BY: CHRIS BLANKINSHIP, ESQ.
The recession officially ended in June of 2009, and many of you are no doubt wondering what to do with all that extra cash in your bank account. Before your wallet bursts at its seams, why not consider an endeavor into the world of exotics? Owning a Ferrari will be one of the best decisions of your life, probably, but there are some legal implications of which you should be made aware. Although this list is not exhaustive, it should be a good starting point:
Deadly Security System?
As the owner of one of the most sought after cars in the world, you will undoubtedly be the target of thieves and opportunists. Anyone who has been the victim of a break-in will tell you how fulfilling it would have been able to catch a thief in progress, or better yet, have a booby-trap waiting to mangle the perpetrator. Even though your Ferrari is private property, the law precludes you from being able to protect the car with deadly force. You won’t legally be able to set up a shotgun to discharge in the event an unauthorized person enters the cabin. Even if you put up a huge warning on the side of the car that reads “WARNING – DEATH TO ANYONE WHO ENTERS,” you still won’t be able to make good on your threat. There’s something distinctly anti-American about this restriction.
What About Insurance?
The mere mention of auto insurance conjures images of geckos, cave-men, Flo, and that guy who played Cerrano in the Major League movies. However, every state is different with regard to whether you need auto insurance, what type of limits you’re allowed to carry, and what insurance proof you need to have in order to be licensed. It’s a good idea to keep your Ferrari fully insured in the likely event your car is totaled. You may also consider a product known as “Gap Insurace” that will help pay the difference between the insurance payout and outstanding loan or lease balance in case your baby is destroyed. Finally, Ferraris seem to have a knack for splitting in half so it may be worthwhile to ask your insurance provider what type of policy would be best to cover you in the somewhat likely event your front and rear end become disconnected.
What about moving?
Your Ferrari may be a beast on the road, but don’t think it will serve as the workhorse for your house move, or even a big Costco run. When you do move, you’re probably going to hire movers. Unfortunately, moving companies are notorious for running scams that lead to undisclosed fees being charged, or in the worst cases, your goods being held hostage until you pay up. Before hiring movers, check out the Federal Motor Carrier Safety Administration’s website to research moving companies and complaint histories. This comprehensive government website provides useful resources such as moving checklists, how to get proper estimates, and explanations for terms. If you are having a dispute, you may consider contacting an attorney to help you get your goods home.
With all the money spent researching and developing modern fuel-efficient engines, you chose a car that takes premium fuel and gets well under 20 combined MPG. Well done! Unfortunately, this qualifies you for the Federal Gas Guzzler Tax. If your car gets less than 22.5 MPG, you’re forced to pay a one time tax of $1K on your new Ferrari purchase. This rate increases as your MPG decreases, and maxes out at $7.7K for vehicles that get less than 12.5 combined MPG. Additionally, there will most likely be sales taxes on your Ferrari purchase unless you’re lucky enough to live in one of the states without this tax: Delaware, Alaska, Oregon, New Hampshire, and Montana. If you purchase your Ferrari in one of these states and then try to register it in a taxable state, you will be subject to sales tax.
Let’s face it, a big reason for purchasing your Ferrari was to show it off while driving down Rodeo Dr. and seeing the valet’s salivate at the mere prospect of parking your baby. The looks and unsolicited photos may get tiresome after awhile, and you may wonder if you can somehow prevent people from interfering with your privacy rights. Unfortunately, when you’re in a public space such as a public road or parking lot, you basically have no rights to privacy. However, if you notice people are leaning up against your car you may be able to sue for trespass, but your relief will be limited to whatever damages were caused by the invasion.
What happens if you die and you fail to leave behind a valid will or trust? Your Ferrari might end up in the wrong hands! Please, plan for the inevitable by preparing a proper will or trust. A will is a great place to start, but many people, especially wealthy individuals, find it necessary to also include a trust as a part of their overall estate plan. A trust can be created and take effect during your life, and allows your beneficiaries to avoid a will probate – a potentially grueling and expensive process. A simple will for any state can be filled out for free on LawSmart.com, or any estate planning attorney can help you with a comprehensive plan that includes all the legal tools such as a trust.
Again, congratulations on your purchase! Feel free to check back next week when we cover "The legal implications of sailing the Bahamas."
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