While timeshares can offer access to an exciting vacation destinations, they often lose their luster and benefits go underutilized. So, what happens when you want out? Unfortunately, timeshare contracts can be difficult to unwind, and additional complexity arises in determining what will happen to the timeshare upon your passing.
What happens if I pass while owning a timeshare?
The property will transfer according to your will. The transfer is governed by the state or country in which the timeshare interest is located; this typically results in ancillary probate, which can lead to additional attorney fees and court costs. If your heirs wish to accept the inheritance, the ownership will transfer and they will become responsible for the associated maintenance fees.
Interest in the timeshare can be transferred to a living trust, allowing you to avoid probate. You can fund the trust with sufficient assets to cover a period of years’ worth of maintenance fees as a family legacy. The trust will dictate the ultimate beneficiaries of the interest. Alternatively, you can add beneficiaries as joint owners on the title, allowing the timeshare to pass by operation of law.
If none of your heirs are interested in maintaining the timeshare and associated responsibilities, they can disclaim the inheritance of the asset. The estate would be responsible for paying the ongoing maintenance fees until the property is sold or the contract terminated.
We recommend having a conversation with your heirs to determine whether any are interested in maintaining the timeshare following your passing. If none of your children are interested in carrying on the timeshare, it may be worthwhile to terminate the contract in advance.
How do I get rid of a timeshare?
In disposing of a timeshare, your main options are to either cancel, sell, or donate the contract. First, make sure you understand exactly what it is you own. Depending on your contract, you either own a portion of real estate, or you have a right to lease property for a specified period of time. Like any other real estate transaction, the transfer of deeded ownership must involve a valid real estate transfer.
We’ve had success with a few clients canceling their contracts directly with the management company. While they didn’t receive any proceeds, the ongoing assessment ceased, and they were released from all responsibility. Most well-known hotel chains with timeshare properties will help broker a resale, though you will likely have to pay a steep commission.
Selling a timeshare can be quite difficult. Resale websites are highly unregulated, the pricing is misleading, and the inventory is overwhelming. If you do pursue advertising your timeshare online, be wary of resellers charging upfront fees to “sell” your property. If you do find a buyer, you will have to draft a contract and utilize a closing company to process the transfer, which could cost roughly $500.
Alternatively, you can explore donating the timeshare, however, most charitable organizations will not directly accept the donation of a timeshare, given the associated liability of the ongoing maintenance fees. You may need to pay a third-party service to facilitate the donation. After accounting for fees, the tax write-off (based on the contract’s fair market value) may be minimal.
While admittedly, none of these options are very attractive, the relief of liquidation may be worthwhile. Given the difficulty in unwinding these contracts, we encourage our clients to evaluate any timeshare purchase under the assumption that they won’t receive any residual value for the ultimate sale of the timeshare. If you’re stuck, reach out to us, and we can help explore your options!