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Spinning off 23 Year Old Son (Car)

Posted: Thu Aug 31, 2017 2:57 pm
by Goodman60
I am wondering about "spinning off" my 23 year old son, who has just started law school out of state. I'm talking about his car. He's still a legal resident of my Pennsylvania house during the 3 years of law school and will remain on my health insurance (that I pay...quite a bit, by the way). I'd like to transfer the title to him, still in Pennsylvania, have him get his own insurance...letting them know he has the car away at grad school..and pay all costs. His law school and living expenses are being funded by a 529 plan that I own and he's the beneficiary of. I will take him as a dependent at least for another year on my tax return.

If he has a bad car accident, and owns the car with his own insurance, am I still liable? I was told that while he was an undergrad and certainly while under age 21, that even if he owned the car and insurance, I'd be considered liable. What about now? To do this will cost us about $500/yr more than if I remain the car owner and we keep his and my car on 1 policy. But if I can reduce my liability, it would be worth it to me.

Re: Spinning off 23 Year Old Son (Car)

Posted: Thu Aug 31, 2017 3:23 pm
by mcraepat9
Depends on the laws of the state in which the accident occurs.

Re: Spinning off 23 Year Old Son (Car)

Posted: Thu Aug 31, 2017 3:48 pm
by Uncle Pennybags
His insurance company is liable as long as he truthfully fills out the application. If the accident cost goes above the policy limit anybody can sue anybody and that's what lawyers are for.

Re: Spinning off 23 Year Old Son (Car)

Posted: Thu Aug 31, 2017 3:50 pm
by OnTrack2020
We just had a discussion with our insurance agent not too long ago about this--at what age do they get their own insurance. She said around the age of 25 they should have their own insurance. Our younger son, who is 18, wants to purchase a better vehicle next year (at age 19). We asked if he should register it in his name only. She said no. It would be much better financially-wise to keep him on our policy. She said if he does purchase a vehicle to put his name, as well as our names (or at least one parent), on the title.

Here is a thread about the situation. Note the post by "JoinToday".

viewtopic.php?t=122570

There's also another poster in the same thread who mentioned about the tax returns. Interesting---I did not know this. You might want to call your insurance company.

Re: Spinning off 23 Year Old Son (Car)

Posted: Thu Aug 31, 2017 3:54 pm
by Goodman60
Uncle Pennybags wrote:
Thu Aug 31, 2017 3:48 pm
His insurance company is liable as long as he truthfully fills out the application. If the accident cost goes above the policy limit anybody can sue anybody and that's what lawyers are for.
That was my thinking too. That anyone can sue anyone for anything and sometimes be successful. But that "spinning him off" with his own car and insurance, and the fact that he's 23 and grad students are generally considered "independent", would add a layer of buffer between me and him.

That being said, the conversation a few years ago was that as an undergrad, nothing I could do would add much buffer and I'd automatically be liable for his actions. I'd like to know what the legal "thing" is that makes that different at age 23 and a grad student, versus under 21 and an undergrad, but older than 18 and still in high school.

Re: Spinning off 23 Year Old Son (Car)

Posted: Thu Aug 31, 2017 3:55 pm
by neilpilot
OnTrack2020 wrote:
Thu Aug 31, 2017 3:50 pm

There's also another poster in the same thread who mentioned about the tax returns. Interesting---I did not know this. You might want to call your insurance company.
If you have excess liability insured with an umbrella policy, also discuss that aspect. It may not cover him in "his" vehicle. Your umbrella premium might (should) also go down if you transfer the vehicle.

Re: Spinning off 23 Year Old Son (Car)

Posted: Thu Aug 31, 2017 3:57 pm
by Goodman60
OnTrack2020 wrote:
Thu Aug 31, 2017 3:50 pm
We just had a discussion with our insurance agent not too long ago about this--at what age do they get their own insurance. She said around the age of 25 they should have their own insurance. Our younger son, who is 18, wants to purchase a better vehicle next year (at age 19). We asked if he should register it in his name only. She said no. It would be much better financially-wise to keep him on our policy. She said if he does purchase a vehicle to put his name, as well as our names (or at least one parent), on the title.

Here is a thread about the situation. Note the post by "JoinToday".

viewtopic.php?t=122570

There's also another poster in the same thread who mentioned about the tax returns. Interesting---I did not know this. You might want to call your insurance company.
Interesting. Basically it makes the case that as long as you take a "child" as a tax deduction dependent, you're liable. I wonder if this is an issue for grandma and grandpa too...if you support an older parent and take him/her as a tax deduction dependent.

Re: Spinning off 23 Year Old Son (Car)

Posted: Thu Aug 31, 2017 3:58 pm
by Goodman60
neilpilot wrote:
Thu Aug 31, 2017 3:55 pm
OnTrack2020 wrote:
Thu Aug 31, 2017 3:50 pm

There's also another poster in the same thread who mentioned about the tax returns. Interesting---I did not know this. You might want to call your insurance company.
If you have excess liability insured with an umbrella policy, also discuss that aspect. It may not cover him in "his" vehicle. Your umbrella premium might (should) also go down if you transfer the vehicle.
Yes, but will it cover ME if he has a bad accident and I get sued for amounts beyond what a plaintiff can get from him and his insurance?

