Hey there, Legal Tea Listeners –This is your host, Jenny Rozelle! Today we have a “cautionary tales” type of episode. Now, on these “cautionary tales” episodes of Legal Tea, we normally talk about real-life cases with real-life clients that are things me or my office have worked on -or they are thing that I think are generally good things to be aware of, so you don’t turn into a cautionary tale on my Legal Tea podcast! Today’s episode is a little bit of both, in a way, because today we are going to talk about timeshares and how timeshares intersect with my world. I deal with clients’ timeshares usually in two scenarios – either during estate planning, it’ll come up that the client has a timeshare and you know, “What should we do with it given the estate plan we’re doing?” -or- it’s after someone has passed away and the family is dealing with it.
If you ask 10 people who own timeshares what they think of their timeshare (do they enjoy it, was it a good use of money, etc.), you would probably get several different responses. Some find them to be absolutely fantastic and do not regret investing in a timeshares; others will start cursing if you mention the word “timeshare.” The purpose of this episode is not to help navigate whether you should buy into a timeshare or not – your estate planning attorney is not the one to ask that question. Rather, I thought it’d be a great use of time to dive into a few different scenarios in which timeshares impact my estate and elder law fields – that way, if you do get a timeshare or have a timeshare, you have a good understanding of how they may impact with your estate plan.
Let’s first start with pre-planning – and what I mean by that is talking about timeshares while someone is living and during an estate planning conversation. So, think someone has hired my office to do a Will or a Trust – and as the client goes through our process, we always talk a lot about someone’s assets to make sure they “line up” appropriately with their plan. Sometimes, people share with us they have a timeshare. Now, first off, we need to differentiate OWNERSHIP versus BENEFICIARY. Ownership means – whose name or names are on the timeshare? Some timeshares have a Deed, so whose name or names are on the Deed? Beneficiary means – at the Owner’s passing, who is the designated beneficiary to get the timeshare?
Most of the time, if there are joint owners on the timeshare, it’s likely going to default to the surviving owners. So, if one owner passes away, it’s likely setup (likely, I said – not always!) in a way to remain with the surviving owners. Think, like John and Susie, husband and wife – if John passes away, the timeshare will likely shift to just be Susie’s rather than, say, go down to the designated beneficiary. Then, if I stick with this example, when Susie passes away, if there are designated beneficiaries, usually the timeshare company has their own process to get the timeshare passed to the beneficiaries. Now, what if the beneficiaries don’t want the timeshare or maybe cannot afford the timeshare? That definitely happens. Well, the beneficiaries have two options…
First, they can accept the ownership of the timeshare and basically, turn around and deal with getting rid of it (whether that’s selling it, for example) -or- they can say, “We don’t want it – we’re not even going to accept the ownership.” This, in my world, is often called “abandoning” property. It’s kind of like throwing your hands up and walking away. Now, this option may come with a bit of headache – because sometimes, the timeshare company will just say, “Okay” and take it back. Other times, they could cause you to experience some headaches – because after all, timeshares are contractual agreements, so if there is money owed, for example, they could try to force you to repay any outstanding balance – they probably don’t have a leg to stand to force you to individually and personally pay, if you’re not on the timeshare, but they could, I suppose, open an estate of whoever died and try to recover whatever they are still owed. In my 12 years, I’ve never seen them do that – but they COULD.
Now, something to consider, too, from a pre-planning standpoint – is whether or not, if you have a Living Trust like a Revocable Living Trust, Irrevocable Trust, Asset Protection Trust, etc. First, I think it’s important to know and understand that if you have specific concerns or questions, you should discuss your situation with an estate attorney to make sure that you do what is best for you. Though, I can speak relatively generally about options … I can say that most clients choose to not deed or transfer ownership of their timeshare to their Trust. To transfer ownership, it’s usually quite the process – not to mention, many, but not all, timeshares don’t truly carry a significant value to them. So, if someone is doing asset protection trust planning, for example, perhaps that is a reason to consider transferring ownership, if you want to 1) keep the timeshare for your beneficiaries and 2) protect it from, say, long-term care. (That’s a common reason many of my clients choose to do asset protection trust planning.)
