Death During a Car Lease Can be Very Expensive!
By: Anthony J. Enea, Esq.
One would logically think that if you die during the term of a car lease that the leasing company/manufacturer would be happy to get the car back with all lease payments due and owing through the month of death being paid. Unfortunately, the families of those who have died during the term of a car lease have learned otherwise.
Death during the term of the lease agreement is deemed by the leasing company to be an “early termination” of the lease. The early termination of the lease in most lease agreements results in the following:
(a) All remaining payments of the lease becoming immediately due and payable. Thus, if at death there are still 2 years remaining on the lease, the lease requires payment of the remaining 2 years from the decedent’s estate;
(b) Early termination fees become due. These fees generally vary by leasing company and auto manufacturer;
(c) The vehicle needs to be returned and the early terminations provisions of the lease often assess costs to the lessee for the transportation, storage and preparation of the vehicle for sale; and
(d) There may be an assessment for the negative equity between your lease amount and the current value of the vehicle.
One’s death during the term of a car lease can be very expensive, especially, if the lessee dies with assets is his or her name and has an estate against which the leasing company can recover.
While this may be just one more valid reason for one to utilize a Revocable or Irrevocable Trust to hold one’s assets so as to avoid the probate process and having an estate available to creditors, there are still other options that may be available to the family of the decedent.
For example, the possibility of transferring the lease to another family member, an individual buyer or a lease swap company should be explored. Again, the lease agreement will dictate if any of these options are available. If the decedent’s surviving family members like and want the vehicle perhaps the option of buying the vehicle or even selling it should be explained.
Having the lease agreement reviewed by an attorney and discussing all possible options with the leasing company/manufacturer to reduce the early termination costs associated with the lease should be undertaken, especially if there is a sufficiently lengthy and costly lease payments remaining.
It is also important to insure that the insurance on the vehicle is not terminated until the vehicle has been returned or a new arrangement entered into for it.
In conclusion, as one ages perhaps leasing a vehicle is no longer a desirable option. Being eighty years old with a car lease may be an expensive option!