That timeshare you’ve been putting off dealing with? It could become a probate headache for your family. In this episode of Absolute Trust Talk, managing attorney Kirsten Howe breaks down the two types of timeshares — traditional deeded ownership and modern points-based systems — and explains why both need to be addressed in your estate plan.
She walks through what’s involved in transferring a timeshare to your revocable living trust, why it matters to act while you’re alive, and what really happens when a timeshare is left unaddressed after someone dies — including the possibility of probate in multiple states. Plus, she covers your real options for getting out of a timeshare and the scams to watch out for along the way.
Time-stamped Show Notes:
0:00 Introduction
0:43 To get things started, Kirsten highlights why timeshares matter in estate planning.
1:15 What is a timeshare? Deeded real estate ownership that is shared with other families.
2:38 Points-based timeshares are a modern alternative in which you purchase annual points rather than owning real estate.
3:18 Transferring a timeshare to your revocable living trust requires contacting the resort company and retitling the property.
4:44 Did you know? When your timeshare is in Florida, Hawaii, or another state, you need a deed prepared by someone licensed in that state.
5:30 The big miss: What happens when clients put off dealing with their timeshare, and it’s left unaddressed after they die?
7:10 Even if your California trust is set up perfectly, out-of-state timeshare real estate can trigger probate in each jurisdiction.
8:15 The other miss: Why many clients say buying the timeshare was the real mistake—rising fees, declining use, and no easy way out.
9:53 Your exit options: give-back programs, selling on the resale market, and why you probably won’t recoup your original investment.
10:58 Unsolicited calls offering to help you get rid of your timeshare are a red flag.
11:15 The charity myth: why donating your timeshare to charity isn’t the easy solution people think it is.
Transcript:
Hello and welcome to Absolute Trust Talk. I’m Kirsten Howe, and I’m the managing attorney at Absolute Trust Counsel, and this is our podcast. So welcome. We’re glad you’re here to join us. Today, I’m doing another short episode in a series that I’ve called Estate Planning Misses. And the Miss stands for a few different things—mistakes, mishaps, misunderstandings, misperceptions—things that could have gone better, things that we have learned over many years of helping lots of people with their estate planning, better ways to do things, or just things to be aware of, things to know about.
Today I’m going to be talking about timeshares. And we have a certain percentage of our clients who have timeshares—a not insignificant percentage—and timeshares are an asset. And in estate planning, we’re concerned about families and assets and taxes and a variety of things, but we always are concerned about the assets. So we’ve seen a variety of struggles, let’s just put it that way, that our clients have had over the years with their timeshares, and I just wanted to share a little bit about that with you.
So to start out with, there are two sort of basic types of timeshares. The traditional—what I call the traditional—which is you buy into ownership of a condo in a particular resort, and you actually own that condo together with maybe 51 other families. And what you own is that condo. It’s actually your real estate, but you are only entitled to use it one week of the year. As an example, you bought in for one week, but you actually are the owner of that real estate. There’s a deed transferring a one-fifty-second ownership to you. In addition to that property that you own, you also have contractual rights with the resort itself, the company that sold you the timeshare, and contractual obligations. And that’s where the ongoing, annual, and ever-increasing maintenance fee comes in. So that’s the first kind. That’s what I call the traditional. And we’ve all—well, maybe not all—but I certainly have attended a timeshare presentation where, you know, back in the—probably this would have been in the ‘80s or ‘90s—where some pretty skilled, high-pressure salesperson tries to persuade you to buy a timeshare. So that’s the traditional type.
And then the more sort of modern type is a points-based system. So what you are buying is a certain number of points every year. Let’s say you’re buying 100 points every year, and you get to use those points. And you get to use them however your contract says you get to use them. You might be buying them from a company that has many resorts all over the world, and you’re allowed to use your points at any one of their resorts, as long as you have enough points and there’s availability on the dates that you want to go. So they’re a little more flexible, and you are not actually an owner of real estate. All you have is the contractual rights, but this still comes with the annual and ever-increasing maintenance fee.
Okay, so how we deal with those two different kinds of timeshares in estate planning is a little bit different. In each case, there is a contract that you have with this company. Maybe it’s Disney, maybe it’s Marriott, maybe it’s Wyndham—you know, whatever the company is, you still have the contract. And so if you’re going to transfer your timeshare to your revocable living trust, which is a solid good practice in estate planning, and we like to see our clients transfer all of the appropriate assets to their trusts, you’re going to have to contact the company and let them know. That’s what you want to do, and you’ve got to jump through whatever hoops, fill out whatever documentation they want in order to retitle your timeshare—the contractual aspect of the timeshare—with the company. And I don’t know that clients get resistance on that score. I haven’t experienced that. The companies are willing to allow you to transfer your own timeshare to your own trust.
But when you have the traditional type of timeshare, which comes with a deed, you also have to transfer ownership of the real estate. And that means another deed, which your resort company may or may not be willing to help you with. In my experience, they don’t, because a deed is a legal document, and they don’t really want to get involved in that. So you’ve got to have a title company or an attorney prepare a deed for you to sign, transferring the ownership of your timeshare real estate into your revocable trust. And these timeshares are located all over the place. A lot of my clients have timeshares in Florida. Some have timeshares in Hawaii. Some are in California. You’re going to have to have a deed done by somebody who can do a deed in that jurisdiction. So when that happens, we will bring in our colleagues in Florida, colleagues in Hawaii. Fortunately, we have people in both states that we can rely on to jump in and help us with deeds when a client needs to transfer a timeshare deed into their trust.
