Liability for Adult Child
Rick
liability policy. She currently drives a car that is in our name and she is
covered on our auto insurance. Someone suggested that we transfer the title
of the car to her name and also have the insurance on the car put in her
name to minimize our liability. Will this really make any difference, since
she is still covered by our liability policy, still lives at home with us
and is our tax dependent? It will cost around $100 in increased insurance
premiums and tag bureau charges to make the change.
slide
If you take the course recommended by someone, it has to increase your
insulation in the event your daughter does cause a loss which exceeds
the coverage you provided for her through insurance.
Will that insulation be sufficient in all cases? I doubt it simply
because there seems to be a great deal of latitude in these liability
cases. Part of what may expose you more is if, say, your daughter has a
propensity to bad driving and has had many crashes which you knew about.
This would give any plaintiff filing against her more weight in
including you because you enabled your daughter to continue to drive.
So the answer is 'it depends' (as usual). It depends on the specifics of
the loss, the specifics of your relationship and knowledge about your
daughter and of course, the slant of the court if it comes down to a trial.
A Michigan Attorney
Transferring the title and registration to your daughter might help.
If it's titled and registered to you, then you could end up
vicariously liable for injuries she causes while driving it. You
could leave her on your insurance (in theory) without a problem,
though.
The legal construct is that if you let someone else drive your car,
you are giving them the instrumentality of potential injury, so you
could be held liable (along with them) for negligent entrustment and/
or under a vicarious automobile liability statute.
mm
I'm sure it will. AFAIK, it doesn't matter where she lives or if she
is your tax dependent or even if you share the same insurance policy
(although maybe the insurance company won't let you do that if she
owns the car separately, but that's between you and the insurance
company, and doesn't affect whether her traffic accidents make you
liable.) What makes you liable is that you own the car.
What if the damages are greater than your insurance coverage, or what
if through some unexpected foulup, like you and your wife are both out
of town and can't get back because a volcano has stopped all the
planes from flying and you don't pay your renewal, or other
possibilities, and you have no insurance at all?
Bbut if you don't mind, I'd like to add a variation on the question.
WRT husband and wife. My brother and his wife owned their cars
jointly. I told him what your friends have told you, that his wife
should own her car separately. My brother who has considerable income
and savings and who lived in Texas said it was a community property
state and it wouldn't matter. Was he right?
(There are no community property laws between parent and child.)
(Now they live in Florida. Does that make a differenc?)
--
Posters should say what U,S. state if any they live in. Why
do so many keep their state as secret as their own name?
IANAL. That is, I am not a lawyer.
Keith
Hash: SHA1
It depends on the liability laws in your state. I know in California if
any one lives under your roof you can be held liable for civil damages
if you provide *any* type of financial support. Consult a lawyer, some
will give you free advice for the first consult.
- --
Best Regards, Keith
http://home.comcast.net/~kilowattradio/
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Mike Jacobs
> liability policy. She currently drives a car that is in our name and she is
> covered on our auto insurance.
All of which, as you say below, gets your family the cheapest fixed
costs of auto ownership, vs. some other arrangement.
> Someone suggested
"Someone?" Was that someone a knowledgeable insurance agent? A
lawyer? A meddlesome but experienced/knowledgeable friend? Or just
an urban legend, a rumor, a message possibly garbled in translation?
At least you had the good sense to question that advice, to the extent
of coming here for a second (and 3rd, and 4th) opinion.
Of course, you don't tell us what state you are in, so all any of us
here can do is offer generalities too.
> that we transfer the title of the car to her name
And that is supposed to accomplish, what? In terms of avoiding
liability, that is?
Bottom line is, if you do something negligent, including (possibly)
negligently entrusting a car to your daughter when she shouldn't be
driving, you may be liable regardless of the happenstance concerning
to whom the car is titled and registered at the time, so long as you
actually exercise control over her use of it. You may also be found
liable, under the laws of most states, if she gets in a wreck while on
a "family errand" (e.g. running to the corner store to get milk) even
if she does so in a car titled to herself, since she was running the
errand on _your_ behalf. OTOH if you have no such control, and she is
not acting on your behalf, you have very little chance of being found
liable, again regardless of who owns the car.
In some, not all, states, the law _presumes_ that a driver is the
agent of the owner, that is, assumes that the purpose of the driver's
trip was to benefit the owner. However, this presumption is usually
rebuttable, and serves only to make sure there is _some_ viable
defendant to be held responsible for the harm negligently caused to
the injured person, if the owner claims not to know the identity of
the driver (or, more likely, conspires to hide his or her
identity).
> and also have the insurance on the car put in her
> name to minimize our liability.
While there may be _some_ slight advantage, in some states, in some
few circumstances, to re-titling the car as discussed above, there are
virtually _no_ benefits I can think of, to forcing your daughter to
obtain her own separate insurance policy, no matter what state you are
in.
_Each_ named driver and car owner in a policy's declarations _is_
separately covered for liability by a typical family auto policy. In
other words, the fact that one family member or the other gets sued
for negligence, only has to do with WHAT THOSE PEOPLE DID or failed to
do, and has nothing to do with whether they are covered under the
same, or different, insurance policies.
> Will this really make any difference, since
> she is still covered by our liability policy,
That's what you just said you were going to _cease_ doing, and require
your daughter to obtain her _own_ auto policy (for liability and all
other coverages). Unless I misunderstood what you intended to do,
and what your advisor suggested you do.
> still lives at home with us
That _fact_ may, along with other facts, be cited at trial as one of
the reasons tending to show you still exercise some control over her
driving actions (which is the _crucial_ fact, as noted above), but co-
residence is not alone dispositive, and (these days, especially)
carries very little weight I should think.
