Pros/Cons of your trust holding title to your timeshare

[LeslieDet]

I did change my post to include the word irrevocable.

In an irrevocable trust there are no personal assets that would exceed State requirements for probate.

The reason why I have no sympathy for any of the HOA's and resort corporations is their product is flawed because of a lack of exit programs. Their contracts should include a provision to quicken foreclosure if the client passes away and no steps up to take the contract.

You can argue that the estate representative has a duty to contact the resort or hoa but that really isn't the case. The duties end at probate. When the assets are in a irrevocable trust and the client passes away with less than the minimum State requirement for probate there is no obligation to contact anyone. They can do their own discovery and if they wish to chase zero's with dollars that would be foolish, imo.

Debts inside the trust must be paid but personal debt outside of the trust would be dealt with at probate. Usually, there is nothing personal left to probate in this situation so the debt would go unsettled.

Bill

I agree with you regarding an irrevocable trust -- and those are the ones used to avoid the clawbacks.

However, you are trying to create new law by saying that the HOA's product is flawed because of a "lack of exit programs". My discussion only relates to deeded real estate. That is governed by state law. You cannot have a contract modify state law. You need to have the state law modified. It isn't the HOAs or developer's fault that deeded real estate means ownership. There is no legal way to "quicken foreclosure if the client [presumably you mean owner] passes away". You would have to modify the law of the jurisdiction. That is never going to happen. Also, foreclosure laws apply to all foreclosures of real property in a state. The laws aren't timeshare specific.

Deeded ownership is NOT a contract of ownership. It is a deed, recorded in the official state records. There is a reason in the USA why we have laws, and why all 50 states have the same real property laws regarding how real estate ownership can be transferred. Every state in the USA requires that the legal owner execute a deed to legally transfer ownership of real property. When that legal owner is dead, he or she cannot sign a document in front of a notary. It is as basic as that. Death (or incapacity) ends the ability for the owner to execute documents.

Trust ownership of deeded timeshares is what I've been addressing this entire feed. If you are now going to start discussing ownership contracts (like the Mexican timeshares use) or RTU (like how MVC's Aruba, Spain and France ts are held), then that is an entirely different type of ownership and it doesn't need to be in a trust. Indeed, the RTUs like Spain have a contractual provision that states if the MFs remain unpaid for 2 years, the ownership of the RTU is forfeited to the Owner Association. Mexican timeshares are typically for a fixed contractual term. All of the ones that I've seen don't actually bill MFs, rather, they charge a fee if you book the reservations. Your contract gives you a right to book a certain type of unit for a certain number of years for an agreed upon discounted price. It is nothing like the deeded real property ownership in the USA.

And, once more, you are conflating the process of probate with state laws that set estate minimums, etc., for probate. None of those state minimums are dealing with an estate that holds deeded real estate. But sure, if you only have a bank account and a cheap car, your executor can avoid probate because you don't meet the state dollar amount for needing to probate. There will be an express transfer process.

 

[easyrider]

You cannot have a contract modify state law.

Using a provision to allow a quit claim at the death of the owner is within all State law. This would enable the hoa's and resorts to bypass foreclosure efforts. Upon receiving a death certificate they could use the quit claim to regain control of the property. Anyone can request a death certificate so it shouldn't be a problem.

The resorts and hoa's would rather an entity be on the hook so they can attempt to collect back payments and possibly entice a descendant into ownership, imo.

Bill

 

[rapmarks]

I am aghast that even death does not free you from your timeshare obligation

 

[LeslieDet]

Using a provision to allow a quit claim at the death of the owner is within all State law. This would enable the hoa's and resorts to bypass foreclosure efforts. Upon receiving a death certificate they could use the quit claim to regain control of the property. Anyone can request a death certificate so it shouldn't be a problem.

The resorts and hoa's would rather an entity be on the hook so they can attempt to collect back payments and possibly entice a descendant into ownership, imo.

Bill

The closest that any state comes to that is the TOD deed. But it requires the beneficiary of the deed to accept the ownership within a mandated statutory time frame. BTW - last time I checked only 14 states have a TOD deed as a legal manner of holding title. And, of course you cannot have a quitclaim filed at time of death. Conveyance requires intent, delivery and acceptance. If the owner signs it years before death, there is no intent to presently transfer. It has zero legal significance. Guess you need to run for state office if you want to change the state laws regarding how real property title transfers.

 

[vacationtime1]

There is not a difference in executor notifying HOA that the timeshare is not being passed on to beneficiaries or the beneficiaries notifying that they don't want the timeshare. I don't see how the cost to HOA is different. The HOA has to take back the deed in both situations. They do not need to undergo foreclosure.

