Deeded Timeshare in Will or Trust

[Kal]

Ownership of a deeded HRC resort can be a real issue upon passing of the owner(s). Does anyone have any suggestions on how to deal with this issue in the situation where the owner residence is not in the state where the timeshare exists? The probate cost and additional attorney could be a substantial percentage of the timeshare value.

 

[DAman]

Possible solutions:

1. Owner places the timeshare in a trust.
2. Owner prepares and records a transfer on death deed(not all states allow-but California does)
3. Owner adds a joint or co-owner

Of course there may be other issues as to why these solutions won't work. At least most HRC deeds are not worthless.

I would consult with an estate lawyer before I did anything like this.

 

[Kal]

The situation in question is where the beneficiaries of the estate do not want to own the timeshare. A TOD would not seem to solve that problem. Placing it in a trust would still not eliminate the burden on a subsequent owner.

The fact that it's real property is the issue where it becomes part of the estate.

 

[klpca]

The situation in question is where the beneficiaries of the estate do not want to own the timeshare. A TOD would not seem to solve that problem. Placing it in a trust would still not eliminate the burden on a subsequent owner.

The fact that it's real property is the issue where it becomes part of the estate.

Ours are in our trust to specifically avoid probate. I plan to divest before we die, but this is the backup plan. I thought that the beneficiaries could still disclaim though.

 

[Kal]

Divesting before the death of the owners is of course the best approach. The concern is sudden death of the owners thereby leaving the property in the estate. Placing the property in a trust would avoid probate, but the executor would still have to pay all indebtedness and/or divest the property.

The issue then becomes the steps the executor must take to get rid of the property. A lawyer in the state where the property is located would be necessary. $$$$$$

 

[GTLINZ]

Kal - first of all thanks for the Hyatt site. It is an invaluable resort that I still refer to.

Second - on your topic i agree that it is best if you can get rid of them before - but i am sure like most of us the owners enjoy using what they have now and you have no idea when that day will come.

We have been in the receiving position of what you speak - we were executors of my in-laws estate and they owned 2 timeshares - one being in SC where they want to treat it like any other property. FL seemed to be better but they were both still in both owners names and one had passed 10 years before. It was going to be complicated and expensive to get the titles straightened out and neither was really worth anything.

We were told legally that you cannot make somebody accept property. So we either rented or used both properties while the estate was open and kept all payments currrent to the date we closed the estate. The next year, when the MF bills showed up, we had 2 situations. For the SC Marriott, we sent copies of the death certificates and told them that nobody would be accepting responsibility for those payments going forward. We never heard from Marriott again. The other was an independent property in FL that was still being used by a family member with the same last name who had been paying the MF. He took the death certificates with him the next year and surprisingly they said as long as he paid the MFs they were fine with it. Once he stopped he just sent them the death certificates and said they were done.

I am not sure the legality of this approach but nobody wanted the units and there were no outstanding debts when the estate was closed. It was a headache for the executors (us) but we minimized the damage.

 

[DAman]

Kal - first of all thanks for the Hyatt site. It is an invaluable resort that I still refer to.

Second - on your topic i agree that it is best if you can get rid of them before - but i am sure like most of us the owners enjoy using what they have now and you have no idea when that day will come.

We have been in the receiving position of what you speak - we were executors of my in-laws estate and they owned 2 timeshares - one being in SC where they want to treat it like any other property. FL seemed to be better but they were both still in both owners names and one had passed 10 years before. It was going to be complicated and expensive to get the titles straightened out and neither was really worth anything.

We were told legally that you cannot make somebody accept property. So we either rented or used both properties while the estate was open and kept all payments currrent to the date we closed the estate. The next year, when the MF bills showed up, we had 2 situations. For the SC Marriott, we sent copies of the death certificates and told them that nobody would be accepting responsibility for those payments going forward. We never heard from Marriott again. The other was an independent property in FL that was still being used by a family member with the same last name who had been paying the MF. He took the death certificates with him the next year and surprisingly they said as long as he paid the MFs they were fine with it. Once he stopped he just sent them the death certificates and said they were done.