> and is our tax dependent?
That fact has even _less_ to do with your control over her driving
habits, than does the fact you live under the same roof. Almost
none, I would say.
> It will cost around $100 in increased insurance
> premiums and tag bureau charges to make the change.
So, why do it? I'm not saying _don't_ do it, but you surely haven't
shown us any rational factors that would make it a _good_ idea in your
particular situation to do so. Ask your insurance agent, ask your
lawyer, but don't rely on vague "someone suggested" advice that is
most likely wrong (or at least, like a broken clock, is right twice a
day and wrong the rest of the time).
--
This posting is for discussion purposes, not professional advice.
Anything you post on this Newsgroup is public information.
I am not your lawyer, and you are not my client in any specific legal
matter.
For confidential professional advice, consult your own lawyer in a
private communication.
Mike Jacobs
LAW OFFICE OF W. MICHAEL JACOBS
10440 Little Patuxent Pkwy #300
Columbia, MD 21044
(tel) 410-740-5685 (fax) 410-740-4300
A Michigan Attorney
> Bottom line is, if you do something negligent, including (possibly)
> negligently entrusting a car to your daughter when she shouldn't be
> driving, you may be liable regardless of the happenstance concerning
> to whom the car is titled and registered at the time, so long as you
> actually exercise control over her use of it. �You may also be found
> liable, under the laws of most states, if she gets in a wreck while on
> a "family errand" (e.g. running to the corner store to get milk) even
> if she does so in a car titled to herself, since she was running the
> errand on _your_ behalf. �
I dissent. While I agree that vicarious liability may attach where
there is a master-servant relationship, I disagree that a typical
"family errand" such as the one you describe includes a sufficient
measure of control over the runner to create such a legal relationship
-- in Michigan, at least.
Barry Gold
>Bbut if you don't mind, I'd like to add a variation on the question.
>WRT husband and wife. My brother and his wife owned their cars
>jointly. I told him what your friends have told you, that his wife
>should own her car separately. My brother who has considerable income
>and savings and who lived in Texas said it was a community property
>state and it wouldn't matter. Was he right?
Yes and no.
In "community property" states, everything you earn during the
marriage is normally considered community property, jointly owned by
both partners. Anything that was already owned before the marriage
is _separate_ property. So is anything received by one spouse as a
gift or through inheritance.
But you can modify that, with a prenuptial agreement -- or even after
the marriage, as long as both parties agree. If you want to do that,
you should consult a lawyer, as the exact wording is crucial. (My
wife and I have such an agreement: whatever is in one of our names is
separate property, regardless of when acquired; whatever is in both
names is community property.)
*But*, even if something is community property, that still means that,
in effect, each spouse owns half of it. So if your sister-in-law gets
into an accident and the damages exceed her insurance, the injured
person could go after her half of the community property, not the
whole thing -- your brother would get to keep his half. But if the
car is registered in both names, then the entire property would be
at risk in case of an accident.
Note that this works both ways: if your brother has one car in his
name and gets into an accident, his wife's half of the community would
be protected.
Another thing to consider: in some states, the vehicle's _owner_ is
liable only up to some limit, usually the state's required insurance
($15K/person, $30K/accident in CA). The driver is liable without
limit. *But* there's still the theory of negligent entrustment:
basically, if your brother knows (or should know) that his wife is a
bad driver, but allows her to drive his car anyway, then he would be
vicariously liable for whatever she does wrong.
This is for discussion purposes only, and is not legal advice. I'm
not a lawyer. If you want legal advice, hire a lawyer.
--
Barry Gold, webmaster for:
Conchord: http://www.conchord.org
Los Angeles Science Fantasy Society: http://www.lasfsinc.org
My blog: http://goldslaw.livejournal.com/
deadrat
> On Wed, 5 May 2010 11:10:15 -0400, "Rick" <ri...@nomail.com> wrote:
>
> Bbut if you don't mind, I'd like to add a variation on the question.
> WRT husband and wife. My brother and his wife owned their cars
> jointly. I told him what your friends have told you, that his wife
> should own her car separately. My brother who has considerable income
> and savings and who lived in Texas said it was a community property
> state and it wouldn't matter. Was he right?
No. "Community property" is a term that a divorce court uses to
designate property that will divided when the marriage is dissolved.
This is separate from ownership. If the court determines that property
owned by one spouse is community property, the court may order the
property split and in doing so may order the title changed to effect the
split.
What doesn't matter is any property your brother owns jointly with your
sister-in-law. If she has an accident, and is found negligent, then
jointly held property may be used to satisfy a judgment.
> (There are no community property laws between parent and child.)
>
> (Now they live in Florida. Does that make a differenc?)
Not much. Living in Florida is almost as bad as living in Texas.
Oh, did you mean with regard to civil law? Sorry. I think the
bankruptcy laws are more favorable to the debtor in Florida.
Rich Carreiro
> While there may be _some_ slight advantage, in some states, in some
> few circumstances, to re-titling the car as discussed above, there are
> virtually _no_ benefits I can think of, to forcing your daughter to
> obtain her own separate insurance policy, no matter what state you are
> in.
You clearly don't live in MA, then :)
In MA, if there are multiple people and/or multiple vehicles listed on
a single policy, state law requires the insurance company to match
person to vehicle in whatever manner results in the highest possible
premium, regardless of actual driving. In other words, if the single
policy covers a Lamborghini and a 25 year old Chrysler K-car, a 45yo
man, and his 17yo son, the son will be considered the primary driver
of the Lamborghini and the man the primary driver of the K-car, even
if they never set foot in the car they are assigned to.
