Purchasing a timeshare can obligate you to a contract, and maintenance fees that can add up to thousands of dollars or more per year. While many timeshare owners, after a few short years of paying increased fees and costs, have buyers regret and difficulty selling their timeshare to recoup their original investment cost, few consider the financial burden that their inherited timeshares can have on to their estate after death. It is important to remember that timeshare is not an investment, but a contract that can carry with it escalating expenses and fees over time. When the owner of a timeshare passes away, the legal requirements (and financial consequences) may surprise you.
Does a Timeshare Membership Expire After Death?
Many timeshare owners are under the impression that after they pass away, their timeshare membership will expire, and that the property management company will reassume the property and resell it. That is simply not the case.
The contract for a timeshare, fees and maintenance costs are for a fixed contract period. Depending on the terms of your timeshare, your obligation to this contract may extend for up to 99 years, regardless if you are around to enjoy the benefit of your membership. These are called timeshare contracts in perpetuity It is a binding contract that extends into perpetuity, with cost obligations leveraged against your estate after death. When you die, your timeshare contract lives on, to create transactional and cost obligations to your next of kin.
What Happens If I Stop Paying My Fees?
In the event of death, payment for maintenance and membership fees are still owed. Depending on the property management company and the terms of the contract, the process of collection for outstanding fees can commence less than sixty days after the first missed payment. After a timeshare owner has passed away, legal proceedings can be made against the estate of the owner to recoup outstanding fees as well as the assumed value of the inheriated timeshare property, as a breach of contract.
For instance, if you purchased a timeshare for $20,000 based on a 99-year contract term, and you have enjoyed being a member for less than ten years, an adjusted fee equivalent to 89 years outstanding membership can be levied against your estate in addition to seizure of the property. After death, the contract enters into probate pending instructions or provisions outlined within the legal will. If no beneficiary or trust has been named in the will, collections proceedings are initiated.
Do My Children Have to Accept Responsibility for My Timeshare contract in perpetuity?
After the death of a timeshare contract holder, the property (and liabilities) are offered to the next-of-kin, as with any other ‘asset’. However, your children or beneficiaries do not have to accept ownership of the timeshare; they can decline it. If the next beneficiaries decline to assume the contract, the title can be foreclosed upon, if there is insufficient assets or funds in the estate to compensate the property management company for outstanding fees. A foreclosure on a timeshare property after death, has no impact on the credit of next of kin.
What does happen is a lot of administrative inconvenience that is passed to the executor of your estate, with regards to resolving your inherited timeshares and their obligations. For families, this is an extra emotional and legal burden, and few beneficiaries wish to assume the financial obligation of inheriting a timeshare. Many of our clients are seniors who wish to eliminate the red tape of exiting their timeshare contract, so that the financial headache is not passed on to their families after their death.
If you currently own inherited timeshares, and you would like to cancel your contract outright, you have alternatives. Since 2004, Aconsumercredit™ has helped families regain financial freedom from the obligation of expensive timeshare contracts. Contact us for a free consultation.