I am not sure the legality of this approach but nobody wanted the units and there were no outstanding debts when the estate was closed. It was a headache for the executors (us) but we minimized the damage.

Sometimes you have to look for a practical solution to a problem. I am a believer in finding practical solutions. Of course there would be no problem if the property was worth a large sum of money.

This thread made me think since I have three out of state timeshares.

Should Hyatt (or Marriott or Hilton, etc.) offer a solution for this problem? That is after the death of an out of state owner and the heirs do not want the property. What would that solution look like?

This problem would not exist for a pure points owner....if I see it correctly.

 

[bogey21]

.

We were told legally that you cannot make somebody accept property. So we either rented or used both properties while the estate was open and kept all payments currrent to the date we closed the estate. The next year, when the MF bills showed up, we had 2 situations. For the SC Marriott, we sent copies of the death certificates and told them that nobody would be accepting responsibility for those payments going forward. We never heard from Marriott again. The other was an independent property in FL that was still being used by a family member with the same last name who had been paying the MF. He took the death certificates with him the next year and surprisingly they said as long as he paid the MFs they were fine with it. Once he stopped he just sent them the death certificates and said they were done.

It looks to me like once they get Death Certificates the problem is solved without a hassle...

George

 

[Kal]

Kal - first of all thanks for the Hyatt site. It is an invaluable resort that I still refer to.

Second - on your topic i agree that it is best if you can get rid of them before - but i am sure like most of us the owners enjoy using what they have now and you have no idea when that day will come.

We have been in the receiving position of what you speak - we were executors of my in-laws estate and they owned 2 timeshares - one being in SC where they want to treat it like any other property. FL seemed to be better but they were both still in both owners names and one had passed 10 years before. It was going to be complicated and expensive to get the titles straightened out and neither was really worth anything.

We were told legally that you cannot make somebody accept property. So we either rented or used both properties while the estate was open and kept all payments currrent to the date we closed the estate. The next year, when the MF bills showed up, we had 2 situations. For the SC Marriott, we sent copies of the death certificates and told them that nobody would be accepting responsibility for those payments going forward. We never heard from Marriott again. The other was an independent property in FL that was still being used by a family member with the same last name who had been paying the MF. He took the death certificates with him the next year and surprisingly they said as long as he paid the MFs they were fine with it. Once he stopped he just sent them the death certificates and said they were done.

I am not sure the legality of this approach but nobody wanted the units and there were no outstanding debts when the estate was closed. It was a headache for the executors (us) but we minimized the damage.

Your experience is valuable. I would have to think thru those steps and see how it would play out. My concern would be that the estate would hold ownership, but Hyatt would continue to bill the original deed holder. I'm not sure how the estate would have to deal with the MR invoices.

 

[Kal]

...This problem would not exist for a pure points owner....if I see it correctly.

Hmmm, it would seem there would still be MF invoices to the named member, but the absence of real property is off the table. If I recall, there was some discussion that the HPP owner would still have some sort of deed. It would be interesting to drill down on that concept.

 

[DAman]

Hmmm, it would seem there would still be MF invoices to the named member, but the absence of real property is off the table. If I recall, there was some discussion that the HPP owner would still have some sort of deed. It would be interesting to drill down on that concept.

I'm thinking if the owner is dead and the estate is closed there is no one to pay the bill. Who could the company go after to pay the bill? This might be an easier situation for the executor since the executor is not dealing with out of state deeded property(maybe??).

 

[Kal]

I'm thinking if the owner is dead and the estate is closed there is no one to pay the bill. Who could the company go after to pay the bill? This might be an easier situation for the executor since the executor is not dealing with out of state deeded property(maybe??).

The problem is closing the estate. There is real property in the estate and unpaid invoices. Hyatt has various means to collect all the while the executor has the problem. It would be great if Hyatt just foreclosed on the deed but it could get messy. Could thereby raise the need for an out of state attorney.$$$$

 

[GTLINZ]

Closing the estate without outstanding obligations was the core issue. The estate was open for years and this cost the estate money but we paid all MFs and even a special assessment for one of them. We did either get use of the unit or a rental (at a loss) so we simply tried to minimize the losses. But as executors we could not close the estate with outstanding debts if we were able to take care of them (and thankfully we were able to).