However, if the K-car were titled to the son and Lamborghini titled
to dad, and son and dad had separate policies, the mappings will be
son with K-car and dad with Lamborghini which will result in a
much lower combined premium. They can even be named "deferred
operators" of each others vehicles. Of course, should son wreck the
Lamborghini, the insurance company is going to look very closely to
make sure son wasn't really the primary driver.
--
Rich Carreiro rlc-...@rlcarr.com
Rick
> here can do is offer generalities too.
Florida...
>
>> Will this really make any difference, since
>> she is still covered by our liability policy,
>
> That's what you just said you were going to _cease_ doing, and require
> your daughter to obtain her _own_ auto policy (for liability and all
> other coverages). Unless I misunderstood what you intended to do,
> and what your advisor suggested you do.
>
I should have clarified that what was suggested to us was that we put the
title in her name and have her buy her own auto insurance policy in her
name. The liability policy I refer to is an umbrella policy that applies to
all of us who live together in the house, and which supposedly pays for
liability damages that exceed what is on our auto policies.
Stuart A. Bronstein
> *But*, even if something is community property, that still means
> that, in effect, each spouse owns half of it. So if your
> sister-in-law gets into an accident and the damages exceed her
> insurance, the injured person could go after her half of the
> community property, not the whole thing -- your brother would
> get to keep his half.
>
> Note that this works both ways: if your brother has one car in
> his name and gets into an accident, his wife's half of the
> community would be protected.
The community property laws differ by state, and your scenario may be
valid in some but not in others. In California, for example, debts
incurred during marriage are considered community debts, for which
the community property of both spouses is responsible.
Stuart A. Bronstein
> mm <mm2...@bigfoot.com> wrote:
>> (Now they live in Florida. Does that make a differenc?)
>
> Not much. Living in Florida is almost as bad as living in
> Texas.
>
> Oh, did you mean with regard to civil law? Sorry. I think the
> bankruptcy laws are more favorable to the debtor in Florida.
The bankruptcy laws are federal, so they are the same in every state.
What is different is that bankruptcy law permits a person who claim
property as exempt based on state exemption rules.
Both Florida and Texas (as far as I know they are the only states)
allow unlimited homestead exemptions. So, say, OJ Simpson, can own a
home in Florida that's worth $30 million, and his creditors can't
touch it. Former Florida governor John Connolly at one point filed
bankruptcy owning a $7 million estate, and it was completely exempt
from creditors.
Mike Jacobs
> On May 10, 8:31 pm, Mike Jacobs <mjacobs...@gmail.com> wrote:
>
> > Bottom line is, if you do something negligent, including (possibly)
> > negligently entrusting a car to your daughter when she shouldn't be
> > driving, you may be liable regardless of the happenstance concerning
> > to whom the car is titled and registered at the time, so long as you
> > actually exercise control over her use of it.
Michigan Attorney, may I safely assume you agree with that general
part of my statement?
> > You may also be found
> > liable, under the laws of most states, if she gets in a wreck while on
> > a "family errand" (e.g. running to the corner store to get milk) even
> > if she does so in a car titled to herself, since she was running the
> > errand on _your_ behalf.
>
> I dissent. While I agree that vicarious liability may attach where
> there is a master-servant relationship, I disagree that a typical
> "family errand" such as the one you describe includes a sufficient
> measure of control over the runner to create such a legal relationship
> -- in Michigan, at least.
Okay. But we do seem to agree that the factual issue at stake is
whether the party whom a plaintiff seeks to hold vicariously liable
exercised such a degree of control over the negligent driver as to
make it reasonable in the eyes of society (as represented by the jury)
to hold that superior person legally responsible for the subordinate
driver's actions.
As I mentioned to another poster on another thread today (the one
discussing legality of arrests for misdemeanors not committed in the
cop's presence), the possibility I raised above is not a foregone
conclusion, but simply one result that I believe _could_ occur, given
sufficiently strong facts and circumstances. Of course, the actual
outcome is always highly fact-dependent.
I do agree with you that the mere fact Daughter ran to the store in
her own car to buy milk because she determined on her own that the
family needed some, ordinarily would not be sufficient to impose
vicarious liability on Dad for a "master-servant" relationship.
Start adding more facts, though, and eventually, the sum of those
circumstances will be legally sufficient to show existence of such
degree of control over Daughter's actions that Dad should also be held
liable, such as to permit an appellate court to uphold a jury verdict
even if the appellate court would have reached a different result.
And, of course, the level of factual certitude usually necessary to
actually _persuade_ a jury to find liability, is often (but not
always) far higher than merely enough to pass appellate muster as
"legally sufficient" and thus to uphold an iffy verdict.
What if Dad had specifically asked Daughter to do this "milk run"?
What if he had told her "keep the change" and gave her a twenty-dollar
bill? What if he gave her a hundred? What if their family adhered
to a traditional culture where the sons and daughters (or at least the
daughters), even as adults, are deemed subservient to the
Paterfamilias and completely subject to his orders, or his permission,
in all things, even in those areas where US law and the average
American family grants complete autonomy to adults (e.g. whom to
marry, what to wear, what to study in college, what work to do,
etc.). I could go on, but hopefully this is enough to illustrate the
point.
And I raised this possibility (perhaps a remote one, although how
likely it is to actually occur is not important for analysis purposes)
in the context of OP's query of what _could_ happen, in terms of him
being held liable for his Daughter's driving. He was wondering
whether it would help him avoid such liability if he required Daughter
to register her car in her own name and obtain her own separate
insurance policy. I don't personally think vicarious liability is
very likely to be imposed in _either_ event, but all I was saying was,
forcing Daughter to register the car in her own name is _not_ going to
completely remove the possibility that Dad would be sued for
Daughter's driving. I trust you agree that, depending on all the
facts and circumstances, this remains a possibility.
