While not all or even a majority of our clients have timeshares a few clients either have them or may be thinking of buying one. If you purchase them in the secondary market the price is nearly always a fraction of the original purchase price, but they have some unusual characteristics and may create challenges when you die. Estate Planning Attorney Auriana Clapp-Younggren, an Associate Attorney with Sandra L. Clapp & Associates (http://clapp-legal.com/), provides some illumination on this topic.
-Berkeley, Inc. Team
Estate Planning for Timeshares
By: Auriana Clapp-Younggren
If you own a timeshare, or are looking into acquiring a timeshare, then it may come as a surprise that timeshare ownership may pose potential legal issues for your estate or heirs. What happens to your timeshare when you die? Generally, buying a timeshare is a commitment for the rest of your life or until you no longer own the interest. Your heirs could be forced into timeshare responsibilities such as debt and maintenance fees, unless your timeshare interest is sold or transferred before death. If your heirs or estate fail to pay the fees, then the timeshare can be foreclosed on.
There are two types of timeshares. The first is actual land ownership which is usually associated with a real property deed. The second is a right of use interest which is usually in the form of timeshare credits. If your timeshare is a deeded interest (meaning the timeshare is vested by a deed), then it is considered a real property interest and it's inheritance is governed by the state law in which the timeshare land is located. This type of interest may require your Personal Representative to file for probate to transfer the asset to your heirs. Probate is the legal process by which title is properly transferred to your heirs. If the timeshare is not situated in your state of domicile, then ancillary probate may be needed. Ancillary probate is where the Personal Representative initiates probate in the state where the timeshare land is located to accomplish the sale or transfer to your heirs. Ancillary probate may cost your estate thousands of dollars to accomplish.
Planning for these issues during life can save your estate money and your family a headache upon your death. One option is to sell your timeshare during life to a third party or to the timeshare company itself. Some timeshare companies have a deed-back program that allows you to transfer the timeshare back to the company. Another option is to transfer your timeshare into a trust during your life and the trust becomes the owner of the timeshare. You can still use the timeshare during life and upon your death the trust continues to be the owner and probate or ancillary probate can be avoided. The timeshare can then be transferred to the beneficiaries or continued to be held in the trust for your beneficiaries' benefit. Any of your heirs may disclaim any part of their interest of your estate, including inheriting a timeshare, as long as it is done within nine (9) months from the date of your death. Once an interest is disclaimed, it is irrevocable and the asset will pass to the next beneficiary in line.
Timeshare ownership can be a cost-effective way to travel and see the world. However, do not let your timeshare fall through the cracks when you are planning your estate.
This article is not intended to replace legal advice applicable to your situation and should be used only for informational purpose. Consult with your legal or tax advisors before implementing any suggestions contained herein. Ms. Clapp-Younggren is an associate attorney with the firm of Sandra L. Clapp & Associates, P.A. and can be reached at email@example.com or (208) 938-2660.
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