The death of a family member or loved one often creates a mountain of work for the deceased's executor or administrator of the estate, including settling the estate's debts. A lease for the deceased's car constitutes one such obligation.
Estate Debts Generally
Most debts don't die with the obligor. Creditors of the deceased during his lifetime will have a claim against the estate after his death. As an auto lease is an obligation to pay a certain amount of money over a period of time, the lease is a debt of the estate.
Early Termination Clauses
The lease contract will specify the conditions under which either party--including an estate--may terminate a lease. The early termination clause may contain a lease termination penalty, which can apply even if the lessee died.
Effect of Early Termination
The lease company generally has the right to demand the total amount of the remaining lease payments from the lessee's estate. If the estate has assets and the lease company will not agree to an acceptable termination arrangement, it may benefit the heirs to continue paying on the lease.
References
- "Frequently Asked Questions"; Leaseguide.com; Retrieved September 7, 2010.
- "Escaping a Car Lease Gets Easier"; Amy Buttell Cane; Bankrate.com; Retrieved September 7, 2010.
- "A GMAC Lease Lingers, Even After Death"; Dan Higgins; Timesunion.com; Retrieved September 7, 2010.
- "Auto Lease Contracts"; Leaseguide.com; Retrieved September 7, 2010.
- Consumer Financial Protection Bureau. "What Should I Know About the Differences Between Leasing and Buying a Vehicle?" Accessed April 12, 2020.
- Merriam-Webster. "Lease." Accessed April 12, 2020.
- AARP. "To Buy or Not To Buy." Accessed April 12, 2020.
- Consumer Financial Protection Bureau. "What is a Manufacturer Suggested Retail Price (MSRP)?" Accessed April 12, 2020.
- LeaseGuide.com. "Capitalized Cost – Cap Cost." Accessed April 12, 2020.
- Autotrader. "Leasing a Car: Can You Negotiate the Price?" Accessed April 12, 2020.
- Edmunds. "The 'Residual Value' of Leasing." Accessed April 12, 2020.
- Federal Reserve. "Keys to Vehicle Leasing: Future Value." Accessed April 12, 2020.
- LeaseGuide.com. "Money Factor—Explained." Accessed April 12, 2020.
- Federal Trade Commission. "Financing or Leasing a Car." April 12, 2020.
- Federal Reserve. "Keys to Vehicle Leasing: End-of-Lease Costs: Closed-End Leases." Accessed April 12, 2020.
Writer Bio
A practicing attorney since 2003, Rob Jennings has written fiction and nonfiction since 2005, with his work appearing in a variety of print and online publications. He earned his Juris Doctor from the University of North Carolina at Chapel Hill.