Thank you for sharing your experience. It is what I suspected. If the timeshare is outside of the trust it needs to be retitled - somehow - before anything can move forward. Unfortunately it is still treated as deeded real estate even though in many cases it is essentially worthless.
As with most financial and estate planning issues, the answer I learned from professionals in these fields is that "it depends" on your personal situation.
FYI - that is not very good advice. The issue is not the value of the timeshare it is the fact that it is real property. By leaving it out of your trust then you are requiring that the executor of your estate process an ancillary probate in the jurisdiction where your timeshares are located. Probate is costly. Ancillary probate is time consuming also. Moreover, while in probate, nothing can be done with your ownership, but your estate must still pay the MFs. If your heirs don't want it, then the estate cannot be closed unless and until your executor has been successful at selling or giving away your ownership. That process requires court approval. You might want to get another estate planning attorney who understands the issues related to owning real property in jurisdictions where you do not reside. You may want to describe it as owning a vacation home in that destination. If you did own 100% of the home, what would your lawyer have suggested? I bet that it would be to put it into trust. Again, the relative dollar value is irrelevant. It is the fact that it is real estate.
You do not understand how real property law works. It isn't the value of the timeshare. It is the fact that it is real property. When you die, the only way real property title can transfer is if the deed allows it, ie a JTWROS, or a transfer on death deed, or by a court order out of the probate court. You cannot avoid an ancillary probate in the jurisdiction where the real property is located simply by having few assets.
That isn't how the applicable law works if your timeshares are deeded. You are creating a burden for your estate. Your kids can't simply tell the resort you are dead. Is that what you'd say about your house? Just tell the bank you are dead and oh well, the bank can take it back. LOL.
The good news is that the archaic computer system that MVC used to use has been updated...
All you are doing by that choice is creating issues for your executor and your heirs. Get some advice from an estate planning attorney. Don't rely upon the misunderstandings of so many owners who are only going to be creating an expensive and time consuming process for their heirs. During the time of the ancillary probate, your executor cannot close out your estate and your estate remains obligated to pay all MFs. Whereas if the ownership is held by your revocable living trust, upon your death or incapacity, your successor trustee can act to sell or otherwise dispose of your deeded ownership, even by giving it away, and your kids or estate is not burdened. By failing to understand how real property law works in the event of death of the owner, you are not doing your heirs any favors by leaving title in your name.
You are incorrect regarding a deed change when one grantor of a trust dies. In fact, in revocable living trusts, when an original grantor dies, the trust becomes irrevocable. And the trust doesn't die. If the title is held by the trust, the trust remains in place. No deed change is required at all. You might want to seek competent counsel. Your understanding of how trusts work is not correct.
The issue with TSs being held in a trust is that they will automatically be passed on to the beneficiaries. When timeshare is the only thing that is not in a trust, the executor needs to notify the TS HOA that the TSs have been disclaimed and that they will have to take them back. Since there is no money that is not held in a trust, there is no money in the estate to pay any MF, and the HOA will have no option but to take back the TSs. There won't be a probate.
You need to meet with your estate planning attorney to understand how trusts work. Your beneficiaries don't "reject" a trust. The trust is a legal entity that is created for estate planning purposes to avoid probate. When you, as grantor, die or become incapacitated, your named successor trustee takes over the management of the trust. If your trust beneficiaries have no interest in the timeshare assets held in the name of the trust, then the successor trustee is empowered to sell or otherwise transfer the ownership out of the trust without a court overseeing the work, and without a judge being required to sign off on the transactions like is required with a probate. That is the perk of a trust. It avoids probate. Your beneficiaries are never forced to accept anything. The trust is a contract with yourself as to how you want your assets to be handled post death. If it says for the trustee to sell or otherwise dispose of unwanted assets, then that is what the successor trustee does. If it says that X timeshare is to be transferred to XY-heir, then XY-heir is under no obligation to accept the transfer; in that case, the successor trustee either asks another beneficiary or sells or otherwise disposes of the X timeshare, all without requiring a court to oversee the process.
That is not how trusts work. You need to understand what trusts are and how they work. Also, keep in mind I'm referring to deeded real estate interests. Absolutely nothing "automatically" passes to the beneficiaries. Trusts are contracts you basically write with yourself to identify how you want your assets to be handled post death. Your successor trustee steps into the original trustee's shoes upon death or incapacity. In that capacity, the successor trustee can sell or otherwise dispose of trust assets. If your beneficiaries don't want an asset, the successor trustee is empowered by the trust itself to sell or otherwise dispose of the assets owned by the trust. And if your timeshare is deeded, no, the HOA cannot simply "take it back". Any and all deeded ownership can ONLY transfer via a properly notarized and recorded deed. The OWNER must execute the deed. If the owner is an individual and that individual is dead, then the ONLY way that a deed can be valid is if a court authorizes the ownership transfer via probate. Whereas, when the trust is the legal owner, the successor trustee steps up and has the legal authority to act for the trust. If you leave a timeshare out there hanging and you die, all you are doing is causing your fellow owners to end up bearing your unpaid MFs and the HOA cannot legally proceed to obtain title without either your executor processing the deed transfer via an ancillary probate, or waiting for the statutory time frame to pass to then commence a foreclosure action (which is typically 5 years), all the while your fellow owners are paying your bad debt. It is a horrible way to treat your fellow owners. You are not screwing the HOA or the developer, you are screwing your fellow owners. And, it is highly unlikely that there is zero money held outside of trust. Not every account is in trust. And the successor trustee is most likely the executor of your estate, and as such has a fiduciary duty to your estate. The successor trustee cannot simply give away all money while there is debts due. That is not how it works.
