably, however, if your divorce is contentious, the two of you may be unable to reach an agreement about the vehicle. In that situation, the court would decide who gets the car.
If you need help understanding how best to split up your car and other property in divorce, a divorce finance expert can help. This person can look at your situation, determine different possible asset splits, and outline the pros and cons of each scenario. Further, they can advise you on which options would serve you best both now and in the future.
Removing a name from a car title post-divorce
- First, find out as much as you can about this process from your local DMV. Each jurisdiction may have its unique procedure.
- Get a certified copy of your divorce decree. This should indicate what is to happen to ownership of the car.
- Obtain pertinent information about the car. This includes its year, make and model, VIN, and mileage.
- Fill out the necessary paperwork provided by the DMV. You may find this paperwork on the DMV website or in the office itself. These forms may include a Notice of Transfer and a Release of Liability. Note that these documents may need to be notarized.
- Submit your paperwork to the DMV. Be prepared to pay any fees that apply.
- The DMV will process the request. The owner will receive the updated title in the mail.
If there is a lien on the vehicle
If money is still owed on this vehicle, you will also need to contact the lender. Tell them what your plan is, and get their input about any procedures or paperwork they require for the process.
Document checklist
- A certified copy of the divorce decree
- Vehicle title
- Vehicle description (make, model, year, mileage)
- Vehicle Identification Number (VIN)
- DMV forms for title transfer or name removal
- Notarization, if required
- Payment for applicable fees
How does the state I live in impact who gets the car?
The state you live in may impact who gets the martial car, depending on whether it's an equitable distribution state or a community property state.
Equitable distribution states
If you live in an equitable distribution state, the judge must divide the property in a manner that is balanced and fair. This decision is based on many factors, including who drives the vehicle the most.
Let’s say that Brian and Bonnie, a divorcing couple in Illinois, share one car. As a matter of equitable distribution, the judge may allow Bonnie to keep the car because she will have primary custody of the children, who need transportation to school each day.
When Brian and Bonnie sell their shared marital home, it is possible that Bonnie would get a lower share of the profits since she got to keep the car. Or, she might get to keep the entire home in exchange for receiving no alimony.
Creativity is often needed when settling a case like this. Remember, if you are getting divorced, you and your spouse are free to come up with your own property division solutions. It is only if you cannot come up with and agree to a fair plan that a judge would intervene.
Most states follow the principle of equitable distribution in divorce cases. If you’re unsure whether your state follows this principle, click here to verify the status of your state.
Community property states
In a community property state, marital assets and property are divided in half, unless the spouses decide and agree on another way to divide the property. Nine states are considered to be community property states:
- Arizona
- California
- Idaho
- Louisiana
- Nevada
- New Mexico
- Texas
- Washington
- Wisconsin
The judge would likely decide who gets the car if you can't agree. To keep it fair, they would also provide the other spouse with property of similar or equal value.
For example, let’s say Mike and Monique are a divorcing couple in Texas, a community property state. A judge may decide to award Mike the car because he works in another town and needs the transportation. But Monique needs a car, too, so the judge might order them to liquidate their shared boat, which is of similar value to the car, so she can buy herself a vehicle.
What happens to a joint car loan in a divorce?
Both people still owe money
If you and your spouse have a joint car loan, it's important to understand that the lender will still view it as a joint car loan after your divorce. So, for example, if the judge awards you the car as part of the divorce agreement, the lender could still go after both parties if payments were missed.
If your ex-spouse fails to pay on time
If your spouse has been awarded the vehicle and you want to make sure they don't stop paying the loan, you could have a statement placed in the divorce decree giving you the power to take possession of the car if your ex-spouse fails to pay on time. Further, if your ex-spouse neglects to make the necessary car payments, you could ask the judge to hold them in contempt of court for going against the divorce decree.
Examining your options
Perhaps you’re sure what to do with the car, but you don’t want a judge to intervene and decide for you. If possible, maintain open communication with your ex about the car. It’s helpful to understand how willing your ex is to cooperate and find a solution. Any of the following options may exist:
- The two of you might decide to refinance the vehicle in one person’s name. To do this, the current loan would have to be paid off, and a new loan would need to be taken out by just one person. The feasibility of this depends on each person’s credit history, especially that of the buyer.
- You might be able to modify loan terms with the lender. In some cases, a lender will simply allow one person to take over a loan. They might be willing to transfer ownership of the loan to just one of you. A change like this would need to be documented and signed by everyone involved.
- As mentioned, you might also decide to sell the car. You could then split the proceeds as is deemed to be fair.
- If you can’t agree on the fate of the car, you could leave it in a judge’s hands. Note that once a judge outlines these terms in your divorce decree, each of you must follow them to the letter.
If a judge awarded you the car, some states accept a standard copy of the divorce decree as proof of your claim. However, you may still need your ex-spouse's signature on the title.
You will also need to sign the title before submitting the document to the DMV. Your state DMV will then provide you with a new title. (Make sure you have proof of auto insurance as well.)
Transferring a car title to your ex-spouse
If you've been ordered to transfer a joint title to your ex-spouse, your ex must apply for a new title in their name. You can sign the title to indicate you approve of the transfer.
How do we change our insurance policy once the title changes hands?
Changing a car insurance policy when the title goes to a new owner involves several steps. Here's a general guide:
- Inform your insurance company of the change, including the name and contact information of the new owner as well as the former owner.
- Provide the insurance company with any proof they require, such as a receipt for the sale of the car.
- Assuming the car will still be insured by the same company, update the policy as appropriate. For example, the new owner may wish to have a different level of coverage than the prior owner had.
- Request written confirmation of the changes for your records.
FAQ about cars and other marital vehicles in divorce
What if neither of us can find the car title?
You can order a duplicate car title from your local DMV. The procedure varies by state, so check your local rules.
If any errors exist on the title, such as the wrong name or a misspelled name, you can replace the title with the corrections made. Inquire about this procedure with your local DMV as well.
Can I sell my car during my divorce?
You may be able to sell your car during your divorce if you purchased it before the marriage began. However, any vehicle purchased during the marriage is marital property. In this situation, your spouse would need to agree to sell the vehicle. You would also be tasked with providing your spouse half of the proceeds if divorce proceedings are ongoing.
After the divorce, the situation largely depends on whose name is on the title. If a joint car title has been transferred to just you, you're free to sell the car whenever you want. There are, however, some issues with selling a financed car that has yet to be paid off. As mentioned previously, you and your ex-spouse would be liable for payments until the loan is paid off. You can remove your ex-spouse's name from the loan if your lender agrees to refinance the loan under your name only.
What if my spouse refuses to sign the car over to me?
Legal recourse is possible if your ex-spouse refuses to sign the car over to you. If the divorce decree ordered the car to be signed over to you, your ex must abide by the decree. If they don't, you can ask the judge to hold your ex in contempt of court.
If the judge agrees to your request, the court can help you take possession of the vehicle, issue fines against your ex, or make sure your ex pays your attorney fees.
If you want to try a less aggressive approach first, consider entering mediation with your spouse. A mediator is a professional trained in conflict resolution. You don’t have to be on the best of terms to try mediation, but you both must be willing to talk about and negotiate a solution.
To learn about Hello Divorce’s mediators, available for online conferencing, click here.
Now that you know what to do with your car title after your divorce, you can be confident that the process will be completed without issue. Want to speak with an account coordinator at Hello Divorce? Click here to schedule a free 15-minute informational call.
