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Estate Planning for Your Timeshare

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“Estate Planning for Your Timeshare” by Attorney Melanie Marban (Audio)

You are sold on the marvels of timeshares and ready to relive your favorite vacation for years to come! But what happens when you grow tired of the timeshare, can no longer travel, or when you pass away? What happens if your family does not want it or cannot afford it? Let’s begin with the two ways a timeshare can be owned:

  1. Contractual Ownership: The contract grants you use of the property for periods of time or grants you points to buy vacation time. The point systems depend on supply, demand, and timing, amongst other factors. Sometimes, this is referred to as a leased timeshare. When you pass away, your estate is required to pay the contractual fees until the timeshare is given back. Unfortunately, contractual timeshares do not automatically terminate at death. They often have limitations like who can inherit and if it can be rented out. Timeshares are hard to appraise as they may have little monetary value. You may even owe money at the time of transfer.
  2. Deeded Ownership: This type of timeshare is considered real property. It is owned by having your name on a recorded deed in the appropriate State and County Land Records. Probate must be opened to transfer ownership. Remember, probate is timely, costly, and under court control. Once your estate has been opened, then the transfer can occur through a new deed. During the probate process, maintenance fees still need to be paid. If they are not kept up with, then the company can foreclose on the property. 

How To Plan for Your Timeshare

Regardless of the type of timeshare you have, it is important to incorporate this asset into your estate plan. One option is to hold the title as joint tenants. This means two or more people own the timeshare in a way that upon the passing of one, their interest immediately passes to the others to avoid probate. The problem with this approach is upon your passing, the surviving owner needs to retitle the timeshare with a new co-owner to remain out of probate. There may also be tax implications for this type of transfer.

Another option is to create a Revocable Living Trust to hold all of your assets. After creation, you can transfer the timeshare into the Trust. This will make the Trust the legal owner of the timeshare while you still receive the benefit of using it. Having a Revocable Living Trust will avoid the difficulties of probate because, upon your passing, the asset is privately transferred outside of court control. 

As our clients reach retirement age, we receive a lot of questions regarding the transfer of timeshares. To plan properly, you need to understand how you own the timeshare and whether your loved ones want to inherit the timeshare. Our office can help you explore which option is the best fit for your goals and create an estate plan that fits your needs. 

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