Mike Jacobs
> Mike Jacobs <mjacobs...@gmail.com> writes:
> > While there may be _some_ slight advantage, in some states, in some
> > few circumstances, to re-titling the car as discussed above, there are
> > virtually _no_ benefits I can think of, to forcing your daughter to
> > obtain her own separate insurance policy, no matter what state you are
> > in.
>
> You clearly don't live in MA, then :)
Obviously. Taxachusetts, home of Romneycare, rabid Sox fans, prima
facie speed limits, turnpikes, and cozy legislative deals with auto
insurers. (Hey, we in MD can claim responsibility for Spiro Agnew,
and the Orioles, so it's not as though I'm ragging on your state as
being any worse). 8*)
> In MA, if there are multiple people and/or multiple vehicles listed on
> a single policy, state law requires the insurance company to match
> person to vehicle in whatever manner results in the highest possible
> premium, regardless of actual driving.
Wow. What a deal for the auto insurers. State law _requires_ this,
not merely _permits_ this?
Here in MD, although not _required_ by state law, an insurer can rate
drivers to vehicles in the way that gets the customer the _best_
(lowest) insurance rates, in a competitive environment. The rating is
still supposed to have _some_ relation to who actually drives the car,
though.
> In other words, if the single
> policy covers a Lamborghini and a 25 year old Chrysler K-car, a 45yo
> man, and his 17yo son, the son will be considered the primary driver
> of the Lamborghini and the man the primary driver of the K-car, even
> if they never set foot in the car they are assigned to.
Right, I get it.
> However, if the K-car were titled to the son and Lamborghini titled
> to dad, and son and dad had separate policies, the mappings will be
> son with K-car and dad with Lamborghini which will result in a
> much lower combined premium.
Sounds like the way to go, if you live in MA. I stand corrected as
to that point.
Of course, I did say that OP should consult his insurance agent, as
well as his lawyer, to see what would work best for him, instead of
simply jumping to his own conclusions (or blindly accepting the
conclusions reached by his anonymous "someone said" informant) and
then _instructing_ his insurance agent and the DMV to change his
paperwork accordingly, without bothering to ask their advice on
whether this was indeed A Good Idea. I think that part still rings
true, whatever state OP is in.
> They can even be named "deferred
> operators" of each others vehicles.
What's a "deferred operator"? Do you mean "permitted operator?"
> Of course, should son wreck the
> Lamborghini, the insurance company is going to look very closely to
> make sure son wasn't really the primary driver.
Yes indeedy. My guess is also that Dad might get a lower rate still,
if he _excluded_ Son as a permitted driver on his Lambo (and then made
sure never to voluntarily give Son the keys to it). But then, of
course, if Son did steal ("borrow without permission") the Lambo and
wreck it, the insurance wouldn't cover it, so maybe that would be a
little too much economizing for someone who can afford an exotic
sports car and has a testosterone-crazed young adult in the house.
deadrat
> mm <mm2...@bigfoot.com> wrote:
>>Bbut if you don't mind, I'd like to add a variation on the question.
>>WRT husband and wife. My brother and his wife owned their cars
>>jointly. I told him what your friends have told you, that his wife
>>should own her car separately. My brother who has considerable income
>>and savings and who lived in Texas said it was a community property
>>state and it wouldn't matter. Was he right?
>
> Yes and no.
>
> In "community property" states, everything you earn during the
> marriage is normally considered community property, jointly owned by
> both partners. Anything that was already owned before the marriage
> is _separate_ property. So is anything received by one spouse as a
> gift or through inheritance.
>
This confuses two concepts -- ownership and community property. The
latter is a designation given to property that will be subject to
division upon divorce. The house my wife and I own is no doubt community
property, but it is not owned jointly but as tenants of the entirety. In
other words, we both own 100% of the damn thing, and even though it would
be community property, no claim or judgment against one of us alone may
touch the house.
Separate property is defined by law in each state. Candidates are
property acquired before marriage, gifts, inheritances, future income
from trusts not controlled by a spouse-beneficiary, and singly-titled or
-registered property agreed upon as separate by the spouses. But the
property must be kept separate. Once it's commingled with community
property, it's likely to be deemed part of the marital enterprise and
become community property.
Mike Jacobs
> > Of course, you don't tell us what state you are in, so all any of us
> > here can do is offer generalities too.
>
> Florida...
Okay, now maybe someone knowledgeable about Florida law can chip
in. I am _not_ a FL lawyer, but one thing I do know from past
experience (although not in all its pertinent details) is that FL is
largely a "no-fault" auto insurance state, where a person _cannot_ sue
somebody else for most injuries, but must look to _their_own_ auto
insurance policy. There is a "threshold requirement" for severity of
injury, before any tort suit is permitted against the responsible
driver. Your state's legislature has _already_ given you a pretty
good deal, there, in terms of "tort reform" and insulation from
potential liability. Of course, consult your own FL lawyer for more
details.
> >> Will this really make any difference, since
> >> she is still covered by our liability policy,
>
> > That's what you just said you were going to _cease_ doing, and require
> > your daughter to obtain her _own_ auto policy (for liability and all
> > other coverages). Unless I misunderstood what you intended to do,
> > and what your advisor suggested you do.
>
> I should have clarified that what was suggested to us was that we put the
> title in her name and have her buy her own auto insurance policy in her
> name.
Which new policy would include her own separate _liability_ coverage
(from zero up to whatever her chosen coverage limit is) as well as her
own separate collision damage, comprehensive (fire/theft/hail),
medpay, uninsured-motorist, etc. coverages, of course.