Re: Spinning off 23 Year Old Son (Car)

Posted: Thu Aug 31, 2017 4:02 pm
by neilpilot
Goodman60 wrote:
Thu Aug 31, 2017 3:58 pm
neilpilot wrote:
Thu Aug 31, 2017 3:55 pm
OnTrack2020 wrote:
Thu Aug 31, 2017 3:50 pm

There's also another poster in the same thread who mentioned about the tax returns. Interesting---I did not know this. You might want to call your insurance company.
If you have excess liability insured with an umbrella policy, also discuss that aspect. It may not cover him in "his" vehicle. Your umbrella premium might (should) also go down if you transfer the vehicle.
Yes, but will it cover ME if he has a bad accident and I get sued for amounts beyond what a plaintiff can get from him and his insurance?
You should continue to be covered. Of course it would help if the agent or insurance company covers your auto as well, and was aware of the situation up front.

Re: Spinning off 23 Year Old Son (Car)

Posted: Thu Aug 31, 2017 4:04 pm
by Goodman60
neilpilot wrote:
Thu Aug 31, 2017 4:02 pm
Goodman60 wrote:
Thu Aug 31, 2017 3:58 pm
neilpilot wrote:
Thu Aug 31, 2017 3:55 pm
OnTrack2020 wrote:
Thu Aug 31, 2017 3:50 pm

There's also another poster in the same thread who mentioned about the tax returns. Interesting---I did not know this. You might want to call your insurance company.
If you have excess liability insured with an umbrella policy, also discuss that aspect. It may not cover him in "his" vehicle. Your umbrella premium might (should) also go down if you transfer the vehicle.
Yes, but will it cover ME if he has a bad accident and I get sued for amounts beyond what a plaintiff can get from him and his insurance?
You should continue to be covered. Of course it would help if the agent or insurance company covers your auto as well, and was aware of the situation up front.
Yes, for that very reason I'll be sure he's insured by the same company and agent.

Re: Spinning off 23 Year Old Son (Car)

Posted: Thu Aug 31, 2017 4:05 pm
by gasman
Might also want to check rates where he is going to be keeping the car. Philadelphia had absolutely brutal insurance rates compared to the rest of the state when we lived there a long time ago.

Re: Spinning off 23 Year Old Son (Car)

Posted: Thu Aug 31, 2017 4:06 pm
by freebeer
Goodman60 wrote:
Thu Aug 31, 2017 3:57 pm
... it makes the case that as long as you take a "child" as a tax deduction dependent, you're liable.
It makes little sense to posit about this (or just about any other legal issue) that someone is or is not liable unless the discussion is limited to a particular state. And even then the answer may not be clear because there may not be any clear statutes and precedents may not be conclusive. And what an insurance salesman advises should be taken with a very big grain of salt. If this is worth an extra $500/year to OP it should be worth $250 for a quick consult with a local attorney. Or at least worth a free post to avvo.com.

Re: Spinning off 23 Year Old Son (Car)

Posted: Thu Aug 31, 2017 4:07 pm
by Goodman60
freebeer wrote:
Thu Aug 31, 2017 4:06 pm
Goodman60 wrote:
Thu Aug 31, 2017 3:57 pm
... it makes the case that as long as you take a "child" as a tax deduction dependent, you're liable.
It makes little sense to posit about this (or just about any other legal issue) that someone is or is not liable unless the discussion is limited to a particular state. And even then the answer may not be clear because there may not be any clear statutes and precedents may not be conclusive. And what an insurance salesman advises should be taken with a very big grain of salt. If this is worth an extra $500/year to OP it should be worth $250 for a quick consult with a local attorney. Or at least worth a free post to avvo.com.
Or a free post to Bogleheads :wink:

Re: Spinning off 23 Year Old Son (Car)

Posted: Thu Aug 31, 2017 4:09 pm
by Goodman60
gasman wrote:
Thu Aug 31, 2017 4:05 pm
Might also want to check rates where he is going to be keeping the car. Philadelphia had absolutely brutal insurance rates compared to the rest of the state when we lived there a long time ago.
It's out of state. Because my son will remain a legal resident of PA during his law school tenure, the car must be registered here (Pittsburgh tho, not Philly) and insured here with the acknowledgment by the insurer that he will have the car with him at school most of the time. Yes, Philly rates are might higher than most of the rest of PA, I've heard.

Re: Spinning off 23 Year Old Son (Car)

Posted: Thu Aug 31, 2017 5:06 pm
by Pajamas
Give your son a little warning about this so it doesn't come out of the blue.

Re: Spinning off 23 Year Old Son (Car)

Posted: Thu Aug 31, 2017 5:18 pm
by Goodman60
Of course.

Re: Spinning off 23 Year Old Son (Car)

Posted: Fri Sep 01, 2017 11:49 am
by CAsage
Goodman60 wrote:
Thu Aug 31, 2017 4:07 pm
freebeer wrote:
Thu Aug 31, 2017 4:06 pm
Goodman60 wrote:
Thu Aug 31, 2017 3:57 pm
... it makes the case that as long as you take a "child" as a tax deduction dependent, you're liable.
It makes little sense to posit about this (or just about any other legal issue) that someone is or is not liable unless the discussion is limited to a particular state. And even then the answer may not be clear because there may not be any clear statutes and precedents may not be conclusive. And what an insurance salesman advises should be taken with a very big grain of salt. If this is worth an extra $500/year to OP it should be worth $250 for a quick consult with a local attorney. Or at least worth a free post to avvo.com.
Or a free post to Bogleheads :wink:
Bogleheads does NOT provide legal advice - stick to financial theory and water-cooler advice.

Re: Spinning off 23 Year Old Son (Car)

Posted: Fri Sep 01, 2017 12:08 pm
by LadyGeek
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