We also did inform both of them TS companies that the estate was closed when we sent the death certificates (and informed them nobody was willing to accept their properties).

 

[DAman]

Closing the estate without outstanding obligations was the core issue. The estate was open for years and this cost the estate money but we paid all MFs and even a special assessment for one of them. We did either get use of the unit or a rental (at a loss) so we simply tried to minimize the losses. But as executors we could not close the estate with outstanding debts if we were able to take care of them (and thankfully we were able to).

We also did inform both of them TS companies that the estate was closed when we sent the death certificates (and informed them nobody was willing to accept their properties).

What did you have to do to get the court to close the estate?

I assume you told the court all the property was distributed except for the two timeshares.

All of the bills of the estate were paid and the timeshares were paid up to the date of your affidavit. You probably put in that nobody wanted the timeshares as well....Did you list them for sale?

The court then closed the estate and your responsibility as executor ended?

Did you have an attorney advise you when you did this?

I find this issue interesting.

 

[Kal]

It's a difficult issue for the estate. If Hyatt takes no affirmative action, the solution would be to change the owner's name to that of the executor thereby allowing the executor to sell the timeshares. That process would likely require an attorney licensed in the state where the timeshare(s) are located. This activity would have to be accomplished quickly or the MFs and potential collection fees would accumulate. In the end, the total transactional costs could be higher than the timeshare(s) value.

The answer is to get rid of the timeshares before the owner(s) pass. AND, sudden premature deaths are not allowed!

 

[GTLINZ]

What did you have to do to get the court to close the estate?

We were told unofficially by a lawyer that you cannot force anyone to accept property. We did not have specific advice related to the estate - we simply applied that rule in practice.

It was going to cost a lot of money to straighten out the deeds and the properties had no value after the 2009 recession. So we documented when we closed the estate that all outstanding debts had been paid and had all beneficiaries sign (as they have to) that they agreed with how the estate was dispursed. I do not think we mentioned the timeshares at all.

I doubt my in-laws ever knew they paid cash for something that would end up being worthless or would not be wanted by their children. They likely did not take enough trips to make up for what they paid either.

 

[Kal]

We were told unofficially by a lawyer that you cannot force anyone to accept property. We did not have specific advice related to the estate - we simply applied that rule in practice....

I wonder if "closing the estate" would satisfy the probate judge when there really is an outstanding issue. I would love to take that unofficial advice!

 

[GTLINZ]

Interesting article from a law frim. It reads the way we did this. This was an agreement between my in laws and each timeshare company - and we took care or all claims they had against the estate before it was closed.

Quote: "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."

How Do I Exit a Timeshare When the Owner Passes Away?

Alternative ways to exit a timeshare are explored in this blog, including death as a possible final answer for some estates.

www.downslawfirm.com

 

[Kal]

Since MFs are invoiced annually, the 6-month waiting period would appear to work.

 

[bdurstta]

I imagine OUR children, although they enjoy our timeshares, are not interested in "inheriting" them. LOL That being said, we still put them in our trust. I will leave directions for the kids on how to sell them if they don't want them (provided i haven't sold them already.) Fortunately or unfortunately, we all know that if sold cheap enough, they will sell. My feelings? If "I" have enjoyed them while "I" am alive, "I" have gotten my money's worth.

 

[Kal]

I imagine OUR children, although they enjoy our timeshares, are not interested in "inheriting" them. LOL That being said, we still put them in our trust. I will leave directions for the kids on how to sell them if they don't want them (provided i haven't sold them already.) Fortunately or unfortunately, we all know that if sold cheap enough, they will sell. My feelings? If "I" have enjoyed them while "I" am alive, "I" have gotten my money's worth.

My crystal ball is in the repair shop, but I would guess timeshares as we know them today will not look so good in another 10-15 years. Can you imagine what the "special assessment" would be to rebuild or substantially upgrade those structures. However, leaving them to the kids would likely require them to spend time and money to off load them. Retaining a lawyer in another state would eat into the inherited funds to complete the sales process. Then too, there could be some substantial monies owed to cover the unpaid MFs and special assessments.