Okay, so I’ve just given you kind of the background. But what is the mistake? What is the miss here? Generally speaking, the miss tends to show up after somebody has died, and it’s because the client really never did anything with the timeshare. We get a lot of clients who will say in the estate planning process, you know, it’s really not worth much of anything. I’ll just—I don’t want to deal with that. I don’t want to spend the money to transfer it to my trust, and it will cost money to do that. No question about it. Or they’ll say, you know, it’s really not worth that much. My kids can deal with it after I die. And that is true. And they will.
And so what happens with the points and the traditional—if you die, then your kids, or your successor trustee, or whoever has the authority, will have to go back to the company, explain that you died, and still go through whatever process they have to go through. And they’ll also have to, with the traditional timeshare, transfer the real estate. Now, when you’re alive, you transfer real estate by way of a deed. After someone dies and they own real estate, now we’re into a probate process. And it might be a short and easy probate process. It might be a long, protracted probate process. You’re just kind of gambling. It’s going to be the probate process that applies in whatever state that timeshare deed is located in. So, you know, putting it off for your kids to deal with is generally more of a hassle, more expensive, and most people, when they’re doing estate planning, one of their key motivators is to make things easy when they go—not to add yet another long list of tasks to their already busy lives. So think about that. If you’ve got timeshares in multiple jurisdictions, even if you live in California, there’s going to be a probate-like process in each of those other states, even if there’s no probate in California because you set up your trust and everything’s great. That’s a mistake.
And what I’m also going to add—and this is just, I don’t know, maybe helpful, maybe not, maybe just interesting—I would say that a lot of our clients would, if they were on this episode and I asked them, say that the big mistake was buying the timeshare in the first place, because they, you know, in the beginning it’s great, and they use it and they enjoy it. And then maybe over the years, they don’t use it quite so much, and their kids grow up, and nobody really wants to go there anymore. But they still have—they’re tied to this deal, and they still have to pay the fees that keep going up every year. They have to pay the fees. So there are ways to stop that.
Some of these companies do have a give-back or buy-back program. So it’s worth asking the company that you bought your timeshare from: Is there a way that I can transfer this back to you? You can sell your timeshare. There are marketplaces for timeshares. It’s important to note that typically, when you originally bought that timeshare, you spent a lot of money. You might have even borrowed money to buy it, so you’re not going to be able to sell it to anybody unless you’ve completely paid for it. So there can’t be a mortgage on it anymore. There can’t be a loan on it. And also, I think my clients are right when they say it’s really not worth much. The timeshares are not worth anywhere near what you paid for them. So if you’re looking at pricing it to recoup your investment, it’s not going to sell.
There are people who will take the timeshare off your hand, and therefore you get out of the maintenance fee, but you might not get any money back for it. And maybe that’s okay. Maybe that’s a good deal. Maybe you just want to get out of that maintenance fee. What I will say—a couple of things. If somebody calls you up out of the blue, you don’t know who they are, you’ve never met them, and offers to help you get rid of your timeshare, that’s probably something you want to avoid. That’s perhaps some kind of a scam. So look hard and long at that. And the second thing—I’ve had a number of clients say, oh, you know, I’ll just leave it for my kids and they can donate it to charity. Well, a charity is not going to take your timeshare unless they can sell it. Because charities have no use for a timeshare. So that’s really not a good approach. If you can’t sell it, they won’t be able to sell it. So you’ve got to think about this and plan ahead, and if you really think it’s not worth anything, see what you can do about getting out of it.
All right. So hopefully some of this was helpful. You learned a little bit. If you have a timeshare, maybe you’re going to take some action and really make things a little easier for the next generation, or maybe you’re going to explore your options. Thank you for joining us. This has been Absolute Trust Talk. I hope you’ll join us again. You can find us anywhere where podcasts are found—especially if you like watching video, we’re on YouTube. So like us, subscribe, do all the things. Thank you very much. I look forward to connecting with you next time.
Resources Related to This Episode:
- A Will is Not Enough – Securing Your Legacy with Estate Planning Life can change in an instant. A will is not enough to be prepared. Get free access to our actionable E-book Guidebook #1 and start protecting your legacy today. https://absolutetrustcounsel.com/guidebooks/
- Learn how to comfortably define gray areas and assess your unique needs to build a secure future now effortlessly. Check out Guidebook #2, Estate Planning Beyond the Basics, here > https://absolutetrustcounsel.com/guidebooks/
- Get our free introductory guide to the most used estate planning tool, family trusts, and understand how we plan to help protect your family. Guidebook #3: https://absolutetrustcounsel.com/guidebooks/
- Absolute Trust Counsel would love to offer access to our Incapacity Planning resource page: https://AbsoluteTrustCounsel.com/Incapacity-Planning/. We’ve collected our top planning information all in one place so listeners can find videos, guidebooks, blog posts, and a host of information with tips and strategies on implementing, planning, and protecting themselves and their loved ones.
- We’re pleased to provide a library of e-books to address common estate planning questions and concerns in practical, easy-to-understand language. https://AbsoluteTrustCounsel.com/Resources/.
- ASK KIRSTEN: If you’d like Kirsten to answer your question on the air, please email her at Info@AbsoluteTrustCounsel.com.
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