> The liability policy I refer to is an umbrella policy that applies to
> all of us who live together in the house, and which supposedly pays for
> liability damages that exceed what is on our auto policies.
Auto as well as _other_ liabilities, I presume, such as household slip-
and-fall claims against any of you, or personal claims against you
arising out of your business. That type of "excess" coverage is
usually referred to by the name you gave it, an "umbrella policy,"
since it includes a variety of possible sources of liability under its
"umbrella" and is intended to shield you from _all_ of them,
regardless of source, above and beyond whatever amount the various
separate _underlying_ "liability" policies (auto, homeowners,
business, etc.) will cover, from the underlying limit up to the
umbrella coverage limit.
Having such a policy is generally a good idea for anyone with
sufficient assets to protect, and for the kind of policy limits
involved, it generally works out much cheaper than simply buying high
limits on all the underlying policies. The umbrella carrier can offer
cheaper rates because it does not have to pay to initially investigate
claims and defend you, and does not have to hire a lawyer on your
behalf initially if you get sued, as the underlying liability carriers
must do even if the suit against you is frivolous. And, the vast
majority of insurance claims are of the smaller variety, which can be
settled within the underlying limits, so the umbrella carrier is
called upon far less often to do anything at all, than are the various
underlying carriers.
In any event, as I mentioned to another poster in this thread today,
you should consult with (a) your insurance agent, and (b) your own
knowledgeable lawyer, and ask for their advice, before you jump to
conclusions and simply order your agent and the DMV to shift over the
policies and registration to your daughter's name, as your anonymous
"someone said" suggested you "should do." Once you have all the
facts, know what the law is, and know what the current actual risks
are and how likely they are, as well as the costs and risks involved
in the _new_ arrangement, you can make a rational decision on whether
to change things, or leave them as they are.
Barry Gold
>
>> *But*, even if something is community property, that still means
>> that, in effect, each spouse owns half of it. So if your
>> sister-in-law gets into an accident and the damages exceed her
>> insurance, the injured person could go after her half of the
>> community property, not the whole thing -- your brother would
>> get to keep his half.
>>
>> Note that this works both ways: if your brother has one car in
>> his name and gets into an accident, his wife's half of the
>> community would be protected.
Stuart A. Bronstein <spam...@lexregia.com> wrote:
>The community property laws differ by state, and your scenario may be
>valid in some but not in others. In California, for example, debts
>incurred during marriage are considered community debts, for which
>the community property of both spouses is responsible.
I think that applies to contract debts. Almost by definition,
one spouse cannot be responsible for the other spouse's torts -- nor
can the community, unless the spouse-tortfeasor was acting _on behalf_
of the community (e.g., as an agent).
Stuart A. Bronstein
> bg...@nyx.net (Barry Gold) wrote:
>>
>> In "community property" states, everything you earn during the
>> marriage is normally considered community property, jointly
>> owned by both partners. Anything that was already owned before
>> the marriage is _separate_ property. So is anything received
>> by one spouse as a gift or through inheritance.
>
> The latter is a designation given to property that will be
> subject to division upon divorce. The house my wife and I own
> is no doubt community property, but it is not owned jointly but
> as tenants of the entirety. In other words, we both own 100% of
> the damn thing, and even though it would be community property,
> no claim or judgment against one of us alone may touch the
> house.
Actually I think you are the one who is confused. Depending on
state law, it is highly unlikely that property could be considered
both tenancy by the entireties and community property at the same
time. If the deed is in entireties, you and your wife may well
each own half due to community property laws, but it is unlikely
that the property itself would be considered community.
And as a result it is unlikely that, on the death of either of you,
the the property would be a full stepped up basis under �1014 of
the Internal Revenue Code. Instead only half the value would have
a stepped up basis, resulting in a higher capital gain tax
(assuming you either don't qualify for or the profit exceeds the
$250,000 homeowner exemption).
> Separate property is defined by law in each state. Candidates
> are property acquired before marriage, gifts, inheritances,
> future income from trusts not controlled by a
> spouse-beneficiary, and singly-titled or -registered property
> agreed upon as separate by the spouses. But the property must
> be kept separate. Once it's commingled with community property,
> it's likely to be deemed part of the marital enterprise and
> become community property.
You're right that comingling often transmutes separate property to
community. But if there is a written deed or other evidence of
title (car pink slip, for example, or bank signature card) that
designates another type of ownership, again you may each be the
owner of half due to the community property laws, but the property
itself would unlikely be considered community.
Rich Carreiro
>> In MA, if there are multiple people and/or multiple vehicles listed on
>> a single policy, state law requires the insurance company to match
>> person to vehicle in whatever manner results in the highest possible
>> premium, regardless of actual driving.
>
> Wow. What a deal for the auto insurers. State law _requires_ this,
> not merely _permits_ this?
Requires. The state Division of Insurance mandates a standard form
auto policy that all insurers must use, and that's what it says (I've
read it). You probably won't be surprised to learn that two or three
companies control over 2/3 of the market in MA.
MA is very heavy-handed with auto insurance. Until only about 10
years ago premiums were 100% set by the state. A given person would
be quoted the same premium by any and every insurer he talked to
(though premiums are effected by account of driving record, place of
garaging, etc., though not gender).
Around 10 years ago, in a move that was controversial at the time, the
state gave insurers permission to institute group-based discounts. So
insurer A might give AAA members a 5% discount, but insurer B might
give AAA member a 10% discount. But the base premiums were still set
by the state and were the same from every insurer).
