Until just a few years ago, vehicles were always considered probate assets in Minnesota. But in 2017, Minnesota statutes provided for a transfer on death (TOD) designation on a vehicle title. This is easily accomplished by submitting a completed Form PS2004 to the Minnesota DVS, along with your original motor vehicle title.
This TOD provision allows the owner or owners to transfer a motor vehicle to a beneficiary after the death of all owners, in much the same way a TODD conveys real property after death. The beneficiary has no property interest in the motor vehicle until the death of the owner (or last owner in the case of joint ownership). This TOD provision allows the vehicle to pass to a loved one without it being subject to probate. For a decedent who owns valuable automobiles, this can help avoid the probate process by keeping the probate estate value under $75,000.
The TOD does not prevent an owner from selling or otherwise transferring your vehicle while they are alive. It simply provides for a beneficiary to receive the vehicle if it is still in the estate after the owner's death. Keep in mind that the beneficiary receives the vehicle subject to the rights of any secured interests, such as lenders.
But there's one catch to this: While the statute allows for transfer to "a beneficiary or beneficiaries," the PS2004 form allows for naming only one individual beneficiary. This appears to be a glaring oversight, and I'm not sure why the form does not reflect the statute's intent to provide for multiple beneficiaries. However, the form does allow the vehicle to be transferred to an entity, so if you wish to give it to multiple beneficiaries, a trust or business entity could be the named beneficiary.
For watercraft, the process is similar, but this requires an application with the Minnesota DNR. As is the case with motor vehicles, the DNR TOD form also includes the unfortunate limitation of only one person as beneficiary, despite the statute's language providing for "beneficiary or beneficiaries."
Aircraft are a unique issue, as this involves FAA registration and recording processes, which can be quite complex. If you own aircraft, it would be wise to seek the counsel of an attorney with experience in aviation matters.
Motor vehicles and watercraft are significant assets in one's estate. Nevertheless, setting up TOD designations for vehicles is not a substitute for having a valid Will. Talk to a qualified estate planning attorney and set a plan in motion to protect those assets for your loved ones.