Asset Management Tips: Timeshares and Estate Planning
Timeshare ownership is a very popular way that many people have found to commit to taking vacations. They can be wonderful when used properly. Many times, though, people are confused and end up not using them appropriately. Either way, if you end up purchasing or inadvertently becoming the owner of a timeshare, be aware that it is something that needs to be addressed in your estate plan to avoid probate.
Timeshare Ownership Can Feel Like An Asset Or An Anchor
As I mentioned above, if not used, timeshare ownership can be a huge burden. I know people who love their timeshare ownership and have traveled the world with it. And I know others who have not used their timeshare and feel that it is the worst decision they made. Either way, when the owner of a timeshare property passes away, the timeshare itself becomes part of the decedent’s estate, just like any other asset would. Proper estate planning allows you to legally note who should inherit the timeshare. It’s important to keep in mind that once ownership is transferred, it’s the inheritors who then become the legal owners. This means they also become responsible for taking over the fees associated with timeshare ownership.
The Main Objective Is To Avoid Probate
There are several ways to set up your estate plan for passing on your timeshare. Just know that in the early days of timeshare ownership family members are typically excited and keen on the idea of becoming the owners when their parents pass on. However, circumstances change. Perhaps when the time comes the designated beneficiary doesn’t want it any longer or they’re unable to financially keep up with the fees.
The main idea is to avoid probate. Depending on how they’re originally titled, timeshares may be subject to probate. As a reminder, probate is an expensive, time-consuming, often stressful court proceeding that certain parts of your estate may go through after your death. During the probate process, Beneficiaries cannot use a timeshare property, but all maintenance and other fees must still be paid (by your Executor and out of your estate).
A few things to keep in mind when you’re trying to figure out how your timeshare best fits into your overall Estate Plan:
Actions by the Executor Trustees: What happens if a Beneficiary either doesn’t want your timeshare or if they’re unable to financially keep up with it? One easy way to handle this is to grant the Executor of your Last Will & Testament the right to decide on their own, when the time comes, if they want to keep a timeshare (absorbing all the costs), sell it on behalf of the Estate, or simply abandon it. The assurances that your Executor has these powers 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.
Joint Tenants: In Georgia, if you add another person to the title, your timeshare as Joint Tenants with Right of Survivorship, upon your passing, ownership will simply go to your spouse (or whomever is on the title with you). Probate can be avoided until the surviving owner passes away, but at that point, it will likely then have to go through the probate process. Please note that most other states have a similar method of titling the real property to avoid probate (i.e., in Michigan, it is referred to as Tenants by the Entirities).
Trust: There is a way to keep a timeshare out of probate though. As an example, 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 your explicit instructions about how the timeshare should be transferred to a Beneficiary after your passing.
If you’ve recently bought a timeshare, have recently been the beneficiary of a timeshare or have owned one for years and need to include it in your estate plan, give my office a call at 404-370-0696. We’ve been helping clients keep their timeshare out of probate almost as long as timeshare has been popular. We’d love to help you too.
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!