As part of estate planning, some families choose to add their children on the title, so that all owners in the family are designated as ‘joint tenants’, to avoid probate issues. For other family members added to the timeshare probate, that means equal responsibility for things like maintenance fees, and special assessment charges. The responsibility they have is equal to that of the original timeshare owner.
Transferring the title by survivorship to children, cannot happen if the child is a minor, or under the age of 21 in most states. A child under the age of majority, cannot sign legal documents or assume legal responsibility for a title contract. It is not that they cannot be made the owner of the timeshare, but those arrangement must be made through a trust, and with a trustee appointed to sign on behalf of the minor.
If the parents own an excellent timeshare, and have paid off a substantial principal purchase amount, they may wish to talk to an estate planner, to place the timeshare in a trust, if other family members wish to continue to access the vacation property in perpetuity, after the death of the owner(s). Some people choose to delegate a ‘pay off’ of their timeshare (not including annual membership or maintenance fees), to allow their family to continue using it, while ensuring there is no outstanding loan from the purchase of the timeshare.
Rights of Survivorship: Does Your Timeshare Automatically Transfer to Your Spouse?
Many of these arrangements may seem excessive, but if the timeshare owner dies, and the property does not transfer by ‘rights of survivorship’ to a living spouse, the ownership and obligations of the timeshare can work its way to probate court. Probate for property can be a lengthy and expensive legal process, which some families avoid by designating other family members as ‘Join Tenants’ of the timeshare.
If it is not made legally clear, who the timeshare should go to upon death of the owner, then family members may be obliged to fight for the timeshare in probate court. However, in most cases, the family can use this as an opportunity to allow the timeshare to take back the contract.
It is important to note than any outstanding membership fees, special assessment charges or maintenance fees, as well as loans originally used to purchase the timeshare, may be pursued by the timeshare organization against the estate of the deceased. If you owe money on your timeshare when you pass on, the timeshare can pursue their right to collect from your estate as a creditor (and they frequently do).
If it is your intention to keep your timeshare ‘in the family’ because you have had an ongoing positive experience with your resort, and fractional ownership contract, there are many ways to provide solutions through estate planning. For instance, if life insurance is provided for surviving family members, a timeshare owner can allocate a portion of the life insurance, to ‘pay off’ any outstanding purchase debt on the timeshare.
Where the timeshare has great sentimental value to the family, we have also spoken to owners who planned funds from their estate, to cover most or all of the annual fees regarding the timeshare. Again, this is only in cases where the resort has been owned for a long time, and where the timeshare is cherished like a vacation home, by the surviving family members.
Trying to avoid probate by assuming that the timeshare will automatically transfer to the surviving spouse, is only a temporary fix, with two caveats. First, when the surviving spouse passes on, family members will still have to engage in probate proceedings, to claim ownership of the timeshare, after the owner’s death. The second consideration, is the possibility that both owners may die at the same time, leaving the ownership of the timeshare contestable in court.
What timeshare owners should also know, is that while the timeshare is in probate proceedings, no one will have access to use the property. The fees however, continue to accrue and in some cases, increase with late payment penalties, interest and other administrative charges.
Timeshare probate court can be very expensive and add to an already emotional and financial burden on your family. That’s why many people choose to cancel their timeshare, and transition to renting timeshares for vacation fun in their late senior years. Unless its clear that adult children or family members wish to assume the financial responsibility of the timeshare contract, it’s better to remove it from the equation, when it comes to estate planning.
Negative Aspects to Creating a Joint Tenancy for Your Timeshare
While assigning joint tenancy can save your family time and money, and help avoid the inconvenience of probate proceedings, there are some potentially negative outcomes that timeshare owners should be aware of:
The timeshare owner loses the ability to independently control, delegate or plan for the timeshare, and available vacation time. When the lease is ‘co-owned’, it means negotiating with other people on usage, split fees and payment, trading weeks and on other perks and incentives that owners are entitled to.
A co-owner may experience financial problems, and there may be creditor claims or liens placed against the timeshare interest. He or she may not be able to meet their financial obligations to the timeshare.
If a co-owner becomes divorced, his or her portion of the co-owned timeshare may be considered in the divorce action and filed against as an asset or liability.
If you are considering adding one or two members of your family, as joint tenants or co-owners of your timeshare contract, it’s important to think about the financial consequences and shared responsibilities carefully, before signing.
Timeshare cancellation is an option for seniors, who no longer see the value of owning a timeshare. For some, health concerns or financial restrictions make timeshare use impractical in later years, when travel can become restricted or onerous.
AconsumerCredit has been America’s leading and trusted resource for timeshare cancellation since 2004. Start by calling us for a free consultation at 1-800-587-EXIT for the facts and your options. In 12-months or sooner, you could be released from your timeshare contract, with our expert attorney guided consulting.