Is My Spouse Responsible for My Car Lease When I Die?

A recent nj.com article asks “What happens to my car lease when I die?” According to the article, in New Jersey the laws are not on the side of the wife. She may be at the mercy of the car dealership and its financing company.

Remember that a vehicle lease is a contract, so if you're the executor who’s managing the deceased person's affairs, you should review the terms of the vehicle lease. In some instances, death may be classified as an "early termination" of the lease, and payment obligations may continue.

If there is a co-signer on the lease, such as the deceased’s spouse, he or she may be liable for future payments. If not, typically they’re likely to be the responsibility of the deceased's estate.

In 2017, the New Jersey Assembly passed a bill that would permit early termination of an car lease upon the death of the lessee and prohibit the imposition of fees as a result. However, that piece of legislation didn’t make it out of the state Senate. There are plans to reintroduce the bill this session, but nothing has been done as of this date.

As a result, there is no law in New Jersey that keeps a car company from charging fees for early termination upon the death of the lessor.

While some car companies have policies allowing for early termination upon death, in many instances, because a lease is a contract, it continues. The deceased lessee’s estate is liable for making the payments. Therefore, if the written lease doesn’t have a clause dealing with early termination without fees, the lessee’s estate may be required to continue making the payments.

California and New York laws say the same thing: leasing companies can legally claim unpaid obligations from the estate of the deceased.

The car dealer isn’t required to, but it’s not unheard of for a sympathetic car company to be compassionate and just put the car up for sale, so actual losses would be minimal.

The executor should speak to an experienced estate planning attorney to see what options they might have in their specific situation.

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Reference: nj.com (May 24, 2019) “What happens to my car lease when I die?”