How Does an Executor Sell a Car During Probate?

Introduction

When you pass away, all of your individually-owned assets are “locked” until someone receives court authority to access them. In probate, that individual is known as your estate’s personal representative (also known as an executor in other states). Whether you nominate the personal representative in your will or a family member petitions to serve as the personal representative, he or she can’t take control of your assets until the probate court formally appoints them and issues Letters Testamentary to prove their authority. As such, the personal representative won’t be able to access or sell any estate assets until probate is opened.

Note that this rule only applies to a decedent’s individually-owned assets—it does not apply to assets with a joint owner with rights of survivorship (JTWROS). Probating the decedent’s share of ownership in JTWROS property isn’t necessary, and the joint owner is free to sell the asset immediately after the decedent passes away (though the title company may need to see a copy of the death certificate).

What is Probate?

Probate is the process of settling a decedent’s liabilities and distributing their remaining assets. Most probate cases are guided by the decedent’s last will and testament, where the testator (the person writing the will) nominates a personal representative, chooses a guardian for minor children (if applicable), and bequeaths his or her assets. When someone dies without a will, their estate is considered “intestate” and will be probated according to the state’s intestacy laws.

In the state of Arizona, probate is guided by the Uniform Probate Code (UPC). The UPC has been adopted in its entirety by 18 states and partially by most other states, and is intended to unify probate proceedings across state lines. The guidelines in the UPC are codified in Arizona Revised Statutes Title 14 (ARS 14).

How to Be Appointed as Personal Representative of an Estate

If you have been nominated to serve as the personal representative to an estate, or if you wish to be appointed personal representative to an intestate estate, you’ll need to file a petition for probate with the probate court in the county where the decedent lived or owned property. Every county has its own forms and requirements, so it’s best to check the county probate court’s website or call the court clerk to determine exactly what you need to submit. As an example, here’s what the Maricopa County probate court requires:

• An Application for Appointment (signed and notarized, original plus copy)
• A Certificate of Training (original plus copy)
• A Declaration of Publication (includes affidavit of publishing; original plus copy)
• An Informal Checklist
• The Letters and Acceptance of Appointment (signed and notarized, original plus copy)
• A Notice of Application (original plus copy)
• The Order to personal representative (signed original plus copy)
• The original copy of the last will and testament
• The Probate Information Cover Sheet
• The Proof of Mailing of Notice of Application (original plus copy)
• A Statement of Informal Appointment (original plus copy)
• A Waiver of Bond (signed original plus copy)
• A Waiver of Right to Appointment and Consent (signed original plus copy)

How to Sell a Car in Probate

Once you have been formally appointed by the court, the process of selling the decedent’s car is mostly the same as how you’d go about selling your own vehicle:

1. Determine the fair market value – in most cases, checking the car’s value on a site like Kelley Blue Book is the only due diligence you’ll need to do. If the car is a rare or specialty vehicle, you may need to have the vehicle professionally appraised.
2. Place an ad for sale – keep in mind that you’ll want to place a for-sale-ad even if you already have a private sale lined up. If you sell the car without attempting to get a better offer, you may be in trouble if an interested party to the estate files a complaint and is able to prove that you sold the car for less than you could have.
3. Collect the proceeds – when you sell the vehicle, have the buyer write the check out to the estate. If you get cash for the sale, deposit the funds in the estate checking account as soon as possible.
4. Record a bill of sale – it’s important to document everything you do on behalf of the estate, and collecting receipts is a big part of that responsibility.
5. Sign over the title – as the personal representative, you have the right to sign over the title by signing your own name (i.e. you don’t have to sign the decedent’s name). It’s best to print your name, sign the document, and then add “personal representative.”
6. Have the title notarized – both the personal representative and the buyer should sign in the presence of a notary public, and have the transfer notarized.

After you have sold the car and transferred the title, don’t forget to call the auto insurance company and cancel the decedent’s insurance policy. Auto insurance companies may be willing to issue a refund for premiums paid after the vehicle was sold, but the process is a whole lot easier when you cancel the policy promptly. Note that you may need to provide the insurance company with a copy of the death certificate and your Letters Testamentary to validate your authority.

What to Do If There is a Lien on the Car

If there’s a lien on the car, you’ll need to settle the note and obtain a clear title before you can sell the car. Call the bank or finance company that’s carrying the note, request a payoff amount, and submit the appropriate payment along with a copy of the death certificate and the Letters Testamentary. Upon receiving these, the finance company will issue a clear title, made out to the estate. If you need to use the proceeds of the sale to pay off the car loan, as the buyer to meet you at the bank or finance company to complete the sale.

The Small Estate Exemption

The state of Arizona offers a small estate exemption that allows smaller estates to complete the probate process by affidavit rather than actually going through probate. To qualify, the estate must have less than $100,000 in real property (house, land, condo) and less than $75,000 in personal property (vehicles, financial accounts, personal possessions, etc.). The party managing the estate will need to wait at least 6 months after the decedent’s passing in order to allow enough time for the decedent’s creditors to submit claims to the estate. Once the estate’s debts, taxes, and bills are paid, the managing party is free to sell the assets, distribute the proceeds, and file the small estate affidavit with the county probate court.

Call our Probate team at (480)467-4365 to discuss your case today.