Pros/Cons of your trust holding title to your timeshare

[LeslieDet]

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

Value is irrelevant, as is unit size. The critical question is whether or not the timeshare is a deeded interest in real property in the USA. If so, yes, use a trust. The "why" is all of the comments I have posted prior to this one explaining why a dead person cannot sign a deed and if it's not in a trust an ancillary probate is required to do anything with that deeded real property interest. It is up to you as the owner to make arrangements for what happens to your assets. Even a no resale value timeshare is an asset. This is not about monetary value, it is about how real property is legally transferred. It is also about you as the owner not leaving a burden for your fellow owners to bear.

 

[TravelTime]

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.

So then why are Tuggers so worried about their heirs being left with their timeshares if they can‘t be passed on without being re-deeded?

 

[easyrider]

This is not about monetary value, it is about how real property is legally transferred.

So doing nothing and letting the resort foreclose seems to be a good option, imo. Especially when a person owns multiple timeshares, imo.

If the timeshare is in the trust, action would be required to exit.

Bill

 

[TravelTime]

So doing nothing and letting the resort foreclose seems to be a good option, imo. Especially when a person owns multiple timeshares, imo.

If the timeshare is in the trust, action would be required to exit.

Bill

Maybe you can answer this. If timeshares need to re-deeded in the trust’s name in order for heirs to inherit the timeshares, then why do so many Tuggers think their heirs will get stuck with their timeshares? What if these assets are in the will?

My attorney said:

You have a Trust and a Pour-over Will. The Pour-over Will ensures any remaining assets (not put into the Trust originally) will transfer to your Trust.

 

[easyrider]

Maybe you can answer this. If timeshares need to re-deeded in the trust’s name in order for heirs to inherit the timeshares, then why do so many Tuggers think their heirs will get stuck with their timeshares? What if these assets are in the will?

My attorney said:

You have a Trust and a Pour-over Will. The Pour-over Will ensures any remaining assets (not put into the Trust originally) will transfer to your Trust.

No one can be stuck with owning the timeshares after the owner passes away. They can be stuck with the consequences of the obligations when an estate goes through probate. By placing assets into a trust and leaving the timeshares out of the trust , there is usually nothing to probate because the timeshares have little to no value as a personal asset.

Timeshares are often hard to get rid of. Many hoa's and resort companies do not allow an exit. It can take a couple of years for them to go through the processes of discovery and foreclosure when not notified of the owners death. When an account becomes delinquent is the first clue. Notification is sent. The notification is returned. Calls are made without return. A look at the persons name in the obituary can reveal a death. Foreclosure begins.

A trust doesn't need to irrevocable to shield assets from a timeshare. Placing the assets into a trust and leaving the timeshares out of the trust means the timeshare are personal property. If the value of this personal property exceeds the State limit for probate then they need to go through probate. We all know that most timeshares have very little value so it isn't a problem for most timeshare owners to pass away and let the timeshare go through foreclosure.

You would need to speak with who ever designed your trust. Often times a trust does become irrevocable or un-amendable after a person passes away to protect the wishes of the grantor. In this situation nothing could be changed regarding the trust terms.

Bill

 

[CalGalTraveler]

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.

Thank you for your thoughtful response. Our UK RTUs are not MVC but Hilton Grand Vacations UK affiliates (i.e. the property is managed by HGVC but ownership of the resort and HOA is local. HGVC UK does not own these timeshare outbuilding units although they own the main resort building and pool amenities). These RTUs are perpetual so do not have an end date.

Similar to @TravelTime we have a pour-over will upon death. Will these UK RTUs transfer into our Trust automatically with pour-over? What steps should we take since we don't want our heirs to be burdened with these foreign RTUs when we die?

UPDATE: Similar to MVC there is "6 month non-payment of Maintenance Fees constitutes forfeiture" language in our RTU HOA documents. The units we own are summer platinum UK holiday and hold some value so could sell or give away for some nominal $. We have noticed that the HOA holds periodic auctions of silver weeks. Those are likely forfeitures but sounds like it is relatively easy for the HOA to recoup the RTU and move on compared to a US deed.

