03/13/2021
Have a TEEN that will be driving soon? READ THIS!! (2 Min. read)
Entrusting one’s car to a teen driver can seem like a liberating event for a parent who had been playing chauffeur, however, it can also have unforeseen unpleasant consequences. The parent who owns the car will likely be liable for any damage or death caused by the teen driving the car. In addition, many states, Florida and California for example, require a parent to sign the teen’s driver’s license application, thus making that parent directly liable for the teen’s driving mishaps. In those states which do not require the parent’s signature on the teen’s license application, other long-established legal theories can result in liability for the car-owning parent as a result of the teen’s driving mishaps. A liability nightmare scenario can result where one parent signs the teen’s license application and the teen drives a car owned by the other parent (or a car jointly owned by both parents). We have seen it happen: In one case, the mom signed the license application and the teen drove dad’s car and got into a terrible accident where three persons were killed. The accident occurred in Florida, a state which protects tenancy by the entireties property from the claims of the creditors of one spouse. In this case, however, both parents were liable – one, as a result of signing the license application, and the other, as a result of owning the car involved in the accident. As a result, the couple’s tenancy by the entireties assets were completely exposed to the claims of the three families who lost their loved ones. A tragedy for everyone concerned.
WHAT YOU CAN DO?
Besides having the very important safe driving discussions with your teen, what can you do? Be aware of what results in liability: if, in your state, a parent must sign the license application for the teen driver, and the teen will not own his/her own car, the teen should only drive a car solely owned by the parent who signs the application (or other liability imposing document), and that parent should be the one who owns the least of the couple’s assets. In this way, at least the other parent’s assets will not be exposed to the teen’s driving mishaps and the liability will be contained to the parent with the least assets. If your state does not require a parent to sign the license application (or any other document imposing liability for the teen’s driving) then, if possible, the teen should own and pay for his/her own car, otherwise, the parent who owns the car driven by the teenager will likely be held liable for the teen’s driving mishaps.
BY THE WAY, AS A CAR OWNER, YOU ARE RESPONSIBLE FOR THE MISHAPS OF ANYONE WHO DRIVES YOUR CAR (not just the teen).
There are also other options out there as well! Remember, we don't want to make it look like you own nothing. Normal assets should remain in sight, but we have other options with the equity that may be accumulated. For example, a homestead exemption protects your equity up to a certain amount, which varies by state.
Shifting assets is also a great strategy as discussed above that can be done for a relatively low cost!
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