You didn't read (or understand) the post directly above yours before responding to it.

WHO WILL SIGN THE DEED IF THE TIMESHARE IS IN A STATE OTHER THAN THE STATE OF THE DECEDENT'S LAST RESIDENCE?

Unless the property is held by a trust, the HOA will have to go through a multi-year foreclosure process.

 

[easyrider]

Conveyance requires intent, delivery and acceptance. If the owner signs it years before death, there is no intent to presently transfer.

Once notarized, a quit claim deed is valid even after the grantors death. A provision in a contract can give authorization to an entity the right to record the signed and notarized quit claim after tod.

Bill

 

[LeslieDet]

Once notarized, a quit claim deed is valid even after the grantors death. A provision in a contract can give authorization to an entity the right to record the signed and notarized quit claim after tod.

Bill

Good lord, you are just making it up as you go... LOL ... BTW - real property law has basically been the same in the USA since, checks notes, roughly 1776.

 

[TravelTime]

Just FYI - if you have set up the trust but never legally transferred ownership of titled assets to the trust, then the trust doesn't own them and those assets will pass via will or intestate if you do not have a will.

We have a trust and a will. All accounts except retirement accounts and other real estate is in the name of the trust. The misc assets like timeshares are on an asset list but not in the trust name.

 

[LeslieDet]

We have a trust and a will. All accounts except retirement accounts and other real estate is in the name of the trust. The misc assets like timeshares are on an asset list but not in the trust name.

Just FYI - if your timeshares are deeded real property, as is Ko'Olina and the Club Points, you must convey title to your trust in order for them to be legally part of your trust and pass outside of a probate of your estate. The MMBR RTU isn't real property. BTW - I also own at MMBR - thus it doesn't have a deed, rather, the RTU has an Ownership Certificate that is maintained by the Cork office records. I can't speak to Aviara. IDK if Aviara is deeded or not. I drive by it routinely, but I've never checked on how the ts ownerships are held.

But back to Ko'Olina and your Club Points, simply listing them on an asset list does absolutely nothing. Failure to convey them means ancillary probates in Oahu and Orange Co., FL. Note, you probably hold title as a JTWROS to both of those, so if one spouse dies, the ownership will pass to the surviving JT, but that doesn't mean it is part of the trust. When the remaining owner passes, it would be subject to probate if not legally titled in a trust.

 

[WinniWoman]

When my husband died, Attorney asked what was outside the trust: cars and timeshare. Had me add all to trust that way successors can sign the title away, can still disclaim. otherwise it just sits there and no one can do anything since no one can sign. I imagine a beneficiary deed would also be recognized.

What happens if while you are alive you want to sell the cars?

 

[WinniWoman]

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.

I think I am probably not explaining it correctly. Maybe that is exactly what the issue is- the fact that the trust would become irrevocable once one person on the deed dies and that might not be what the surviving spouse wants.

Our atty is very competent. In fact- our other atty we had where we used to live said the same. No trust needed in our case.

 

[easyrider]

Good lord, you are just making it up as you go... LOL ... BTW - real property law has basically been the same in the USA since, checks notes, roughly 1776.

Not really. This provision in the contract would be a death clause executed by quit claim. On the sellers side , death doesn't prevent the obligation of the seller. Death of the buyer in contract creates a situation that can be impossible to enforce. Often times the remedy is for the seller to keep their product. That is why timeshares often go through foreclosure when a person dies when no one contacts the timeshare staff.

So basically, I think you agree with me that foreclosure is the best current method of a timeshare company to regain control of their asset after a person has passed away and no one has paid the mf.

Bill

 

[LeslieDet]

I think I am probably not explaining it correctly. Maybe that is exactly what the issue is- the fact that the trust would become irrevocable once one person on the deed dies and that might not be what the surviving spouse wants.

Our atty is very competent. In fact- our other atty we had where we used to live said the same. No trust needed in our case.

If you have a deeded timeshare ownership, and that ownership is in your trust, no deed changes are required after the death of one or more of the grantors, because the individual doesn't own the timeshare, the trust does. So, when you originally said that you had to do a deed change if one of the grantors dies, that is simply wrong. That isn't how trusts function. You probably are simply misunderstanding what your lawyer was telling you. But if you own deeded timeshares, then the easiest way to manage them from an estate planning perspective is to have them in a revocable living trust. Your heirs will thank you.