Given this, does the pour-over matter if it pours into the trust? What if the trust does not allow foreign holdings? Can the executor of the estate outside of the trust still dispose of these foreign assets on behalf of the estate?

 

[LeslieDet]

So doing nothing and letting the resort foreclose seems to be a good option, imo. Especially when a person owns multiple timeshares, imo.

If the timeshare is in the trust, action would be required to exit.

Bill

Are you simply trying to purposefully ignore the pages of discussion? Of course that is a horrible approach. Why would you want to be a deadbeat and have your fellow owners carry the burden of your MFs for the number of years that it would take for a HOA to legally be required to foreclose on a deeded ownership interest? Why? Not to mention the attorney's fees and costs involved with a foreclosure. Even non-judicial foreclosures are expensive. Is there some reason you continue to ignore the laws that would apply? Foreclosure is not a quick process. It may typically span a 5 year time period, if not more. Let's say the state where you own has a 10 year period. Doing "nothing" means you are a deadbeat intent on screwing your fellow owners.

And, once again, you are failing to comprehend anything I've said about trusts. The "action" required is as easy as a successor trustee executing a properly prepared and notarized deed to convey the ownership. Then that deed is recorded. It is done.

 

[LeslieDet]

Thank you for your thoughtful response. Our UK RTUs are not MVC but Hilton Grand Vacations UK affiliates (i.e. the property is managed by HGVC but ownership of the resort and HOA is local. HGVC UK does not own these timeshare outbuilding units although they own the main resort building and pool amenities). These RTUs are perpetual so do not have an end date.

Similar to @TravelTime we have a pour-over will upon death. Will these UK RTUs transfer into our Trust automatically with pour-over? What steps should we take since we don't want our heirs to be burdened with these foreign RTUs when we die?

UPDATE: Similar to MVC there is "6 month non-payment of Maintenance Fees constitutes forfeiture" language in our RTU HOA documents. The units we own are summer platinum UK holiday and hold some value so could sell or give away for some nominal $. We have noticed that the HOA holds periodic auctions of silver weeks. Those are likely forfeitures but sounds like it is relatively easy for the HOA to recoup the RTU and move on compared to a US deed.

Given this, does the pour-over matter if it pours into the trust? What if the trust does not allow foreign holdings? Can the executor of the estate outside of the trust still dispose of these foreign assets on behalf of the estate?

You will want to address your questions about how your pour over works with your trust and estates attorney. No heirs are ever forced to accept any bequest or distribution. There is no indentured servitude. It sounds like you found the applicable wording regarding the UK timeshare RTUs. If your heirs don't want the UK timeshares, then they can reach out to the UK timeshare itself and either find a buyer, or in the worse case scenario just forfeit the ownership. Your executor is your executor, no matter where your assets are located. If your trust doesn't allow foreign holdings, which would be an unusual provision IMHO, then you need to ask your attorney why that wording is in there.

 

[LeslieDet]

Maybe you can answer this. If timeshares need to re-deeded in the trust’s name in order for heirs to inherit the timeshares, then why do so many Tuggers think their heirs will get stuck with their timeshares? What if these assets are in the will?

My attorney said:

You have a Trust and a Pour-over Will. The Pour-over Will ensures any remaining assets (not put into the Trust originally) will transfer to your Trust.

When there is a pour over will, then any such assets that are included in that must be probated in order to be transferred to the trust for distribution. So, if you have a coin collection, sure, that is easy. If you own real estate, then the executor must proceed with any and all required ancillary probates in order for those assets left outside the trust to pour over from the will to the trust.

As to why so many tuggers think their heirs will get stuck? Perhaps it is from years and years of misinformation spread on this and other sites by folks who have no clue how real property law or estate planning works.

