The loss of a family member or friend is always a difficult experience. Unfortunately, dealing with the issues that arise after they pass away can be just as emotionally taxing whether it is fighting over money or figuring out what to do with things no one wants. Because timeshares can be transferred to others, one of the things you might inherit is an interest in a timeshare. Owning a timeshare may have been a wonderful experience for the person who left it to you with the best of intentions believing that it will give you a lifetime of inexpensive vacations. It may have also been a burden on them, which they complained about constantly and never dealt with. Regardless of the situation, when this happens you may have multiple questions running through your head, like what are my options, do I want the timeshare, and if I don’t want it am I forced to take it?
Timeshare Inheritance Basics
Timeshares regardless of the type are generally considered property. If the person who passed was the sole owner the timeshare will be passed down in accordance with the terms of their will. When a timeshare is devised per the terms of the will, the property will have to go through the probate process. If the timeshare is deeded, the probate process typically requires that a separate case be opened in the court where the timeshare is located to approve the transfer and ensure that all of the appropriate laws were followed. This can be a time-consuming, expensive, and frustrating ordeal.
If the person who passed away does not have a will, the timeshare will go to their heirs based on their state’s intestacy laws. Regardless of how the timeshare comes to you, you may have a long list of questions.
Here are some of the most common questions from people who stand to inherit a timeshare, which we have tried to place in a helpful order:
The first question: A timeshare has been left to me; do I want it?
There is a myriad of things that you should know and consider when determining if you want the timeshare. First, you may not be aware that all timeshares have maintenance or membership fees that must be paid either monthly, quarterly, or annually and in some cases may increase every year. These fees are perpetual and will continue for as long as you own the timeshare.
Second, some timeshares are also subject to special assessments. Special assessments are fees that are charged by the owners’ association or club to repair damage to the resort or resorts and can often run into thousands of dollars.
Third, if the timeshare you stand to inherit has an outstanding balance on the purchase loan, then you may become responsible for the bill. The vast majority of timeshare purchases are financed directly with the timeshare developer. The length of the loans is traditionally ten years, and the interest rates can vary from as little as 5% to as much as 19%. It is important to know if there is an outstanding loan balance, the amount of the maintenance fees, and if there may be any special assessments to determine if the timeshare fits your budget. The last thing you want is to inherit a timeshare that you cannot afford, and the timeshare developers don’t want this either.
Fourth, you need to know the type of timeshare you stand to inherit. There are many people who love and have had great experiences with their timeshare ownership. The common thing all these owners share is that they own a timeshare that fits their lifestyle. Whether they own a fixed week every year or points, these owners all understand the positives and negatives of the type of timeshare they own. It is vitally important to look at the type of timeshare you stand to inherit to see if it will fit your lifestyle and vacation needs. If you don’t consider this you may end up with a timeshare that does not work for you and end up unhappy.
Lastly, the primary basis of your decision should not be the investment potential of the timeshare. Some timeshares have resale value, others do not. You can generally find this information online or you can contact a licensed timeshare resale broker who should know if it is possible to resell the timeshare and the potential resale value.
Other than the potential to resell the timeshare, you should not take into consideration any other financial returns. Since you are a potential heir, it is highly likely that you do not have a copy of the purchase contract. In the purchase contract, virtually every timeshare developer goes to great lengths to point out that the timeshare should not be purchased as an investment or for financial returns. This includes rental, tax advantages or deductions, or appreciation (increase in value). As an heir, it is vitally important you do not agree to accept the timeshare based on any of these factors.
After considering these factors and any others you believe are important, you have now reached a decision.
The second question: Am I forced to accept it and what do I do if I don’t want it?
The good news is that as with any property that has been left to you, you are not required to accept a timeshare. However, this does not mean you can just sit back, and the timeshare will go away. In order to decline your timeshare inheritance, you will typically have to file a disclaimer of interest in accordance with the laws of your state or the state where the timeshare is located. Usually, the disclaimer of interest will have to be signed, dated, and filed with the probate court. It is critical that you act quickly because there is often a deadline set by state law to file the disclaimer of interest. If you fail to file the disclaimer of interest in a timely manner, you might end up becoming the legal owner of the timeshare.
It is critical to know that if you refuse the timeshare, you will not be able to use it and it may very well pass on to the next person in line to receive the deceased person’s property. This could be your aunt or uncle, or even your own children.
The third question: If I don’t want the timeshare is there any way I can still end up with it?