Then on April 1, 2008, over the screams of insurers and some consumer
advocates the state finally allowed limited competition. The state
must approve all premium formulae, but insurers are now allowed to
have different premiums.
>> They can even be named "deferred
>> operators" of each others vehicles.
>
> What's a "deferred operator"? Do you mean "permitted operator?"
Yeah. I like your term better.
--
Rich Carreiro rlc-...@rlcarr.com
deadrat
>> bg...@nyx.net (Barry Gold) wrote:
>>>
>>> In "community property" states, everything you earn during the
>>> marriage is normally considered community property, jointly
>>> owned by both partners. Anything that was already owned before
>>> the marriage is _separate_ property. So is anything received
>>> by one spouse as a gift or through inheritance.
>>
>> This confuses two concepts -- ownership and community property.
>> The latter is a designation given to property that will be
>> subject to division upon divorce. The house my wife and I own
>> is no doubt community property, but it is not owned jointly but
>> as tenants of the entirety. In other words, we both own 100% of
>> the damn thing, and even though it would be community property,
>> no claim or judgment against one of us alone may touch the
>> house.
>
> Actually I think you are the one who is confused.
This is not unlikely as it happens often enough.
> Depending on
> state law, it is highly unlikely that property could be considered
> both tenancy by the entireties and community property at the same
> time. If the deed is in entireties, you and your wife may well
> each own half due to community property laws, but it is unlikely
> that the property itself would be considered community.
I'd say it was practically guaranteed that the house would be considered
community property in the event that my wife and I divorced. While we were
married, mortgage, taxes, insurance, and upkeep were all paid out of bank
accounts titled as JTWROS, i.e., with comingled funds. Note that I say "in the
event," which fortunately for me is an event that hasn't obtained. Technically,
I'd say that means that the house isn't actually community property because that
term only applies to property considered for division by a divorce court. And
indeed, in Illinois, the section of the law that defines community property
(called "marital property"), 750 ILCS 5/503, prefaces the section with "For
purposes of this Act, namely the Illinois Marriage and Dissolution of Marriage
Act. Now that doesn't stop the IRS from talking about community property under
state law in the section of its code that you cite below.
The deed is tenancy by entireties, which means by definition that both my wife
and I own 100% of the house, not each of us half. Illinois contemplates that
community property may be titled in various ways as it notes that property can
be community property "regardless of whether title is held individually or by
the spouses in some form of co‑ownership such as joint tenancy, tenancy in
common, *tenancy by the entirety*,...." (emphasis added)
Now, I may be confused, but I still don't see what prevents the house from being
both community property upon a divorce and held as TotE during the marriage.
> And as a result it is unlikely that, on the death of either of you,
> the the property would be a full stepped up basis under §1014 of
> the Internal Revenue Code. Instead only half the value would have
> a stepped up basis, resulting in a higher capital gain tax
> (assuming you either don't qualify for or the profit exceeds the
> $250,000 homeowner exemption).
If I'm confused about community property, I'm *really* confused by the paragraph
above. Section 1014 is entitled "Basis of property acquired from a decedent,"
but on the death of either of us, the survivor does not acquire any part of the
house from the decedent. The survivor owned 100% of the house before the
decedent's death and continues to own 100% of the house after the decedent's
death. Now that doesn't mean that Section 1014 doesn't consider the property
acquired. You can go cross-eyed reading subsection (b), which lists the ten
ways of considering property as "acquired," but such acquisition means that the
property's basis *is* stepped up. In any case, spousal transfers aren't taxed.
>> Separate property is defined by law in each state. Candidates
>> are property acquired before marriage, gifts, inheritances,
>> future income from trusts not controlled by a
>> spouse-beneficiary, and singly-titled or -registered property
>> agreed upon as separate by the spouses. But the property must
>> be kept separate. Once it's commingled with community property,
>> it's likely to be deemed part of the marital enterprise and
>> become community property.
>
> You're right that comingling often transmutes separate property to
> community. But if there is a written deed or other evidence of
> title (car pink slip, for example, or bank signature card) that
> designates another type of ownership, again you may each be the
> owner of half due to the community property laws, but the property
> itself would unlikely be considered community.
Perhaps my confusion extends to your meaning. The type of ownership of property
isn't necessarily material to its inclusion as community property. What matters
is the timing of its acquisition, the manner of its acquisition, and its
treatment during the marriage.
A Michigan Attorney
> > > Bottom line is, if you do something negligent, including (possibly)
> > > negligently entrusting a car to your daughter when she shouldn't be
> > > driving, you may be liable regardless of the happenstance concerning
> > > to whom the car is titled and registered at the time, so long as you
> > > actually exercise control over her use of it.
>
> Michigan Attorney, may I safely assume you agree with that general
> part of my statement?
In part, yes. States may vary on their approach, though. Read on.
> > > You may also be found
> > > liable, under the laws of most states, if she gets in a wreck while on
> > > a "family errand" (e.g. running to the corner store to get milk) even
> > > if she does so in a car titled to herself, since she was running the
> > > errand on _your_ behalf.
>
> > I dissent. �While I agree that vicarious liability may attach where
> > there is a master-servant relationship, I disagree that a typical
> > "family errand" such as the one you describe includes a sufficient
> > measure of control over the runner to create such a legal relationship
> > -- in Michigan, at least.
>
> Okay. � But we do seem to agree that the factual issue at stake is
> whether the party whom a plaintiff seeks to hold vicariously liable
> exercised such a degree of control over the negligent driver as to
> make it reasonable in the eyes of society (as represented by the jury)
> to hold that superior person legally responsible for the subordinate
> driver's actions.
