Florida has unique liability laws concerning automobile accidents in contrast with other states. In Florida, both the owner and the driver of a vehicle are responsible for damage done by the vehicle. This law creates an unusual problem with the owner and driver of the vehicle are two different spouses in the same marriage. This problem exists because assets that are traditionally protected as a tenancy by the entirety, and assets owned by the spouses individually are now at risk of creditor’s claims.
A Florida Vehicle Trust protects a parent’s assets by transferring the title of a vehicle to a specially designed irrevocable trust. Once the transfer is complete, the spouses no longer own the vehicles but are instead named as trustee to the Florida Vehicle Trust. Any trustees appointed to the trust are allowed to use and operate the vehicles just as if they owned the cars outright.How to Protect Assets After an Auto Accident?
Traditionally, lawyers recommend that each spouse’s car should be titled in that person’s name only, and this person should be the only one allowed to drive the vehicle. This attempt to limit liability was created to shield the other spouse from creditors in the scenario that the other spouse was involved in an auto accident. Also, this would protect their assets owned as Tenants by entireties from claims of either spouse, but not a claim against both. If the driver and the owner are two different people, then creditors are allowed to attach to the assets of either spouse or those which are jointly owned.
This can be a nightmare scenario if one spouse owns most of the couple’s property, and the other spouse made a simple driving mistake. Tilting the cars in one spouse’s name, and only letting that spouse drive the vehicle, sounds easy in theory, but in reality is not an ideal situation for most clients. Asset protection is even more challenging when our clients have children because the parent’s assets are also liable to creditors if a child wrecks the car. This is why we came up with a better solution in the vehicle trust.Protecting Assets for Teenage Drivers
Florida law requires a parent or guardian to sign the driver’s license for a child under the age of 18. This means the parent is personally responsible for damage done by the child driving the vehicle. Further, a parent is also held accountable for the negligent actions of a child driving the parent’s car. As we said earlier, it is not necessary to put the assets of both parents and the children at risk. The Florida Vehicle Trust will ensure that a child negligent driving will not put his or her family’s assets at risk.Flexibility of the Florida Vehicle Trust
While we named this a “Florida Vehicle Trust” the trust can hold a large variety of assets. The Florida Vehicle Trust can hold title to assets such as cars, trusts, boats, motorcycles, mopeds, and other types of personal watercraft. This type of trust is useful other items that could create a liability. The Vehicle Trust does not remove liability from the driver or operator of the vehicle, so it is important to protect the other assets also.
When using a Florida Vehicle Trust, the owner becomes the trustee, and each authorized driver or operator is a co-trustee who is allowed to use the vehicle. This essentially removes the owner portion of the liability, and only the driver becomes responsible for the damage. (NOTE there is some additional liability for drivers between the age of 15 and 18 for the parent who has agreed to take financial liability for the child)
We recommend a trust for each vehicle, boat or PWC to limit the domino effect that could occur. This way the liability is can be limited to the equity in a vehicle. As these cases can take a long time to resolve, the value will continue to decrease and may eventually be negligible. Many of the top estate planning lawyers in Jacksonville understand the liability imposed by owning or using a vehicle that is involved in an injury in Florida. We believe the Florida Vehicle Trust offers additional protection to an individual or families assets in Florida.Is Insurance Enough?
Most of our clients have insurance for their vehicles, and some even have balloon policies for larger claims. The problem is that if there is a significant amount of damage, or the injuries are severe, then the insurance coverage might be enough. Medical bills quickly add up, and lawsuits often ask for millions of dollars for damages. It is not hard to imagine a scenario where someone is injured severely, and there are millions of dollars of medical expenses within the first month. While some lawyers may only look to recover from insurance, many will look at who the party is and investigate what other assets are reachable.
It is important to protect yourself and your family’s assets from creditors and events out of your control. Contact us today to learn more about the Asset Protection in Florida and the potential benefits of a Florida Vehicle Trust.
If you would like to discuss a vehicle trust, Contact one of our Florida vehicle trust lawyers in our Jacksonville office by email or call 904-685-1200.