 

[LeslieDet]

Not really. This provision in the contract would be a death clause executed by quit claim. On the sellers side , death doesn't prevent the obligation of the seller. Death of the buyer in contract creates a situation that can be impossible to enforce. Often times the remedy is for the seller to keep their product. That is why timeshares often go through foreclosure when a person dies when no one contacts the timeshare staff.

So basically, I think you agree with me that foreclosure is the best current method of a timeshare company to regain control of their asset after a person has passed away and no one has paid the mf.

Bill

I'm not going to debate established real property law with you. You do not understand how it all works together. And, as to foreclosure, I think it is that you finally understand what I've been saying repeatedly to you, if deeded timeshare ownership is not in a trust, and if the executor fails or refuses to probate the timeshare asset, then after the death of the owner, the ONLY way for the HOA to gain ownership is via a foreclosure process, which is expensive and takes a significant amount of time.

 

[WinniWoman]

If you have a deeded timeshare ownership, and that ownership is in your trust, no deed changes are required after the death of one or more of the grantors, because the individual doesn't own the timeshare, the trust does. So, when you originally said that you had to do a deed change if one of the grantors dies, that is simply wrong. That isn't how trusts function. You probably are simply misunderstanding what your lawyer was telling you. But if you own deeded timeshares, then the easiest way to manage them from an estate planning perspective is to have them in a revocable living trust. Your heirs will thank you.

Our timeshare deed in not in a trust. We don't have a trust for anything. I was referring to a home deed.

 

[rapmarks]

When my husband died, Attorney asked what was outside the trust: cars and timeshare. Had me add all to trust that way successors can sign the title away, can still disclaim. otherwise it just sits there and no one can do anything since no one can sign. I imagine a beneficiary deed would also be recognized.

But who do you sign it away to?

 

[sfcolliejr]

We have our Westin/Marriott in our revocable trust. We have advised our principle beneficiaries that they do not have to accept ownership of the timeshare (Westin Flex). They would have to initiate a change in ownership, then accept liability for taxes and fees. If fees and taxes continue to go up steeply, it may not be an issue as we may tried to sell or deed back.

 

[easyrider]

I'm not going to debate established real property law with you. You do not understand how it all works together. And, as to foreclosure, I think it is that you finally understand what I've been saying repeatedly to you, if deeded timeshare ownership is not in a trust, and if the executor fails or refuses to probate the timeshare asset, then after the death of the owner, the ONLY way for the HOA to gain ownership is via a foreclosure process, which is expensive and takes a significant amount of time.

So we do agree on the foreclosure aspect of the conversation. It seems you don't agree with the idea that when they sell a timeshare, they could add a provision in the contract, to eliminate foreclosure, such as a signed quit claim that could be recorded upon receiving a death certificate.

I think you do agree that a trust, once irrevocable, does protect all assets in the trust. Where our thoughts differ is that I'm saying if there is nothing to probate regarding personal assets, because the assets are in the irrevocable trust, no one has any duty to inform a timeshare company of the death or any duty to take over the timeshare in most cases.

Bill

 

[VacationForever]

So we do agree on the foreclosure aspect of the conversation. It seems you don't agree with the idea that when they sell a timeshare, they could add a provision in the contract, to eliminate foreclosure, such as a signed quit claim that could be recorded upon receiving a death certificate.

I think you do agree that a trust, once irrevocable, does protect all assets in the trust. Where our thoughts differ is that I'm saying if there is nothing to probate regarding personal assets, because the assets are in the irrevocable trust, no one has any duty to inform a timeshare company of the death or any duty to take over the timeshare in most cases.

Bill

You don't even need a irrevocable trust to do that. Irrevocable trusts are expensive mainly because you pay a much higher tax rate. For most people without signficant wealth, all they need is a revocable trust, as it ensures that assets are passed on to beneficiaries without going through probate. When an estate has everything in a revocable trust except for timeshare, there is simply no money to pay for timeshare MF.

 

[easyrider]

You don't even need a irrevocable trust to do that. Irrevocable trusts are expensive mainly because you pay a much higher tax rate. For most people without signficant wealth, all they need is a revocable trust, as it ensures that assets are passed on to beneficiaries without going through probate. When an estate has everything in a revocable trust except for timeshare, there is simply no money to pay for timeshare MF.

I agree. What happens is people die and a year or two later the resort figures it out and forecloses. I think what Leslie is saying is that the resort could go after an estate and that is right when the timeshare has value more than the cost of recovery. No one chases pennies with dollars so for the most part it isn't an issue for a timeshare owner, imo.