Otherwise, if you do not have a Trust at all or have like a Revocable Living Trust, more likely than not, it’s likely going to be easier and just fine to leave the timeshare in your names. Sometimes, the transfers take some time and some work, and heck, I’m sure some even require a fee, so why go through that trouble, if it doesn’t get us further ahead later? As I said earlier, most timeshares don’t carry a significant value to them (which is different, may I add, than what you’ve paid into it in like maintenance fees); so long as the value doesn’t rise to the level of requiring probate court involvement after you pass away, which most don’t. Of course, like I said earlier, if you are genuinely concerned about your individual timeshare and how it relates to not only your estate plan, but also your state laws, I highly recommend you contact an estate attorney to discuss your individual situation with them.
So, now, let’s talk a little about after we pass away – a bit ago, I said that often timeshares give you the ability to designate beneficiaries. At the owner’s passing, beneficiaries are usually what is going to govern first – so say, I, Jenny Rozelle, own a timeshare and designate John Smith as the beneficiary of my timeshare – and what I mean by that is the beneficiary is on record with the timeshare company. So, at my passing, John Smith gets “first dibs” on the timeshare. Like I said earlier, too, technically beneficiaries don’t have to “accept” the timeshare. They can abandon it – and then, from there, it’s really whatever the timeshare company’s process and protocol on “what’s next?” Do they just absorb any expenses and fees and take the timeshare back over? Do they try to go after the owner’s estate to recover any debts, fees, expenses associated?
Since most timeshares are contractual, I’m certain most timeshare companies have the ability to, like I said, “go after” the owner’s estate – but in my experience, that’s pretty rare. At the end of the day, they would have to hire an attorney to do so – and since that’s the case, they have to make sure it’s “worth it” to hire the attorney. Maybe it is, maybe it isn’t. My experience is that they rarely do “go after” the owner’s estate. Don’t take that as legal advice, though, my friends. At the end of the day, like I said, they COULD since payment terms are likely within the contract that was originally signed.
Another option after death is attempting to sell the timeshare. Now, I was reading through some articles and stuff in preparation for this episode – and I liked how this one talked about selling a timeshare. According to PTM Trust and Estate Law, a law firm in Gainesville, Florida, they say (regarding selling a timeshare): “You should manage your expectations when it comes to the purchase price. Timeshares are often sold at a loss because they simply are not in high demand. Think about it this way: If a company has to literally pay people to sit through a sales pitch for a timeshare, then there are probably not a lot of people actively seeking timeshare ownership.” I liked the “manage your expectations” because if you think about how much you’ve spent on the timeshare, including the maintenance fees, you may think it’s worth more than it really is. So, just be mindful of that.
You know, as an estate attorney, I’ve seen a lot of different scenarios with timeshares – I have a lot of clients that have them; heck, my own parents have one. Some have good experiences with timeshares. Some have bad experiences. I’m not here to bash on timeshares, so I’ve tried to keep this episode informational as a “heads up” on how timeshares intersect with my estate field. At the end of the day, if you are a timeshare owner, perhaps this is a perfect trigger to cause you to revisit your estate plan or maybe even finally do an estate plan. Discuss the timeshare with who you feel are beneficiaries – for example, I told my parents have no interest in taking the timeshare at their passing, so they made my sister the beneficiary. Though, my sister actually frequently uses their timeshare, so that makes better sense. And if you are a beneficiary, as in the owner has passed away, it may be prudent to pause and consider your options. Do some research. Do some digging. Make sure you’re making the right decision for yourself and your own beneficiaries one day.
Alrighty, time is up, my friends! I hope this was an interesting episode for you. Let’s shift to a sneak peak of next week, which we’re circling back to the “current trends” topic where we talk about things that are going on currently that impact my estate and elder law world – or maybe, things that I have stumbled upon on the news or social media that is relevant to this podcast. Well, next week, we’re going to talk about online estate planning platforms – you see them on commercials, they may come to you as a recommendation from your financial advisor. So, we’re going to talk about them and my general thoughts on them (and they may surprise you!) so be sure to tune in next week. Talk to you then, Legal Tea Listeners! Take care and be well!
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