How do I exit a timeshare when the owner dies? The Executor, Trustee, or the person wrapping up a deceased person’s affairs has the responsibility to deal with assets and liabilities.
Is a timeshare an asset or a liability? If used, it can be a great asset. However, many timeshares are unsellable and carry ongoing fees. They are essentially unmarketable. In most cases, timeshares become significant liabilities.
A cottage industry has grown up to extract people from their timeshares. We have worked with companies that promise to sell your timeshare. However, unlike a normal real estate agent, who will work for a commission, timeshare selling companies want $1,500 or more to attempt a sale, with no guarantees. That says a lot about the chances of a sale.
More recently, companies have emerged that promise to get you out of the deal because of the high-pressure sales tactics that were used to sell the timeshare in the first place. These are often law firms that threaten the timeshare company with litigation if they don’t consent to your exit.
If it is any consolation, death may be a way out. A timeshare will usually be part of the deceased owner’s estate, according to nj.com’s recent article, “My dad had a timeshare and died without a will. I don’t want it. What do I do?” The contractual obligations of the timeshare owner become the responsibility of the estate.
When the timeshare company hears of the owner’s death, they may keep sending letters for the timeshare expenses. Is there any way the owner’s children could be held responsible for the timeshare expenses?
Legally speaking, a timeshare is an agreement or arrangement in which parties share the ownership of or right to use the property. Each owner is entitled to use the property for a specific period of time. Some examples of timeshare ownership are a vacation club at a tropical resort or a villa at a ski destination.
There are three basic types of timeshare programs: fee simple, leasehold, and right-to-use (‘RTU’). In addition, there are some variations of RTUs, like points systems and fractional/private residence clubs.
The executor or administrator of the estate may elect to abandon the asset. If the company does not file a claim against the estate, then after a short waiting period (six months in Maryland) the claim is barred. This is one instance where going through probate has an advantage over avoiding it. If the timeshare is owned by a trust, the trustee needs to resolve the matter. We are now usually leaving timeshares out of trusts, or even redeeding the properties out of trust, to have an option to exit at death.
In addition, the executor may decide to contact an estate planning attorney, especially if the timeshare is out of state. This is important, as the laws concerning timeshare agreements and inheritances vary from state to state.
If a claim is filed, and the estate fails to make the payments on the timeshare while the owner’s estate is being probated, fees and penalties may accrue. At that point, the timeshare company and the property manager may file a lawsuit against the estate to get the money due them pursuant to the timeshare agreement.
However, if the property is disclaimed by all of the heirs, the property manager may likely foreclose on the timeshare, so any accrued debt would be paid from the estate’s assets. That foreclosure shouldn’t impact the credit of any heir who disclaimed the timeshare.
Dying may seem an extreme measure to get out of your timeshare. Other alternatives are evolving, but it’s usually best to clean up messy matters yourself.
Reference: nj.com (June 3, 2019) “My dad had a timeshare and died without a will. I don’t want it. What do I do?”