You can pass a car on to a family member without too much fuss and also without paying sales tax, or excise tax as it is called in some states. It is a nice way to give a car a second life. Each state has its own specific requirements, but generally, there are a few things you need to do correctly.
Make sure any financing on the car has been paid off so the bank or loan company can give you the title to the car, if you haven't received it already. Check with the bank for exact requirements to receive the title. If the family member is buying the car, there are ways of relieving the loan, but as a gift, there is no financial obligation involved.
Sign your title over to the immediate family member. (Check with your state if this has to be done in front of a witness.) This would mean grandparents, grandchildren, parents (including stepparents), spouses, children (including natural, adopted, and stepchildren), siblings (including natural and half), in-laws (including mother, father, son, and daughter), and aunts and uncles. Anyone else will not count as an immediate family member. If the new owner has a different last name, be prepared to prove the relationship.
Fill out the title completely. List your name as the seller, the family member's name as the buyer, and the odometer reading, as well as the word gift in the sale price box. Sign and date the title.
Take out insurance for the new owner. This can be done by calling an insurance agent and getting a policy in the new owner's name. If the family member already has a car, it is pretty simple. If this is the person's first car, there will be more information required to get a policy.
Take a copy of the filled out title, proof of insurance, the car's registration card, proof of identity, and money to pay for the title transfer fee, to the local Department of Motor Vehicles for your state. The department will handle the rest of the process for you, giving the new owner a temporary registration and mailing the new title to them.
Check with your local DMV to see if you need witnesses or the signatures to be notarised, before you fill out the title. California will require a smog certificate if the car is more than four years old
Tips and warnings
- Check with your local DMV to see if you need witnesses or the signatures to be notarised, before you fill out the title.
- California will require a smog certificate if the car is more than four years old