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What Happens to a Timeshare After The Owner Dies?

Timeshare, Financial Planning, Wills, Retirement, Timeshare Debt, American Consumer Credit, Florida, USA

At the time you or your parents purchased a timeshare, your thoughts were about creating memories and enjoying endless weeks of vacation time at your favorite resort.   The focus for many consumers, when it comes to the membership they own, is budgeting for the monthly fees, taxes or maintenance of the property, and when they will be able to use it.

As the American population and Baby Boomers draw into the average age of retirement, the conversation about legacy planning and inheritance include debt, expenses and liabilities.   The timeshare that you have enjoyed for decades can present serious hardship in retirement, and it can also complicate what you leave behind for loved ones.

Non-Payment of Fees and Penalties

Many families find themselves in an unfortunate situation when it comes time to execute the financial obligations of a loved one that has passed on.  Did your parents or spouse tell you about the actual cost of the membership?  Do they own more than one membership?  What are the cumulative monthly fees that the estate is now responsible for, and what are the late payment or non-payment penalties associated with the timeshare?

If you are not able to answer any of these questions, you are not alone.

There is a great deal of misinformation regarding the financial obligation of a vacation property after the owner is deceased.  We have spoken to clients who believed that billing for the timeshare would cease after they informed the resort or vacation membership that the owner was gone.  Obviously, if the owner is deceased the payments would not be possible, right?  Unfortunately, that is not the case.

Like a mortgage, timeshare fees and payments endure after the owner is deceased.  In the process while the next of kin organize the estate details, the fees for the timeshare continue to accrue.  Unpaid fees also start to incur penalties, and non-payment is reported to the credit bureau.  This is of course a problem for the surviving spouse, and can impact refinancing for other properties, including the mortgage for the principal residence.

The scenario is an unfortunate one for grieving families, as the fees and penalties continue to accumulate.   If the former owner has other assets (including a family home), the resort can take legal action against the estate to recover the outstanding value of the long-term lease of the vacation membership.   This can place families in additional financial hardship as it can add up to a large deduction from whatever principal net assets are left.

Offer to Transfer Timeshare

If the deceased timeshare owner had no other assets (including investments or savings), the resort has no recourse but to take back the property for non-payment, without seeking financial restitution.   However, the first option is generally to offer the property to next of kin, who may wish to keep it in the family.

Relatives of a deceased timeshare owner are not required by any law to assume the financial obligation.  The offer to transfer the timeshare to a family member is made in writing, and can be refused by written letter.  Where there are no net assets, the timeshare cannot petition for payment from surviving family members. That is not to say that the resort will not send letters to attempt to prompt payment from beneficiaries and next-of-kin.   If the amount owing on the timeshare(s) is extensive, many families opt to transfer ownership.  Rather than have the amount deducted out of the estate, families entertain the idea of using the property, renting it to recoup expenses, or selling it to earn a refund on the initial investment.  With the amount of resale and rental properties available, the prospect of earning income from a timeshare is limited however.

Timeshares in Probate

Sometimes consumers purchase a timeshare with partners, including other family members who share the responsibility as co-owners.  If there are multiple owners registered for the property with co-owners or joint or “tenants by entirety”, the property passes automatically to the surviving owner(s).   When the last surviving owner is deceased, details about ownership can get a little complicated.

Having a will does not exempt a timeshare from probate, and the amount of time it takes depends on both the state laws (which vary by state) and the value of the assets involved.  While assets and liabilities are in probate, the property cannot be used by family members, and the executor of the estate must ensure that all payments and fees are paid during the process.

To avoid the cost and inconvenience of a timeshare in probate, owners can deed it to a child or other named beneficiary, or create a trust for assets, including the timeshare.

Starting a Conversation

If you are entering or in mid-retirement, now is the time to have a conversation with your beneficiaries about the membership properties you own.  Do your family members wish to inherit the timeshare?  Adding them to the deed is uncomplicated, and provides a plan for succession that avoids increased non-payment costs and penalties after death.

If none of your family members are interested in retaining access and ownership for the timeshare, evaluate the cost versus use benefit of the vacation membership or property.  If you haven’t taken advantage of your timeshare, and costs are increasing in terms of maintenance fees, now might be a great time to cancel your timeshare with American Consumer Credit.   We offer a legal pathway that ends your timeshare obligation without risking the quality personal credit you have built.

Your family will appreciate the effort you make to resolve your lease now.  If your retirement plan no longer includes vacation lease ownership, call us at: 1-800-587-EXIT.