 

[1Kflyerguy]

As to why so many tuggers think their heirs will get stuck? Perhaps it is from years and years of misinformation spread on this and other sites by folks who have no clue how real property law or estate planning works.

Unfortunately many timeshare exit companies really promoted the idea of children / heirs being stuck with Timeshares forever unless you hire them to save your heirs... Those company ads probably reach a lot more people than TUG.

 

[LeslieDet]

So then why are Tuggers so worried about their heirs being left with their timeshares if they can‘t be passed on without being re-deeded?

I don't understand your question. It is real property law that requires properly prepared and notarized deeds be recorded in order to transfer legal ownership. It seems like you are having a disconnect between the procedure and the substantive issues. Substantively, any heir being left a bequest in a will can disclaim that bequest. In that case, the executor can offer the item to some other heir or dispose of it. Again, because it is real property it requires an ancillary probate process to do so. In a trust, there is nothing to re-deed. The trust doesn't die. The trust can continue to hold title, provided that is allowed by the terms of the trust. If a trust beneficiary doesn't want the timeshare, or the personal residence for that matter, the successor trustee has the legal authority to act and sell or otherwise convey the asset to another all without the oversight of the probate court. Trusts avoid probate. No beneficiary is forced to take anything. Of course, a beneficiary may be guilted into accepting their grandmother's prized china and their mom's display cabinet that held that china for the past 50 years...

 

[LeslieDet]

Unfortunately many timeshare exit companies really promoted the idea of children / heirs being stuck with Timeshares forever unless you hire them to save your heirs... Those company ads probably reach a lot more people than TUG.

You are right on that front. Even that HBO comedian John Oliver was pushing disinformation when he overgeneralized and claimed that all timeshares are a forever burden for heirs. And those "exit companies" are lying as much as those callers who claim you can rent out your II accommodation certificates, if you only pay them up front! It is always about separating an owner from their money.

 

[easyrider]

Why would you want to be a deadbeat and have your fellow owners carry the burden of your MFs for the number of years that it would take for a HOA to legally be required to foreclose on a deeded ownership interest? Why?

The reason is, it is easier to forget about it than to take care of something no one wants. The hoa's should accept deed backs to prevent this but for the most part they don't. This is a problem created by them, not the owner of the timeshare. Don't blame the player, blame the game.

What you propose is that everyone with a timeshare go though the arduous task of exiting a timeshare after they pass which is ridiculous, imo. The bottom line is all liabilities , including a timeshare, are gone, when you pass away with no assets to pay the liabilities. When your assets are in a trust they are removed from your personal assets. You feel that placing a worthless liability, which include most timeshares, into the trust so that the trust beneficiaries will have to deal with it is better than leaving it as a personal asset outside the trust where no one has to deal with it.

Your way is good for the hoa. My way is good for me. Obviously, I would choose my way as it is legal and very easy.

Calling others names like deadbeat who would choose the easy route, which actually made me smile, means you know the process works in the way I said. In fact, I'm naming it dead beat style and I'm sure my attorney will grin too. Dead beat style is a suitable name because, I'm dead and I beat the system, lol.

Bill

 

[LeslieDet]

The reason is, it is easier to forget about it than to take care of something no one wants. The hoa's should accept deed backs to prevent this but for the most part they don't. This is a problem created by them, not the owner of the timeshare. Don't blame the player, blame the game.

What you propose is that everyone with a timeshare go though the arduous task of exiting a timeshare after they pass which is ridiculous, imo. The bottom line is all liabilities , including a timeshare, are gone, when you pass away with no assets to pay the liabilities. When your assets are in a trust they are removed from your personal assets. You feel that placing a worthless liability, which include most timeshares, into the trust so that the trust beneficiaries will have to deal with it is better than leaving it as a personal asset outside the trust where no one has to deal with it.

Your way is good for the hoa. My way is good for me. Obviously, I would choose my way as it is legal and very easy.