In Michigan I would be very surprised if the supreme court held that
actual control was dispositive. Michigan is very duty-oriented in
negligence cases, and I just don't see the courts here imposing a duty
of control on the parent where (as in this hypo) there is no right of
control of either the adult child or the vehicle.
> I do agree with you that the mere fact Daughter ran to the store in
> her own car to buy milk because she determined on her own that the
> family needed some, ordinarily would not be sufficient to impose
> vicarious liability on Dad for a "master-servant" relationship.
> Start adding more facts, though, and eventually, the sum of those
> circumstances will be legally sufficient to show existence of such
> degree of control over Daughter's actions that Dad should also be held
> liable, such as to permit an appellate court to uphold a jury verdict
> even if the appellate court would have reached a different result.
I don't see the case reaching the jury unless the child was a minor
and/or the vehicle was titled and/or registered to the parent.
> What if Dad had specifically asked Daughter to do this "milk run"?
> What if he had told her "keep the change" and gave her a twenty-dollar
> bill? � What if he gave her a hundred? �What if their family adhered
> to a traditional culture where the sons and daughters (or at least the
> daughters), even as adults, are deemed subservient to the
> Paterfamilias and completely subject to his orders, or his permission,
> in all things, even in those areas where US law and the average
> American family grants complete autonomy to adults (e.g. whom to
> marry, what to wear, what to study in college, what work to do,
> etc.). � I could go on, but hopefully this is enough to illustrate the
> point.
None, some, or all of these may be present in a particular case. But
you're adding master-servant facts that would dress the naked hypo to
which I was responding. In any event, I think the Michigan supreme
court would deem all these insufficient to create a master-servant
relationship. They do not create any legal duty of the runner to obey
the parent -- which would result in the lack of *legal* control by the
parent.
> And I raised this possibility (perhaps a remote one, although how
> likely it is to actually occur is not important for analysis purposes)
> in the context of OP's query of what _could_ happen, in terms of him
> being held liable for his Daughter's driving. �He was wondering
> whether it would help him avoid such liability if he required Daughter
> to register her car in her own name and obtain her own separate
> insurance policy. �I don't personally think vicarious liability is
> very likely to be imposed in _either_ event, but all I was saying was,
> forcing Daughter to register the car in her own name is _not_ going to
> completely remove the possibility that Dad would be sued for
> Daughter's driving. �I trust you agree that, depending on all the
> facts and circumstances, this remains a possibility.
Well, you are essentially asking me if someone might sue dad based on
daughter's driving. Since I cannot rule out the possibility that a
sufficiently aggrieved and/or vindictive in pro per plaintiff is
literate enough to put pen to paper and find his way to the courthouse
with a filing fee, the answer to that is of course "yes". I recall a
rather amusing case from, IIRC, a New Jersey federal court in which
the plaintiff had sued Satan and His Minions (which the court
dismissed for non-service of process). But people cannot conduct
their business on the risks of the actions of such people. When the
question is asked differently, i.e., is there a reasonable chance that
a competent attorney would sue dad based on adult daughter's negligent
driving where dad lacked the legal authority to prevent her from
driving the car, the answer -- in Michigan at least -- is "no".
Stuart A. Bronstein
> Stuart A. Bronstein <spam...@lexregia.com> wrote:
>>The community property laws differ by state, and your scenario
>>may be valid in some but not in others. In California, for
>>example, debts incurred during marriage are considered community
>>debts, for which the community property of both spouses is
>>responsible.
>
> I think that applies to contract debts. Almost by definition,
> one spouse cannot be responsible for the other spouse's torts --
> nor can the community, unless the spouse-tortfeasor was acting
> _on behalf_ of the community (e.g., as an agent).
I don't see how you can say "almost by definition" since liability
is a creation of law, and the law decides who is liable for what.
In California the general rule (Fam. Code �910) is that community
property is liable for any debt incurred by either spouse either
before or during marriage. It doesn't limit that liability to any
particular kind of debt.
There is another statute that deals specifically with tort debts.
Fam. Code �1000. A married person per se is not generally liable
for the torts of his or her spouse. However the community property
of that spouse is liable for the tort debts of the other spouse.
Stuart A. Bronstein
> "Stuart A. Bronstein" <spam...@lexregia.com> wrote:
>
>> Depending on
>> state law, it is highly unlikely that property could be
>> considered both tenancy by the entireties and community
>> property at the same time. If the deed is in entireties, you
>> and your wife may well each own half due to community property
>> laws, but it is unlikely that the property itself would be
>> considered community.
>
> I'd say it was practically guaranteed that the house would be
> considered community property in the event that my wife and I
> divorced.
I don't practice in Illinois. But a brief review of the law and
cases indicates to me that the law presumes all property to be
"marital property" for purposes of division on divorce. But for
other purposes the title may be considered as stated in the deed.
Is that what you mean? To me that's not the same as being both
community property and tenancy by the entireties at the same time.
> The deed is tenancy by entireties, which means by definition
> that both my wife and I own 100% of the house, not each of us
> half. Illinois contemplates that community property may be
> titled in various ways as it notes that property can be
> community property "regardless of whether title is held
> individually or by the spouses in some form of co‑ownership
> such as joint tenancy, tenancy in common, *tenancy by the
> entirety*,...." (emphasis added)
Different ways of titling property have different legal definitions
and consequences. It may be titled by entireties, and may be
treated as entireties for inheritance purposes, but presumed to be
marital property for purposes of division of property. Again, for
me that is not the same as being both at the same time. Some of
the rights are decided under marital property laws and some under
tenancy by the entireties law.
> Now, I may be confused, but I still don't see what prevents the
> house from being both community property upon a divorce and held
> as TotE during the marriage.
