Bankruptcy

How To Title Car Purchased For Use By Your Minor Child: Protecting Car In Bankruptcy

By Jonathan Alper

Here is an interesting bankruptcy case which demonstrates the pitfalls in titling a car in the name of anyone other than the principal driver.

A grandfather wanted to buy a car for his grandchild. He purchased a car for all cash and put the title in the name of his son. The son put none of his own money toward the purchase, and the son did not drive the car or pay for its upkeep. The son let his child, the grandchild, use the car exclusively. Then, the son filed Chapter 7. The trustee claimed the car purchased by the grandfather but titled in the debtor?s name was part of the bankruptcy estate. The debtor son argued that he held title only for convenience purposes and that he had no equity in the car purchased by the grandfather and driven by his child.

The court held the car was non-exempt and had to be surrendered to the trustee. The court stated that in Florida car titles constitute presumptive legal ownership. If the grandfather wanted to give the car to this son as custodian for the granddaughter he should have titled the car in his son?s name as custodian under Florida Statute 710.111. The statue provides a way to record certificates of title in an adult?s name as custodian for a minor child.

If you need to take title to a car to be driven by a child you should hold title in your name as custodian for the child. The custodian notation is required to avoid having the car be subject to your own creditors or a bankruptcy trustee. In re DiStefano Case No. 10-19596

Full post as published by Florida Bankruptcy Law on March 25, 2011 (boomark / email).