When you buy a new car, you probably don’t think twice about whose name goes on the title. Most couples just put “husband and wife” or list both partners out of habit. It feels like the right thing to do, but in the state of Michigan, that little “and” between your names could be a multimillion-dollar mistake.
We’re insurance agents, not attorneys, so we don’t provide legal advice. However, we work closely with the legal community to make sure our clients are protected, and the experts have a very clear take on this.
The “Owner’s Liability” Trap
In Michigan, there is a specific rule you need to know: The owner of a vehicle is liable for any negligent acts committed by someone driving it.
Here is how that plays out in the real world: Imagine you and your spouse own a car jointly. Your spouse is driving to work, gets into a serious accident on the Beltline, and is found at fault. Because both of your names are on the title, both of you are now legally liable for the damages.
Protecting Your “Tenancy by the Entirety”
This is where the math gets scary. In Michigan, married couples often own their home as “tenancy by the entirety.” This is a fancy legal term that basically creates a shield around your house. If one spouse is sued, creditors usually can’t touch the house because it belongs to the “marriage unit,” not the individual.
But if you both own the car, you are both sued. That shield around your house? It vanishes. Because you are both liable for the accident, your joint assets—including your home and your joint bank accounts—are now fair game to satisfy a judgment.
The Solution: Title to the Primary Driver
The simplest way to protect your family is to ensure each vehicle is titled only in the name of the person who drives it most.
- If Dad drives the truck, only Dad’s name should be on the title.
- If Mom drives the SUV, only Mom’s name should be on the title.
By doing this, if there is a catastrophic accident, only the driving spouse is liable. The non-driving spouse’s assets (and your jointly owned home) remain protected behind that legal shield.
What About Probate?
A common reason people title cars jointly is to avoid probate if one spouse passes away. While that’s a valid concern, Michigan law allows for the transfer of vehicles (up to a certain value) to a surviving spouse quite easily without a full probate process. In our opinion, the “probate convenience” isn’t worth risking your entire home and life savings over an auto accident.
Don’t Just Take Our Word For It
We aren’t the only ones saying this. The attorneys over at Mika Meyers, a fantastic firm right here in Grand Rapids, have a great breakdown on this. They explain how retitling assets is one of the most effective (and cheapest) ways to protect yourself.
Check out their full Overview of Asset Protection here.
Start the Conversation
Retitling a car might cost you a small fee at the Secretary of State, but it could save you everything you’ve worked for.
Take a look at your registrations this weekend. If you see two names on a car that really only has one driver, give us a call. We can talk about how this impacts your insurance and make sure your umbrella policy is lined up to protect you, no matter whose name is on the “pink slip.”