It’s the contract that gets transferred. A lease contract a financial responsibility. All (most) financial responsibilities get transferred to estate (Unless a death clause in said contract) and the estate must sort out with whatever assets left over.
If there’s little money left to satisfy all debts left behind, a judge needs to rule on who gets what. Unless there was a trust set up, family is last to get anything. Even unsecured debt can be recovered if there is money there.
Dealership doesn’t have anything to do with it. It’s the captive’s car. Dealer is nothing more than a middleman
1 Like
Right, but I meant in terms of resale value to satisfy the early termination buy out. IE if Carvana offered X, will the dealership offer X+ or X- based on the fact that they had sold it.
I told them I would expect the dealer to be worse and be prepared for that, especially how underwater the car is.
The next of kin, or any relatives period (unless a spouse or co-signor) are NEVER EVER responsible for debts incurred by deceased…or anything else.
However, the executor of the estate has to pay out all outstanding debts before dishing out the remainder of the estate. There is a lot of funny business that goes on here, and it really all depends on the size of the estate. One good reason to die broke with a ton of liabilities! Pass those assets onto your kids before you croak!
I understand, just can’t get my head around the fact that the car is leased and next of kin is responsible. Can’t imaging dealing with my dad’s crazy leases 
1 Like
The next of kin is not responsible. The bank goes after the estate if there are any assets. If the estate doesn’t have any assets, the bank is screwed and takes the loss.
6 Likes
You’re thinking of it wrong. The next of kin is (May be) the administrator of the estate. The next of kin isn’t responsible though. In other words, if the estate is insolvent, the next of kin isn’t responsible. The next of kin may miss out on some of the estate proceeds, however, depending on how much the estate has in assets and liabilities though.
I was the administrator of my dad’s estate. Most of his money was set up as an ITF though, which was protected. I wrote checks out against the monies he had left. Anything left after that was split between my sister and I. Had he had 0 though, I would’ve given the keys back and the bank couldn’t come after me for what was remaining. A judge would deem the estate insolvent, and tell the bank they were SOL, and it would be treated similar to a Chapter 7.
3 Likes
Right and in this specific example, the kids and brother who are part of the estate can either each lose ~$1k of the estate value to deal with it now, or wait months and probably owe the same amount or more in penalties. So not worth the hassle I don’t think.
That’s the confusing part…how can they be part of the estate? Their dad didn’t own them. But if you say that the total assets the dad owned, minus the lease cost, belong to the kids then i can understand.
Each bank is different. Some will waive altogether, some will cut you a break. Some want every penny they can get.
2 Likes
Ok, makes more sense.
Think of it this way, you have 10,000 to your name, a home that you owe 100,000 on and a leased car. Another bear attacks you and feasts on your remains. Your 10,000 asset (cash), your car and home are your estate. Your cub becomes administrator of the estate. He sells the house for 100k and satisfies the 100k in debt you owe, leaving you even on the house. You still owe 5k on your car. He paid the bank, leaving b you with 5k in cash (estate). That 5k is then divided up how your will states, or, between your cubs (assuming no disputes since you don’t have a will…disputes would be handled by a court).
Now, if you had 0 in assets and no home to sell, the judge would deem your estate insolvent. That means there’s nothing left for the car. They don’t come after your cub. That said, your cub doesn’t get anything either.
Very rudimentary example, but in the end, your cub pays down your debt based on estate cash, not his own.
I’m guessing that’s what he meant. They would get the proceeds of the estate after debts are satisfied. They are beneficiaries of the estate.
With Toyota you just turn them back in with the death cert
2 Likes
https://www.latimes.com/business/la-fi-lazarus-20140321-column.html
Is this recent Cody? This story is old so just checking if policies changed.
People need to understand “estate”. It is not just a rich person. If a homeless man has $10 in his pocket when he dies, and a debt of $7, then, technically, after he dies, the creditor of the $7 debt would have to file a claim against a $10 estate. After that debt is settled, his heirs would get the remaining $3 estate.
In the case of a lease, the bank is not going after family members directly. They are trying to get paid what the deceased was liable for, before the funds are distributed to the heirs. So the family can drop the car off and walk away without personally owing money, but the bank will file a lien on the deceased persons assets (estate) before those assets are distributed to the heirs. In that case, they may be entitled to additional costs for recovery.
The family is doing the right thing by checking out their options to minimize the impact on the deceased assets.
My Father passed away with a GM lease of an Equinox. Payments were ridiculously low, like $159 per month, and he had tons of miles left. Each one of our family members called a different person, and got a different answer.
I called GM: Was told that we could turn in the car and GM would send through the auction and charge the difference between the payoff and what they recovered, estimated about $1800.
My Brother called the dealer: He said in the case of a death and car in good condition, within miles, etc., they would take the car back and void the lease. No additional charges.
My sister also called GM financial: They said we could turn the car in with no charges under the circumstances.
We turned the car in to the dealer and filled out the paperwork, provided death cert, etc. 4 months later, my mother recieved a bill from GM for $1600 or so based on the auction value vs. lease payoff. Not sure, but my brother the executor called GM and I believe they backed off.
One other option was to have someone else take over the lease and use the car.
Moral of the story: be diligent and document your conversations. Check with dealer, bank, and legal counsel if you have it.
If the deceased had no assets, then walking away is an option.
I feel for your situation, its hard enough to lose someone you care about, and these details are tough.
3 Likes
Also, there’s a lease contract. The family needs to get ahold of the contract and read in it’s entirety.
Don’t just call people and take their word over the phone.
If the contract is silent about “death”, than the bank reserves the right to go after the estate (via a lien) for any losses, as described above.
And remember, if you do get any advice from a dealer/company etc, remember to get it in writing…even if it’s an email or text. That will go a long way to resolving any issues down the road.
Also, many times debt collectors go after the next of kin after a death…I’ve read about many instances of them calling regarding credit card debt. They try and guilt you/threaten you, and unfortunately many people capitulate and pay a bill that isn’t their responsibility.
At the end the dealer took it back for $2k in negative equity. They tried to charge even more but they were able to agree on a flat amount. Car is already up for sale on their lot for a few hundred more than the trade in value.
2 Likes