Posted on: Jun 10, 2015
From time to time our blog will address topics posed by Elder Law Group clients. This month’s post addresses settling an estate that includes a timeshare or other vacation ownership property.
The first thing to determine when an estate includes a timeshare or other vacation property ownership is the nature of the property “ownership.” Some vacation ownership plans sell deeded real property that a buyer can pass to beneficiaries through a Will.
While the buyer owns the real property, he or she also has a contractual obligation to pay maintenance fees to the vacation ownership company, typically on an annual basis. For this type of ownership, the Personal Representative, or another person with legal authority to settle the estate, can transfer the deed to the property by a special type of deed to the heir or beneficiary who is to receive the property and assume the liability of maintenance fees.
Another type of “ownership” is not represented by a deed and not an ownership at all, but a contract executed with the seller granting the buyer rights to use real property on a timeshare basis in return for dues payment, typically monthly.
Say you are attempting to settle a parent’s estate that includes one of these real property deeds or timeshare contracts and an obligation to pay, for example, $350 in monthly dues or $1,200 in annual maintenance. In return for timely payment, the estate receives a number of “points” that can be spent each year to book a vacation stay at one of the timeshare company’s properties.
This makes the problem a practical one and not a legal one. To solve the problem, an heir or beneficiary has to be willing to take on the liability of the monthly dues or annual maintenance. Your family may have used the points to vacation and build some memories. However, the cost in dues or maintenance each year might pay for a nice vacation elsewhere.
The contract signed by the decedent should be carefully reviewed by your Elder Law Attorney to determine the estate’s options. If no one wishes to assume the obligation, the estate continues to have responsibility to pay the maintenance fees or dues until there is a resolution. All heirs and beneficiaries can disclaim their interest.
The interest can be returned to the timeshare company, offered to the company for sale, sold through a broker or on the open market and the proceeds distributed to the heirs and beneficiaries – all only if the contract terms permit. The timeshare may also be donated to a charity that will accept it. Unfortunately, no matter the ownership type, these property interests have little fair market value. And, disclaiming an interest does not void the estate’s contractual liability to pay the monthly dues or annual maintenance fees.
Another consideration is that with some programs the timeshare points have an expiration date by which you have to schedule annual use. This expiration date may occur while the estate is still being settled and a course of action determined. If the timeshare contract does not address this circumstance, when the personal representative notifies the company of the death of the decedent, he or she should insist that usage of the points be preserved while the estate is being settled.
If you hold timeshare or vacation property ownership, you should discuss a plan for this asset with your Elder Law Attorney who is planning your estate. If the ownership is real property recorded in a state other than the one where you live, this may complicate your estate’s probate. Some people deed property of this type to a trust, and it is important to understand the advantages and disadvantages of this option.
Perhaps you want to consider changing the titling of the property to joint ownership with right of survivorship during your lifetime so ownership is determined in the joint owner when you pass. These are among many options to discuss with your Elder Law Attorney.
If we can help you with this or another elder law questions, please contact us at (509) 468-0551.