Special Considerations for Leaving Heirs Timeshares
Having a place to escape for a few weeks a year is the primary allure of timeshares. Most people cannot afford to buy a vacation home, but the relative cost of buying an interest in a timeshare is much lower, and thus, more accessible to the average person. This property interest must be factored into one’s estate plan just like any other asset, and hopefully will provide the same memories for children and other loved ones. Florida, due to the warm climate and amount of annual visitors, has the highest amount of timeshares in the country. While it is not uncommon to own property in another State, this situation does present additional considerations for surviving family members that should be factored into an estate plan. Further, timeshares usually have annual fees for which heirs must assume responsibility, representing another issue that an estate plan should cover. A discussion of issues related to legally transferring ownership, and how to plan for fees associated with a timeshare, will follow below.
Type of Ownership Interest and Transferring to Heirs
Ownership of timeshares is typically transferred via two methods: deed or as a contractual property interest. If a timeshare is deeded, it is treated as real estate, and requires more planning to avoid probate. The timeshare could be passed on via a will, which is certainly the minimum everyone should do, but this method is not necessarily the most efficient way to handle transferring ownership. Specifically, unless the timeshare is transferred to a trust, it would need to go through probate where the property is located before an heir could take ownership, which is expensive, time-consuming, and usually brings more taxation of and claims against assets. Further, ancillary probate, used when property is owned in another State, could be necessary, presenting additional challenges and expenses. Putting the property into a trust, on the other hand, gives greater control over when and how a beneficiary would receive the timeshare, and potentially avoid the hassle of probate. Alternatively, if the timeshare is a contractual property interest, it is considered personal property, and could be handled in the deceased’s State of residence at death, but would still probably benefit from being held in a trust. Note that the timeshare management company may also have its own requirements to transfer ownership to a third party that should be verified and completed, if necessary.
Paying Timeshare Fees
Many potential heirs have legitimate concerns about how to pay the annual maintenance and other fees that can often amount to thousands of dollars. This yearly burden may be more than a loved one wants to take up, but an estate plan can provide for this possibility by including provisions on renting it to generate income, if permitted, or designate a percentage of other assets to cover these expenses. Further, beneficiaries are not obliged to take this property, and can file a disclaimer of interest to avoid assuming responsibility, which may be advisable if selling the interest is not feasible due to market conditions, and the fees are high. Alternatively, the will or trust used to transfer ownership could be drafted so a specific person is not named as the beneficiary, making it difficult for the timeshare company to identify who is legally responsible for fees, but some way of disposing of the property will eventually need to be completed.
Consult a Florida Estate Planning Attorney
Estate planning is complicated, and the type of assets a person owns greatly drives what will work to achieve a person’s goals. Attorney William Rambaum has decades of experience advising on estate planning matters, and knows how to create an arrangement that will provide your family a legacy to celebrate, rather than a burden to avoid. Contact the Oldsmar law firm to schedule an appointment.