Bill

 

[LeslieDet]

So we do agree on the foreclosure aspect of the conversation. It seems you don't agree with the idea that when they sell a timeshare, they could add a provision in the contract, to eliminate foreclosure, such as a signed quit claim that could be recorded upon receiving a death certificate.

I think you do agree that a trust, once irrevocable, does protect all assets in the trust. Where our thoughts differ is that I'm saying if there is nothing to probate regarding personal assets, because the assets are in the irrevocable trust, no one has any duty to inform a timeshare company of the death or any duty to take over the timeshare in most cases.

Bill

No, we don't agree. You simply are not comprehending that you cannot change real property law, law that has been in place for over 200 years when it comes to how deeded real property can be legally transferred. You cannot modify state law by a contract between two people. State law can only be altered by the legislators, signed by the governor, or in some cases by state proposition approved by a majority of voters. You simply cannot "add a provision" when it involves deeded real property to "eliminate foreclosure" or accept a post-mortem quit claim. Deeds that are not recorded during the grantor's life are generally invalid for a number of legal reasons. Has there ever been an exception? Perhaps. I'm not going to research all US jurisdictions to determine if there is one. Nor am I going to teach real property law to you. Suffice it to say you cannot do what you want to do when it comes to deeded real estate. Moreover, I'm not going to discuss the legal differences between irrevocable and revocable trusts. There are complex aspects that include tax considerations based upon the venue and marital status of the grantors.

What it all comes down to is you are spending an awful lot of time trying to figure out ways to avoid your obligations and avoid the law as well as your ownership responsibilities.

 

[CalGalTraveler]

@LeslieDet you make some interesting points.

We own holiday Right to Use certificates in a timeshare in the UK that are not in our trust. We will not want to keep these certs after we die. I was told the RTU cert is like owning a foreign stock like a REIT.

1) Is keeping foreign perteptual RTU outside of a trust the right approach? Worst case if cannot sell, too complicated to offer back RTU with UK law, or give away, the estate walks. It is a foreign country so hardly worth the effort for developer to hire lawyers to recover an $800 maint fee. Dead people do not need credit reports and difficult if not impossible for foreign entity to ding US credit.

2) Can a U S trust even hold a foreign RTU "stock" asset like this?

PS We own our US deeded timeshares in our trust. Will pass these onto heirs or sell.

 

[LeslieDet]

@LeslieDet you make some interesting points.

We own holiday Right to Use certificates in a timeshare in the UK that are not in our trust. We will not want to keep these certs after we die. I was told the RTU cert is like owning a foreign stock like a REIT.

1) Is keeping foreign perteptual RTU outside of a trust the right approach? Worst case if cannot sell, too complicated to offer back RTU with UK law, or give away, rhe estate walks. It is a foreign country so hardly worth the effort for developer to hire lawyers to recover an $800 maint fee. Dead people do not need credit reports and difficult if not impossible for foreign entity to ding US credit.

2) Can a U S trust even hold a foreign RTU "stock" asset like this?

PS We own our US deeded timeshares in our trust. Will pass these onto heirs or sell.

I am not familiar with how the UK timeshares are structured. I see you say you own MVC, I happen to own MMBR. It is a RTU. The MVC RTUs are not anything I'd worry personally about putting into a trust. I don't view it like a stock nor is it like a REIT. The RTU is simply a license to use. The MMBR RTU lasts through 2076. My RTU ownership gives me the right to use 3 weeks a year in the unit size I own, provided I pay the annual MFs. If I fail to pay the MF for two consecutive years, then I forfeit my RTU. Because it is a transferable license to use, if I still own it at my death, my heirs can easily have the license transferred to them, should they so desire. They could also sell my license to use without any court intervention. If you have questions as to what your trust can actually own, I suggest you reach out to your trust attorney. Your trust will have a section addressing what it can and cannot do. Personally, I saw no need to transfer my RTU to my trust, but I am aware others have done so, especially with the Aruba RTU. It is a simple owner modification form that is done internally at MVC.

Good job for putting your US deeded timeshares into your Trust. Your beneficiaries will appreciate your effort. Ancillary probates can be expensive and take a long time to process. If your beneficiaries want to sell after you are gone, the successor trustee is the human being who signs the documents to complete the Trust's sale of its assets.

 

[dago]

OMG. After reading all these posts, I am certainly glad we no longer own a timeshare. We sold our one and only one about 7 years ago.

 

[easyrider]

Good job for putting your US deeded timeshares into your Trust.

In a situation where a person has a 1 or 2 bedroom timeshare that has no resale value would you put this in the trust and why ?

Bill