Your Estate Plan and Owning a Timeshare
When it comes to your estate plan and owning a timeshare, one thing that many people who purchase timeshares do not understand, is how to properly protect these assets and/or pass them on to heirs.
If you own a timeshare, you understand how they work and hopefully yours has been and will continue to be the source of wonderful travel adventures and memories. The main source of confusion typically arises during the purchase, because of the “Perpetuity Clause” that exists in most contracts.
As it relates to your estate plan and owning a timeshare, the Perpetuity Clause basically states that you’re the owner of the timeshare for your life, and when you pass away, ownership would become part of your estate.
At that point, responsibility to pay any fees would be inherited by your estate, next-of-kin, or a designated Beneficiary. For most timeshare owners, they think this clause is sufficient. Not so.
Your timeshare needs to be included in your estate plan just as your house is, your investments, savings and other valued assets are.
The most important thing to take into consideration with timeshare are the fees associated with timeshare ownership. These things must be discussed with the person you would like to pass it on to. They should enjoy travel, be able to travel, and they should be able to afford the fees associated with timeshare ownership.
If your beneficiary doesn’t want your timeshare or they’re unable to financially keep up with it, you can designate this person as a Co-Trustee of the timeshare in your Estate Plan. Co-Trustees have the right to decide on their own, when the time comes, if they want to keep a timeshare (absorbing all the costs), sell it, or simply abandon it. The Co-Trustee title is one way to release both a Beneficiary, as well as your estate, from the responsibility of having to pay ongoing fees after you pass away.
Also, depending on how they’re originally titled, timeshares may be subject to probate. Probate, as everyone knows is an expensive, time-consuming, often stressful (for your heirs) court proceeding that certain parts of your estate may go through after your death. It’s a process everyone wants to avoid if at all possible. Having a well written Estate Plan is one way that many people avoid probate. And there is a way to keep a timeshare out of probate. You can place it inside a Revocable Living Trust, which makes the Trust the legal owner of the timeshare and, like with all Trust-owned assets, removes probate from the scenario entirely. The terms of the Trust will have explicit instructions about how the timeshare should be transferred to a Beneficiary after your passing.
If you own a timeshare and have not yet created an Estate Plan, give my office a call. We can help you avoid the headaches many timeshare beneficiaries inherit all too frequently.
Looking to find an experienced estate lawyer in the Georgia area who is skilled in asset protection and estate plan preparation? Shannon Pawley is an attorney in Georgia with expertise in estate planning and asset protection. Shannon can provide assistance with creating an estate plan to include making a will and how to establish a trust properly. If you have questions about asset protection or questions about making an estate plan, reach out to Shannon and she will be glad to help answer all the estate planning questions you might have!