I didn't say that. Title of property can certainly be considered
different under different circumstances. But at the same time and
under the same circumstances property can't be considered held
under both of two conflicting means of holding title.
> If I'm confused about community property, I'm *really* confused
> by the paragraph above. Section 1014 is entitled "Basis of
> property acquired from a decedent," but on the death of either
> of us, the survivor does not acquire any part of the house from
> the decedent. The survivor owned 100% of the house before the
> decedent's death and continues to own 100% of the house after
> the decedent's death. Now that doesn't mean that Section 1014
> doesn't consider the property acquired. You can go cross-eyed
> reading subsection (b), which lists the ten ways of considering
> property as "acquired," but such acquisition means that the
> property's basis *is* stepped up. In any case, spousal
> transfers aren't taxed.
If Illinois couples own property by the entireties, and you say
that means each owns 100% and can't transfer the proprety to anyone
else, that may or may not constitute a "transfer" for purposes of
seciton 1014. But if half is considered transferred to the
surviving spouse, and title is in entireties, only half of the
value of the property will get a stepped up basis. But if it's
considered community property then the entire value gets a stepped
up basis. Again, it can't be both at the same time.
>> You're right that comingling often transmutes separate property
>> to community. But if there is a written deed or other evidence
>> of title (car pink slip, for example, or bank signature card)
>> that designates another type of ownership, again you may each
>> be the owner of half due to the community property laws, but
>> the property itself would unlikely be considered community.
>
> Perhaps my confusion extends to your meaning. The type of
> ownership of property isn't necessarily material to its
> inclusion as community property. What matters is the timing of
> its acquisition, the manner of its acquisition, and its
> treatment during the marriage.
After a bit of research it turns out that, under Illinois law, my
last statement (above) is incorrect. All property, unless
otherwise designed as separate under law, is presumed to be marital
property irrespective of the way the deed is drafted. To me that
means that it is not the same as saying it's two conflicting types
of property at the same time.
deadrat
> deadrat <a...@b.com> wrote:
>> "Stuart A. Bronstein" <spam...@lexregia.com> wrote:
>>
>>> Depending on
>>> state law, it is highly unlikely that property could be
>>> considered both tenancy by the entireties and community
>>> property at the same time. If the deed is in entireties, you
>>> and your wife may well each own half due to community property
>>> laws, but it is unlikely that the property itself would be
>>> considered community.
>>
>> I'd say it was practically guaranteed that the house would be
>> considered community property in the event that my wife and I
>> divorced.
>
> I don't practice in Illinois.
It's now time for me to say that I don't practice in Illinois, either.
That's because I'm not a lawyer.
> But a brief review of the law and
> cases indicates to me that the law presumes all property to be
> "marital property" for purposes of division on divorce. But for
> other purposes the title may be considered as stated in the deed.
> Is that what you mean? To me that's not the same as being both
> community property and tenancy by the entireties at the same time.
I think that they're orthogonal in Illinois, two separate properties of
property, if you will. One tells you what happens to the property upon
divorce, and the other tells how ownership rights operate with respect
to the property.
>> The deed is tenancy by entireties, which means by definition
>> that both my wife and I own 100% of the house, not each of us
>> half. Illinois contemplates that community property may be
>> titled in various ways as it notes that property can be
>> community property "regardless of whether title is held
>> individually or by the spouses in some form of co‑ownership
>> such as joint tenancy, tenancy in common, *tenancy by the
>> entirety*,...." (emphasis added)
>
> Different ways of titling property have different legal definitions
> and consequences. It may be titled by entireties, and may be
> treated as entireties for inheritance purposes, but presumed to be
> marital property for purposes of division of property.
Up to this point, I'd say we're in violent agreement.
> Again, for me that is not the same as being both at the same time.
<?>
> Some of
> the rights are decided under marital property laws and some under
> tenancy by the entireties law.
I'd phrase it slightly differently: some operations of the law will
depend on the property's status as community property, and other
operations will depend on the property's title.
>> Now, I may be confused, but I still don't see what prevents the
>> house from being both community property upon a divorce and held
>> as TotE during the marriage.
>
> I didn't say that. Title of property can certainly be considered
> different under different circumstances. But at the same time and
> under the same circumstances property can't be considered held
> under both of two conflicting means of holding title.
OK, this comment and a little research may have cleared up the
confusion. Upon a person's death, the IRS steps up the basis of that
person's property and as an added bonus treats all of what would be
community property as eligible for the step-up. But the IRS also looks
to the decedent's state to decide ownership, and in California
community property was a designation that only took meaning upon
division in divorce. California law specifically provides that jointly
held property is community property (Family Code 2581) but also that
upon the death of a spouse before actual division, the title determines
ownership and not the property's prospective status as community
property (Family Code 2040). Thus the IRS deemed property held as
JRWROS to be held 50% by the decedent, and only that portion was
eligible for step-up.
To remedy this, about ten years ago, California created a new title,
called community property, which could be applied with or without
rights of survivorship. Married couples then get the best of both
possible worlds: CPWROS passes automatically to a surviving spouse,
and the whole thing is considered community property by the IRS for
step-up purposes.
And, of course, you get can only check one box when you decide on the
title.
<snip/>
I had incorrectly assumed that "community property" was not a title
designation. Sorry. In California, it can be, and if you and your
spouse title property as community property, you don't get to specify
any other form of ownership. But note that if you don't title property
as community property and pick some other form of ownership, when you
get divorced, California may still call that property community
property for purposes of division, no matter that the title doesn't say
"community property."
You always have the option of shooting yourself, your spouse, or both
of yourselves to prevent that from happening. Seems drastic, though.