Timeshares can be a headache for estate planning attorneys and probate attorneys as well as their clients! If not treated appropriately they can cost time and money for everyone involved.
Many timeshares are real estate interests. This makes them deeded interests. Other timeshares are under a contractual right to use. If a person dies with a timeshare interest in their name, this may require going through an additional probate in the state where the timeshare is located. This is called ancillary probate and can cost up to several thousand dollars in attorney fees and court costs.
Nevada Probate and Timeshares
If the timeshare is a deeded interest (in Nevada), there must be a probate in Nevada because the interest is real property. However, if the value of the entire estate (including the timeshare) is less than $100,000, a special petition to the court by the executor may allow the estate to be set aside and distribution made without further court involvement. If the timeshare is under a contractual right to use and the value of the timeshare is less than $20,000, the beneficiary can use an Affidavit of Entitlement without any court proceedings to transfer the timeshare a new name. However, the rules are different in each jurisdiction. Therefore, you should consult an attorney local to where the timeshare is located to ensure any probate is done correctly.
Avoiding Probate
The easiest way to avoid this problem is to set up a revocable living trust for your assets. An estate planning attorney can assist you in creating the trust. Once the trust is created, you will transfer the timeshare interest into the trust and the trust becomes the legal owner of the timeshare. As the living beneficiary of the trust, you can use the timeshare while you are alive. Upon death, the trust continues to be the owner and probate is not required. The timeshare interest will then be transferred to a beneficiary (or beneficiaries) according to the terms of the trust.
Maintenance Fees for Timeshares After Death
It is important to keep in mind that all timeshares come with a maintenance fee obligation whereby the owner is required to pay annual fees to maintain the timeshare property. If a person dies without a trust, the obligation to pay the maintenance fees transfers to the estate and then to the person who inherits the timeshare. With a living trust, the obligation to pay the fees stays with the trust but then transfers to the beneficiary. Oftentimes the person who inherits the timeshare doesn’t want the property. A beneficiary can refuse all or part of an inheritance. If they refused the timeshare, it would remain the property of the estate or the trust.
The company governing the timeshare can foreclose if maintenance fees are not paid. If the beneficiary has taken the contract or deed but doesn’t want the property, the best solution is for the new owner to contact the timeshare company and negotiate with them. The new owner will not receive any funds but he or she will be relieved of the maintenance fee obligation. If the property is in a valuable location, the beneficiary may be able to sell it for a small value on resale or rent the unit to cover the costs of the maintenance fees. Beware of any companies that offer to assist in selling timeshare interests for an upfront fee. They are almost always scams.
Get Help
If you own a timeshare, it benefits you to contact an estate planning attorney at Clear Counsel Law Group and put the timeshare in a living trust so you do not inadvertently burden your loved ones. If you have inherited a timeshare, you can contact an estate planning attorney local to the timeshare to determine your best options.