When you purchase a timeshare, you’re obtaining a partial ownership in the property. Not only will you have access to the vacation property each year during your regularly scheduled time, but you’ll also be able to pass this asset along to your heirs. While being able to leave your timeshare to a loved one was most likely discussed as a major benefit during the sales presentation, the complex estate planning considerations associated with this transaction are rarely included as part of this discussion.
It’s crucial that you work with an experienced estate planning attorney who understands the laws governing the transfer of a timeshare to your beneficiaries upon your death. There are several different ways to handle this process, and you’ll want to identify the solution that minimizes the time and cost that your loved ones could incur.
Estate planning for timeshares can be a complicated process. In most instances, timeshares are considered real property, which means the deed must be transferred to your beneficiary. In general, the probate process must occur in the state where the timeshare is located. As a result, your estate will incur extra costs associated with an ancillary probate. The attorney fees and court costs associated with this ancillary probate for your timeshare can be quite expensive.
There are some estate planning solutions that will allow you to avoid these additional probate costs. By working with an experienced attorney, you can often save your beneficiaries a lot of time and minimize these additional probate costs to your estate.
Timeshare contracts usually contain a perpetuity clause which states that the owner is responsible for all associated fees for the rest of their life. In addition, these fees pass along to the individual who inherits the timeshare upon your death. While it’s possible that your loved ones won’t be able to use the timeshare until it has passed through probate – a process that can take anywhere from six months to over a year – the ongoing fees must be paid in order to avoid additional financial consequences.
The average cost of timeshare maintenance fees is $1,000 per year. In addition, if you still owe money on your timeshare mortgage, these payments must be made each month. Occasionally, timeshare developers will levy additional fees, called special assessments, to cover the costs associated with repairs after a natural disaster. Depending on your heir’s financial circumstances, the costs associated with timeshare ownership can potentially be crippling.
It’s crucial to plan for this in your estate to prevent your loved ones from having to shoulder this financial burden. One effective way to address this situation is to designate a percentage of the assets in your estate to cover your timeshare maintenance fees for the first year or two after your death. This will give your beneficiary time to come up with a long-term plan for the timeshare.
One of the most effective estate planning solutions for your timeshare is to transfer it into a revocable living trust. Since the trust will be the legal owner of the timeshare, the property won’t have to go through probate upon your death. In addition to avoiding probate costs, there are several other important benefits associated with placing your timeshare in a living trust:
If you don’t want to create a revocable living trust, there are several other estate planning options available to you:
While you may have gotten years of enjoyment out of your timeshare, it’s possible that your loved ones won’t want to take control of it upon your passing. There can be many reasons why your loved ones don’t want your timeshare, including:
If your loved ones don’t want your timeshare, they can file a disclaimer of interest to relinquish their responsibility for the property upon inheriting it. Once this document has been approved, ownership of the timeshare will be passed along to the next beneficiary specified in your will. If all of your heirs decline the timeshare in this manner, it will go into foreclosure and all debts associated with the property, including unpaid maintenance fees and the remaining balance of a timeshare mortgage, will be paid from your estate. This solution can be costly, and it may significantly reduce the value of the inheritance you’re leaving to your loved ones.
Your other option is to legally cancel your timeshare. By working with an experienced timeshare exit company, you can get out of your timeshare before your death. This will avoid the complex estate planning considerations involved in transferring ownership of a timeshare, and it will prevent your loved ones from incurring the financial burdens associated with this property upon your death.
If you would like to get out of your timeshare to avoid the costs and hassles associated with transferring it to your beneficiaries, Timeshare Termination Team can help. We understand that every timeshare contract is different, and we’ll customize your exit strategy based on your unique circumstances. We always use attorney-based solutions to ensure you’re able to get out of your timeshare legally, safely and permanently.
When you work with Timeshare Termination Team, you’ll benefit from our exclusive You First Approach™ focused on placing your unique needs and goals first during every stage of the process. This approach is the primary reason we’ve been able to help 100% of our clients achieve the freedom they desire from the burdens of timeshare ownership.
As part of our You First Approach™, you’ll receive:
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