Avoiding Probate When Passing A Timeshare on To Your Heirs
With nearly 10 million timeshare owners in the U.S. and annual revenues topping $10 billion, vacation ownership is clearly an enormous business. And Florida is one of the leading states in terms of the number of timeshare and the fact that several of the largest timeshare companies have their headquarters in the state.
For many timeshare owners, however, ineffective estate planning – or no estate planning at all – leaves their heirs with an expensive and aggravating mess figuring out what to do with the decedent’s timeshare when they pass. Mainly, this is because owners often think of their timeshare as personal property, like a car or boat, instead of what it really is – deeded real estate.
Indeed, for most timeshare developers, part of the sales pitch is that the owner can pass their ownership onto their children when they die, which is true. However, because it’s legally considered real estate, the only way ownership can transfer from one person to another is via a deed or court order.
Timeshare’s probate problem
So, what happens when a timeshare owner passes without addressing their ownership in their estate planning? Like the overwhelming majority of timeshares, it ends up in probate. And the probate process is not only expensive and time-consuming, it means creditors see it as an asset and can pursue it to settle any debts against the estate.
Furthermore, in Florida, any probate administration involving a Florida-based timeshare must take place in Florida, regardless of where the owner or the heirs live. That can add even more complexity, more aggravation, and more expense to the process. And while there are ways to legally refuse or disclaim an inherited timeshare, that is also a complicated, paperwork-heavy process that will likely require the assistance of an estate planning attorney.
Instead, a more effective course of action is to avoid probate entirely and include your timeshare interest in your estate planning, treating it like the deeded real estate that it is. This can be accomplished in one of two ways:
Distribution through a trust. With a living trust, you can transfer assets into the trust and continue to have access to them. The assets are then distributed directly to your beneficiaries after your death, bypassing probate entirely. By placing your deeded timeshare into your trust, ownership will go to your heirs smoothly without having to hire an attorney and go through a court proceeding.
Adding your heirs through a deed transfer. By having the names of your heirs added to the timeshare deed, they become co-owners. That means, when you pass, full ownership automatically transfers to them. You may even want to transfer the deed entirely to your heirs. However, that will make them legally responsible for the maintenance payments and property taxes immediately.
Either of these options will effectively eliminate a great deal of frustration and legal costs for your heirs. Unfortunately, most timeshare owners are not aware of this issue and the property ends up going through probate. When that happens, the timeshare often doesn’t seem like it’s worth the time and expense of cleaning up the mess in probate court. Conversely, including it in your estate planning will allow your heirs to continue enjoying the travel benefits as part of your legacy.
If you have questions about how to keep your timeshare out of probate, or would simply like to talk to a qualified estate planning attorney about how to protect your family in general, contact Nexus Legal Solutions at 407-900-7722 for a consultation.