Calling others names like deadbeat who would choose the easy route, which actually made me smile, means you know the process works in the way I said. In fact, I'm naming it dead beat style and I'm sure my attorney will grin too. Dead beat style is a suitable name because, I'm dead and I beat the system, lol.

Bill

You'll have to share your trick to knowing exactly when you are going to pass. Most folks aren't able to predict that with such certainty. And, it isn't a game. It is sad that you promote such conduct. Sadly, there are those like you who simply don't ever care about cleaning up after themselves, and are always trying to find a way to get away with not paying their bills. Your heirs will not thank you for the mess you are going to end up creating for them.

 

[easyrider]

You'll have to share your trick to knowing exactly when you are going to pass. Most folks aren't able to predict that with such certainty. And, it isn't a game. It is sad that you promote such conduct. Sadly, there are those like you who simply don't ever care about cleaning up after themselves, and are always trying to find a way to get away with not paying their bills. Your heirs will not thank you for the mess you are going to end up creating for them.

No one really knows when they will pass away Leslie. You're sounding a bit self righteous don't you think ? Every day people die with their assets protected in a trust. Some of these people have accumulated personal unsecured debt, such as credit card debt, with no assets to pay these debts. Their heirs have no responsibility for this debt. Nor does their trust in most cases. By putting a liability into a trust you are making the heirs responsible for the debt when they wouldn't need to be.

I could say that your advice actually creates more work for the heirs. In other words , more mess.

My heirs will be happy. If they want any of our timeshares they can take them, and if they don't, they don't have to do anything.

You may wonder why. It's because in their greed, the timeshare companies haven't developed an easy exit program. If there was such a mechanism, it would prevent many foreclosures.

Bill

 

[LeslieDet]

No one really knows when they will pass away Leslie. You're sounding a bit self righteous don't you think ? Every day people die with their assets protected in a trust. Some of these people have accumulated personal unsecured debt, such as credit card debt, with no assets to pay these debts. Their heirs have no responsibility for this debt. Nor does their trust in most cases. By putting a liability into a trust you are making the heirs responsible for the debt when they wouldn't need to be.

I could say that your advice actually creates more work for the heirs. In other words , more mess.

My heirs will be happy. If they want any of our timeshares they can take them, and if they don't, they don't have to do anything.

You may wonder why. It's because in their greed, the timeshare companies haven't developed an easy exit program. If there was such a mechanism, it would prevent many foreclosures.

Bill

You are the one who has been self righteous throughout this. BTW - you are once again incorrect when it comes to heirs having no responsibility for debts of the deceased when the deceased has assets in a trust. But, why bother to go over the finer points of the applicable law? Suffice it to say that there are many debts that the assets in the trust will be responsible to pay. You might want to read your will and trust again. And, it is honestly laughable that you blame the developers for how deeded real property ownership works. This isn't a subscription to Columbia record club. You apparently have an aversion to assuming responsibility for what you willingly purchased. My advice doesn't create more work for heirs. My advice accurately summarized the law. My advice does assume, however, that the owner wants to be a good citizen and do what is legally required to address their assets. But I do understand that there are, for example, pet owners who simply drop their unwanted pet along the side of the road, not caring what happens to that pet nor worrying about who will bear the cost of saving it. My advice is don't be that person. Do better.

 

[easyrider]

My advice does assume, however, that the owner wants to be a good citizen and do what is legally required to address their assets.

Assuming anything, especially about being a good or bad citizen, because of your conscience, is a bad assumption and argument, imo. You have demonstrated one way to proceed in exiting a timeshare by placing it in a trust that will benefit the hoa but not the heirs. Your way does create more work for the heirs and comes at a cost.

I have outlined what commonly happens, which is many people pass away with no assets and a timeshare and most of these timeshares go through foreclosure. That is the process. When you have a trust and leave the timeshares out of the trust, it is the same situation as that the person that has no assets and the timeshare goes through the same process.

