Florida Estate Planning Lawyer Blog
Getting your first driver’s license can be one of the biggest milestones in a young person’s life. However, what was once a cherished rite of passage has now turned into a potential liability for parents. Under Florida law, a parent can be held legally responsible for the negligent actions of a child driving the parent’s car. Florida law also requires a parent or guardian to sign the driver’s license for a driver under 18, and this person who signs will also be held liable for the driver’s negligent driving.
A parent’s liability may not even end once the child turns 18. This state also recognizes the “dangerous instrumentality doctrine,” which states the owner of a vehicle is liable for its negligent operation. This means the owner can be liable even if the driver is an adult and unrelated to the owner.
Further, parents are at risk from creditors when a child is involved in a car wreck even if the car is tilted in one spouse’s name. In Florida when two people are married, creditors cannot normally reach the other spouse’s assets unless both spouses jointly own the property. However, both spouses can be liable to creditors if, for example, one spouse owns the car and the other spouse signed the child’s driver’s license. This can create a nightmare scenario where creditors go after assets a parent once thought was protected from creditors.
So how can parents limit their liability? One answer is to simply not let the teenager drive until they are 18, however that is quite unreasonable. At the Law Office of David Goldman PLLC, we recommend limiting liability through the use of one or more vehicle trusts.
A Florida vehicle trust protects a parent’s assets by transferring the title of a vehicle to a specifically designed irrevocable trust. Once the transfer is made, as parents you no longer own the car – the trust does. In the trust, the drivers are then named as trustees to the vehicle trust. This allows the parents and their children to still drive and use the vehicle as they always have. In a legal sense the parents become “managers” of the trust, which owns the property, and can use the car as they see fit.
The child is also named to this trust, which will then allow the teenager to drive the car without incurring liability on the parents. (This does not remove the liability that may attach to the parent who took the child to get their license) The trust is irrevocable, which essentially means the settlors, or parents, no longer own the vehicle, and the vehicle is now owned by a trust and managed by trustees.
The trust itself will state the settlor, or the person who creates the trust and transfers assets, will have no liability for the acts of any trustee or beneficiary of the trust. Further, the settlor may not have any liability resulting from the use, abuse, or misuses of the tangible assets of the trust. This means that the settlors, or parents, may not be liable for the negligent actions of a child due to their ownership of the vehicle.
Often a vehicle trust is used with other forms of ownership or asset protection to insulate a family’s at risk assets from future unknown creditors. A vehicle trust can own almost any type of vehicle including boats, motorcycles, or personal watercraft. For more information on the benefits of a Florida Vehicle Trust contact our office today.