Read this: https://www.thinkglink.com/2018/02/02/timeshares-and-estate-planning-is-probate-necessary/
Everything else is in a trust. Same as we advise people now. They don’t have to accept an inherited ts. They tell the resort there is no one to take it over and the owner died.
What you are completely missing is how real estate transfers work. You are also ignoring the fiduciary duty that the executor and successor trustee owe. Can people screw over their fellow owners by removing each and every penny from their estate and then leaving the HOA hanging with years of unpaid MFs, yes they can. Is it the right thing to do? If you have any ethics or morals, you should want to pay your bills such that you are not harming your fellow owners by leaving mounds of bad debt. It is also quite unusual to know the exact date of your future death. Folks have credit card bills, utility bills, medical bills. Those bills need to be paid, even if the deceased has their bank accounts held in the name of their trust. And those types of debt are not under the name of the trust, credit cards and medical expenses aren't billed to the family trust. They are billed to the individual. And, the successor trustee must settle the debts of the deceased before transferring away the remaining money to beneficiaries. Remember, when someone dies, their trust doesn't die. The trust remains in place and has assets. This has absolutely zero to do with accepting an inherited timeshare. No one ever has to accept an inheritance or an asset from a trust distribution.
That article you linked isn't correct. It is phrased that the probate court wouldn't have anything to do, no action to take. What that article completely ignores is that probate of real estate ownership is required for any deed transfer post death; and that the executor of the estate who is most likely the successor trustee, owes a fiduciary duty to discharge the debts of the estate. Do people lie? Of course they do. The successor trustee could put on blinders and ignore all of the bills of the deceased, but by doing so, risks personal liability. And anyone who thinks they can manipulate the system to screw their fellow owners really isn't a type of person I'd want to affiliate with.
HOAs take back TS deeds from the owners who have passed away all the time when beneficiaries do not want them. You need to come down from the high horse. We are talking about the real world and how owners deal with not wanting their descendants take on unwanted timeshare. In your own words, even when timeshare are passed on through a trust, the beneficiaries can also reject them. From my understanding, it is much harder to disown timeshare passed through the trust. Financially, there is not a difference to other owners.
LOL - I am in the real world -- the one of how real property law works and how legal ownership is conveyed. I never said HOAs don't take back the timeshare when owners pass away. Rather, I said that in order to do so, if the ownership is NOT held in a trust, then the executor of the estate must open an ancillary probate in order to obtain the legal authority to legally transfer title of that timeshare to the HOA. Absent a court order from a Probate judge authorizing the transfer of title from the estate of X to the timeshare HOA, there is no other LEGAL way to transfer title. Once the legal owner is dead, he or she isn't able to sign a deed in front of a notary! Ouiji boards don't count. If the executor doesn't legally convey title back to the HOA, and the MFs remain unpaid for whatever the statutory timeframe is in the jurisdiction where the timeshare is located (typically it's 5 years), then the HOA would be required to commence a foreclosure proceeding, and ultimately obtain title to that timeshare via a foreclosure deed. All the while, the MFs are unpaid as bad debt and that is charged out to all of the fellow timeshare owners as part of the annual MFs. That is simply how the law works. There are no horses, high or otherwise. Just real estate law, which I practiced in CA since 1987. And if you have ever actually dealt with real estate, you'd actually understand that the process of being able to legally trace the ownership via recorded deeds is what title insurance does, and why preliminary title reports are prepared. And, you are obviously missing the actual point in all of my comments is that no heir or beneficiary is EVER forced to accept any deed for a timeshare. EVER.
LOL - good grief Wilma, spoken like someone who has no clue how real property law works in the entire USA or how estates are probated in the USA. Perhaps those good "Tuggers" you are referring to should stop offering really poor legal advice! Or perhaps you simply believe that anyone who goes to TUG to ask a legal question gets crappy advice from all of the long time members who don't understand how the law works. I've indicated in every comment that my comments apply to deeded real estate. That is the only thing that anyone asking about a Revocable Living Trust should care about. So, for those folks who may own a contract in Mexico or a RTU, they should not even be asking about Revocable Living Trusts. Just so you understand, timeshare contracts and RTUs aren't real property interests! Perhaps you need to stop posting horrible legal advice that will only serve to cause problems for folks.LeslieDet, you have missed the points of many good Tuggers, and each situation they are in. Maybe read more and post less.