Yes, the blame lies with the contract. They were either stupid or greedy by not implementing an exit that benefits both parties regarding a paid off timeshare. That being the circumstance, how can you say anything derogatory about people not caring about what happens to their timeshare when they die. Obviously it won't be their problem but it will be their heirs problem when it is in the trust.

When the timeshare is left outside the trust, the heirs can take your approach if they choose or do nothing at all. When the timeshare is in the trust, the only choice is to deal with it.

Bill

 

[VacationForever]

If a trust beneficiary doesn't want the timeshare, the successor trustee has the legal authority to act and sell or otherwise convey the asset to another all without the oversight of the probate court.

So the successor trustee has to find a way to exit the timeshare because being in a trust becomes a problem for the heirs. The HOA at that point can say, nope you cannot deedback to us. Then what? We are back to square one because the heirs and successor trustee are left with a timeshare when there is not a way out of it.

 

[dago]

Who will get the last word?

 

[easyrider]

Who will get the last word?

I think Leslie but I wouldn't bet on it, lol.

Bill

 

[LeslieDet]

So the successor trustee has to find a way to exit the timeshare because being in a trust becomes a problem for the heirs. The HOA at that point can say, nope you cannot deedback to us. Then what? We are back to square one because the heirs and successor trustee are left with a timeshare when there is not a way out of it.

Why are you looking at it in a vacuum? If that is all there is, the HOA knows that the long road ahead with the costs associated with a foreclosure and years of bad debt is a bad thing. You are forgetting, or intentionally omitting the fact that the BOD of the HOA owes a fiduciary duty to do what is in the best interests of the HOA. While there is no legal ability for the HOA and the owner to plan the exit strategy at time of purchase from the developer when it is deeded property as Gumby suggests, the HOA board isn't stupid. The HOA and the successor trustee can reach the exit agreement at that time. That is the prudent move and failure to do so would be a bad business decision on behalf of the HOA.

 

[VacationForever]

Why are you looking at it in a vacuum? If that is all there is, the HOA knows that the long road ahead with the costs associated with a foreclosure and years of bad debt is a bad thing. You are forgetting, or intentionally omitting the fact that the BOD of the HOA owes a fiduciary duty to do what is in the best interests of the HOA. While there is no legal ability for the HOA and the owner to plan the exit strategy at time of purchase from the developer when it is deeded property as Gumby suggests, the HOA board isn't stupid. The HOA and the successor trustee can reach the exit agreement at that time. That is the prudent move and failure to do so would be a bad business decision on behalf of the HOA.

You are making a huge assumption that all HOAs are logical. At the end of the day, having the timeshare in a trust can become a huge headache for the successor trustee.

 

[LeslieDet]

You are making a huge assumption that all HOAs are logical. At the end of the day, having the timeshare in a trust can become a huge headache for the successor trustee.

And you are making many, many assumptions and completely misrepresenting the ease of processing documents by successor trustees. Don't be so afraid of the process working well. The mistake I am making is in thinking that you as an owner would want to be a responsible one and make legal arrangements to dispose of what you owned.

 

[VacationForever]

And you are making many, many assumptions and completely misrepresenting the ease of processing documents by successor trustees. Don't be so afraid of the process working well. The mistake I am making is in thinking that you as an owner would want to be a responsible one and make legal arrangements to dispose of what you owned.

That is called selling way before we plan to die, barring that we get run over by a beer truck before then.

 

[VacationForever]

And you are making many, many assumptions and completely misrepresenting the ease of processing documents by successor trustees. Don't be so afraid of the process working well. The mistake I am making is in thinking that you as an owner would want to be a responsible one and make legal arrangements to dispose of what you owned.

The other point is that many people who cannot afford to pay MF anymore try to have a deed in lieu of foreclosure and yet the HOAs refuse to accept the deeds back. What makes you think they will take back the deed simply because the owners are dead? By and large, HOAs are illogical.