Better to off load sooner than later.

 

[GTLINZ]

My crystal ball is in the repair shop, but I would guess timeshares as we know them today will not look so good in another 10-15 years.

It is good to hear somebody else say what I have been thinking.

I owned Hilton for years and always wanted Hyatt - I just did not want to make the investment and be responsible for another property if we could not get more in return within a few years because we are not young and the payback takes time. We enjoyed our Hilton properties. I did have a friend I exchanged reservations with for Hyatt and II and we loved them both (II is so much better than RCI). So what I had was working. We take a lot of shorter trips to FL and can drive, and recently have more family and friends to visit in FL - which means less timeshare time.

I remember watching Hyatt for years and bronze units would sell for thousands of dollars plus closing. A few years ago the bottom completely came out and I got an EOY bronze almost free with no closing or transfer costs (the seller lost money). Then last year we decided to dump the Hilton between MFs and grown kids and relatives/friends to visit in FL. We are now down to an gold Hyatt EOY and it does enough. We want to keep using it while I am working but the timeshare future does not look so great to me. It was trending the wrong way and now we all know a lot of units will not have owners paying MFs with the current job losses.

I feel very fortunate that I sold the Hilton last year. I lost $5K on it even though I bought it resale. The values (like Hyatt) just kept coming down. But we have a lifetime of memories and owning it was a great decision. I am just not seeing the future as beneficial for ownership unless current trends change.

 

[Kal]

A very popular concept is to "buy where you want to vacation". That is a great position to protect the owner from lack of availability at other Hyatt resorts when using points. However, if the property is part of the estate transferred to beneficiaries, it doesn't mean that it's any longer a desired location to vacation. As MFs continue to escalate the arithmetic might not work. As an example, if the MF is say $1,600, that would equate to about $225 for each day for lodging in a 7-day stay. The first HRC resort is over 25 years old. The $1,600 MF could easily reach $2,500. The daily lodging cost would then be over $350.

My beneficiaries would definitely not want to be limited in their destinations of choice; moreover, they would look to Airbnb as a favorite for location options and cost. Currently the choice for my oldest son is Maui at an Airbnb unit at a cost less than $225. They have no interest in his parents preferred HRC destinations.

As a comparison in a 2-week vacation to Paris staying in a fantastic Airbnb property, the daily cost was $175. This property was located a few blocks from the Notre Dame in one of the most desired locations in Paris. There are no Interval properties in any way comparable.

 

[Kal]

I'm evaluating the option of adding my son (Executor) to the ownership of the deeded resort. That way there would be no need to retain an additional attorney just to transfer ownership to him. Does anyone know what Hyatt charges to add a family member as additional owner?

 

[klkaylor]

The Key hear is that timeshare are real property and therefore dealt with by the estate rules of the state the timeshare is in not the state the owner resided or died in.
If the property is properly title/owned by a trust then the successor trustee has the fiduciary duty to deal with the timeshare - pay the taxes/MF etc. to maximize the value of that item for the trust.
The trust must dispose of this property in some manner, deed back, sell, let someone inherit it based on the rules of the trust.
If not in a trust then the property must pass per the will if there is one - but the probate of the will is done in the state the property is in. So a probate case must be opened in the state the property is in. One trick is to see if the state has a small estate rule - an estate in that state is less than $X dollars (varies by state) and then you can just follow the rules to transfer owner ship via the small estate law. No need to open a formal probate and go to court. CA has one -so yea but not all states do
Final issue is that anyone can disclaim an inheritance be it via a trust, will or state law. If a timeshare is disclaimed it just flows down to the next in line so the trust or estate still has to deal with that property. If no one wants the property(get the disclaimer action in writing) then the excutor/successor trustee can inform the timeshare company that the property has been abandoned by the benificiaries - this essentially becomes a deed back event.
We are working through this issue - into the trust or not - for our estate. Especially as we have timeshares in HI, NV, and CA and are moving to TX