There are indeed several ways that you could still end up with the timeshare if you don’t want it. The first and easiest way, which we discussed above is if you fail to file a disclaimer of interest with the probate court or fail to file it on time.
The second circumstance where you may end up with the timeshare is not an issue of inheritance but rather being added to the timeshare pre-inheritance without your knowledge. The children of timeshare owners are sometimes added to their parent’s account or even the deed without the children ever being aware. In some instances, parents will add their children because they (often mistakenly) feel that the timeshare interest will be beneficial. In other cases, parents are advised by the resort that children need to be added so that they can utilize the facilities as co-owners.
You are now probably asking yourself how your relative could add you as a co-owner without your knowledge? Unfortunately, it is much easier than you think. If the timeshare is purely points-based you can be added as a co-owner simply by your relative filling out a form for the timeshare developer. If the timeshare interest is deeded, it is only slightly more complicated. Deeds are documents of conveyance customarily executed only by the grantor (the person who is transferring ownership of the property), not by the grantee (the person who receives ownership of the property). So, as the owner of the timeshare (grantor) your relative can add you without your permission. All they have to do is sign the deed adding you as an owner and record it with the appropriate government entity for the county where the timeshare is located.
The most prudent thing for any children of a timeshare owner is to determine whether their names could have been added to their parents’ deeds. The easiest way to find this information is to look at the county records where the timeshare is located. Depending on the state and county where the property is located, the deed could be recorded with the County Clerk, Deed Recorder, or like occurs here in Nevada with the County Recorder.
This is where things become a bit more complex. Typically, deeds are filed and recorded by address. In the case of a large timeshare property, there may be thousands or tens of thousands of deeds recorded for the property. The sheer number of deeds can make trying to find the information you are looking for an overwhelming task. However, there are a few things you can do to narrow the search. The first is to search the records with either your or your relatives’ names. This should bring up any documents that were recorded in their or your name with the most recent documents appearing first.
If searching by name is not an option, the next possibility is to try and determine the date the timeshare was purchased. Once you have this date you can narrow your search to documents that were recorded shortly after. It is important to remember that each state has a statutory timeframe to cancel a timeshare purchase, so any recordings will not occur until after this date. So don’t make the mistake of only searching the records for the date of the purchase, the deed could be recorded up to several weeks after the purchase.
The fourth question: The timeshare has some value to me, and I want to take it. Is there anything else I should know?
If after evaluating the situation, you feel like the timeshare has some value to you or it makes sense for you to accept your inheritance and then try and sell it on the open resale market there are a few things you should know. When you accept the timeshare you become the legal owner so you are responsible for all the obligations and responsibilities associated with the timeshare. These obligations are typically perpetual so as long as you own the timeshare you will be responsible for them. These responsibilities may include paying maintenance fees, special assessments, membership dues, and exchange company membership fees.
Still, the cost of owning the timeshare may be less than you can get for selling it. If this is the case, you also need to consult your state law on inheritance tax as accepting the timeshare may result in you owing money to the IRS for taxes. In addition, when you sell the timeshare you may also incur tax liability for the proceeds of the sale.
The other thing to be aware of is that many timeshares give the timeshare developers the right of first refusal. This right of first refusal allows the timeshare developer to match the sales price of any proposed sale to a third party. So, if stand to inherit a timeshare and are thinking about selling it to an acquaintance who wants it for little to no money be careful because you may be shooting yourself in the foot.
The fifth question: I have done my research and none of this makes any sense to me; who should I call?
First things first, do not beat yourself up if you are confused about the pros and cons of accepting the timeshare or what to do. For the uninitiated timeshares can be confusing and inheritance issues can be downright daunting. The combination of the two may leave you feeling overwhelmed and with more questions than answers.
If that is the case, the best thing that you can do is speak with a qualified probate attorney or an attorney that has experience dealing with timeshares. The issues associated with inheriting a timeshare can be legally complex and vary greatly depending on the facts of your case. Therefore, it is important to seek professional advice which can only be provided by an attorney.
In conclusion, the decision about what to do with a timeshare you stand to inherit is intensely personal and will depend on your situation. Because this decision is so personal and fact-specific, there is no one size fits all answer on the best thing to do if you stand to inherit a timeshare and I have no feelings either way. I wholeheartedly believe the decision should made purely on an individual basis with input from a licensed attorney who can counsel you on the specifics of your case.