Corliss Law Group Estate Planning Law Corporation: Estate Planning: The issues with timeshares
While timeshares may help the timeshare owner to enjoy a certain amount of leisure each year, they are a headache for estate planning purposes.
Even though a deeded timeshare is an interest in real property, it is really more of a recurring luxury expense than it is an asset.
Let us consider some issues raised by timeshares: Ongoing maintenance and property tax expenses; hard to sell; sometimes undesired as an inheritance; and how they are transferred at death.
The owner, or the deceased owner’s estate, is liable for all timeshare maintenance fees and real property taxes. These continue after death and can pile up if unpaid; regardless of whether anyone uses the timeshare, your estate remains obligated to pay these expenses. A decedent’s estate will often wish to sell its timeshares.
Unfortunately, timeshares are very difficult to sell. Perhaps the best place to start is with the timeshare company itself.
Sometimes, for a large fee or commission, they can assist in selling an existing timeshare. Otherwise, other possible avenues are to lease the timeshare, cancel the timeshare, or sell the timeshare through a timeshare market.
Aside from leasing, the other options all involve losses. So essentially, the timeshare is more of a luxury expense than an asset.
Timeshares, if they are deeded (as opposed to leased) are real property interests. Accordingly, once the owner dies, just like owning real property, the laws of the state where the timeshare is located control.
If title is held in joint tenancy with right of survivorship, then the surviving joint tenants file an affidavit of death of joint tenant to remove the deceased joint tenant’s name from title.
Alternatively, if title is held in the name of a trust, then the trust controls who inherits the timeshare without probate.
However, if title is held in the deceased owner’s name alone, then a probate may be triggered. This depends on the size of the decedent’s estate, whether the property is in the decedent’s state of residence, and the laws of the state.
In California, if the combined value of the timeshare and any other probate assets belonging to the decedent (excluding real property located outside California) are equal or exceed $150,000, a probate is required.
If the deceased California resident owns a timeshare outside California, it is possible that ancillary probate may be required under the laws of the other state in order to transfer the deeded timeshare – either according to the deceased owner’s will or the laws of intestacy of the state where the deeded property is situated.
To avoid triggering a probate in any state deeded timeshares, just like any other interests in real property, are often transferred into the owner’s living trust, prior to the owner’s death. A living trust can hold all of a person’s real property assets located anywhere in the United States, including timeshares.
Next, the death beneficiaries oftentimes do not even wish to inherit timeshares because of their expenses, including travel to reach their locations.
If, however, there is a willing beneficiary who has the time, money and desire to use the timeshare, then that person could inherit directly from the deceased owner’s trust provided that the timeshare has been transferred to the trustee.
Timeshares are just another reason to hold assets inside one’s living trust and get one’s affairs in order. This in turn will provide a peace of mind more conducive to fully enjoying all those wonderful vacations.