Do you have to keep making payments on your loved one’s leased car when they die?
Usually, the estate is responsible for continuing to make monthly payments until the leasing agreement expires.
Check the contract: If death is specifically listed as a reason for early termination, the estate is no longer liable.
Contact the car dealership as soon as possible; they may negotiate with you to terminate the contract.
You may also be able to transfer the lease to a family member or friend who is willing to take the car.
Many people assume that the lease agreement their loved one signed with a car dealership dies with them. But in most cases, that is not true.
Lease agreements often extend beyond death of the lessee—which means the estate can be liable for the remaining payments in the lease agreement. It all depends on what’s in the contract your loved one signed, and whether your state has laws regulating car dealerships that offer leases.
Contact the dealer
As soon as possible, notify the dealership or leasing agency of your loved one’s death. You will need to provide a death certificate and proof that you are authorized to act on behalf of the estate (either letters testamentary or letters of administration).
Sometimes, a sympathetic car dealership will allow you to end the lease agreement, but in most cases, the future of the car lease depends on two things: the language in the lease agreement and the willingness of the dealer to negotiate.
Check the contract
First, find the lease agreement and read it carefully. Does it mention what will happen in the event of the lessee’s death?
Some leases do list death as a valid reason for termination of the agreement. If not, your state laws may spell out how much the estate is responsible for after your loved one dies.
Keep in mind that the law may not be on your side. Many states do not regulate this at all; in that case, the car lease becomes just another debt for the estate to settle.
Consider transferring the lease
Check to see if there was a co-signer on the lease—often a spouse or an adult child. If there is, then that person will be held responsible for the payments going forward, not the estate.
If someone in your family needs a car or is willing to take this on, transferring is often the simplest option.
In other cases, car dealerships will negotiate with the executor of the estate to transfer the remaining lease to another person. If someone in your family needs a car or is willing to take this on, it is often the simplest option.
While considering your options, make sure to stay current with the payments. Failure to make monthly payments can limit your options, especially if you or someone else in the family wants to take over the lease and the vehicle.
Return the vehicle
If the lease agreement allows you to terminate the lease—or if the dealership agrees to end the lease without requiring further lease payments—there will likely be more loose ends to deal with.
You will need to arrange for the handoff of the vehicle, whether at home or at the dealership. And keep in mind you may be charged fees for various things like repossessing the car, transporting it, excessive wear and tear, and paperwork.
Wear and tear may be deemed “excessive” if there are dents, scratches, or dings on the exterior; tears in the upholstery; extensive wear on the tires; or cracks in the windshield.
In extreme cases, these fees can total hundreds or even thousands of dollars. As executor, make sure you are in regular contact with the car dealership to get a clear picture of what to expect, and what can be negotiated, to minimize surprises when the final bills arrive.
Finally, remember that a car is one of the most personal belongings anyone owns. Returning it to the dealership—or watching someone else drive it away—may bring up strong emotions. Take it step by step and allow yourself extra time to process your feelings when the day comes.
You may be eligible for free bereavement support. Empathy can help with everything from funeral planning to estate administration, with step-by-step guidance and real-time expert support. Many people get free premium access to Empathy as a benefit with their life insurance claim. We partner with New York Life, Guardian Life Insurance Company, Bestow, Lemonade, and other leading carriers. When you make your life insurance claim, talk to your representative about whether Empathy is a benefit they offer.
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