How to keep my kids from inheriting my timeshare ?

[bogey21]

If what you are trying to accomplish is make sure your kids aren't stuck with ownership of TS when you die don't make it complicated. Just leave it to them in your will and leave instructions telling them if they don't want it, to disclaim the inheritance when the will is probated...

George

 

[skibikegokf]

I'm pretty sure you are all missing the legal implications. If I die, and the Time Share I own, is not inherited, my estate will simply own the Time Share. Assuming the estate goes through probate, the and all assets are distributed from the estate in probate, then I'm pretty sure the only recourse for the Time Share company will be to foreclose. There are no assets remaining in the estate to attack.

 

[GTLINZ]

I have been thru this with a timeshare that belonged to my mother in law. After she passed, nobody in the family wanted it - so we kept the fees current until the estate was closed and we rented it at a loss twice while the estate was open. We kept everything current so that they would not submit any claim while the estate was open.

After the estate was closed and the next bill showed up we sent them a death certificate and a copy of the closed estate with a brief note that nobody wanted it.

If you want to pursue this approach I would discuss it with the executor.

 

[KossB]

Jim, say my kids wrote a disclaimer of inheritance. would the timeshare be required to take the deed back, even if, stipulated at purchase, they said that weeks can not be deeded back?

I am not an attorney. But I am a tax advisor, and I am familiar with the basic principles of estate law.

Most of what you have been told in this thread is accurate. A trust is not the appropriate mechanism if your goal is to avoid having your children inherit your timeshare. There may be other reasons to set up a trust, but that is something you would need to discuss with an attorney. And not just any attorney, but an attorney who specializes in estate planning.

It is generally true that if you leave the timeshare to someone in your will, that person has the right to refuse to accept the inheritance. They do that by sending written notice to the executor of your will. The executor then offers that property to the next person in line. If no one else is identified in your will, then it would probably be offered to the next heir according to state law. So it could pass to your children's children, or a distant cousin or something. But they also have the right to refuse it.

If no one will accept it, then by law, the estate will continue to be the owner. The resort may agree to take it back--even though they claim they don't do that--because if the estate has no money or other assets, and it can't pay the bills for the maintenance fees, then the resort has only two choices: take it back or go through foreclosure. And guess which one is easier and cheaper?

When you die, the estate becomes the legal owner of all your property. It is the responsibility of the executor of your will to distribute that property to your heirs. But the executor also has to use money and other assets in your estate to pay your bills. For example, the executor is expected to use money in your estate to pay the mortgage on your house until it is sold or refinanced by whoever is going to inherit it. And they are expected to use money in your estate for things like your funeral expenses. As long as there is money available, or something that is easy to sell, such as stocks and bonds, your estate will be required to pay the maintenance fees on the timeshare. And they have to pay current bills before distributing money or other assets to your heirs.

But the key point is that the executor cannot force anyone to accept the timeshare. And the executor cannot be expected to hold the estate open indefinitely. Once everything else is settled, and the most recent timeshare bill has been paid, and the resort has not yet sent out the next bill, the executor will distribute all the remaining money and other assets to your heirs--except for the timeshare which no one will accept. And then the estate will own nothing except the timeshare, and it will be unable to pay the next bill from the resort. The executor will inform the resort that none of the heirs will accept the timeshare, and that the estate has no funds to pay the fees. It is at that point that the resort will begin to seriously consider simply taking it back instead of filing suit or starting a foreclosure proceeding.

But you won't have to deal with any of that. (LOL) You won't be around anymore when that happens.

One of the core concepts here is that the estate functions as an independent legal entity, separate from the heirs, separate from the person who died, and separate from the executor. The estate comes into being when the person dies. It is a lot like a corporation, and the executor serves in a role that is similar to the president of a corporation.

BMK

 

[callwill]

This has been a good question and commentary for me. We have had a timeshare in florida for a really long time and do not use it as much as we "dreamed". At some point will engage the give away process ans see if someone bites, but dont want to stick our kids with an albatross..that is how i have come to view it. I advise friends all the time that ask about them to just purchase the vacation you want at the time and for the time you want it or you are stuck paying for vacations you dont want. I had been thinking about working a deal with my elderly mother to buy it for a buck while we continue to pay the fees and use it until she dies and let it go to the island of orphaned timeshares...

 

[Passepartout]

I am not an attorney. But I am a tax advisor, and I am familiar with the basic principles of estate law.

Most of what you have been told in this thread is accurate. A trust is not the appropriate mechanism if your goal is to avoid having your children inherit your timeshare. There may other reasons to set up a trust, but that is something you would need to discuss with an attorney. And not just any attorney, but an attorney who specializes in estate planning.

It is generally true that if you leave the timeshare to someone in your will, that person has the right to refuse to accept the inheritance. They do that by sending written notice to the executor of your will. The executor then offers that property to the next person in line. If no one else is identified in your will, then it would probably be offered to the next heir according to state law. So it could pass to your children's children, or a distant cousin or something. But they also have the right to refuse it.

If no one will accept it, then by law, the estate will continue to be the owner. The resort may agree to take it back--even though they claim they don't do that--because if the estate has no money or other assets, and it can't pay the bills for the maintenance fees, then the resort has only two choices: take it back or go through foreclosure. And guess which one is easier and cheaper?

When you die, the estate becomes the legal owner of all your property. It is the responsibility of the executor of your will to distribute that property to your heirs. But the executor also has to use money and other assets in your estate to pay your bills. For example, the executor is expected to use money in your estate to pay the mortgage on your house until it is sold or refinanced by whoever is going to inherit it. And they are expected to use money in your estate for things like your funeral expenses. As long as there is money available, or something that is easy to sell, such as stocks and bonds, your estate will be required to pay the maintenance fess on the timeshare. And they have to pay current bills before distributing money or other assets to your heirs.

But the key point is that the executor cannot force anyone to accept the timeshare. And the executor cannot be expected to hold the estate open indefinitely. Once everything else is settled, and the most recent timeshare bill has been paid, and the resort has not yet sent out the next bill, the executor will distribute all the remaining money and other assets to your heirs--except for the timeshare which no one will accept. And then the estate will own nothing except the timeshare, and it will be unable to pay the next bill from the resort. The executor will inform the resort that none of the heirs will accept the timeshare, and that the estate has no funds to pay the fees. It is at that point that the resort will begin to seriously consider simply taking it back instead of filing suit or starting a foreclosure proceeding.

But you won't have to deal with any of that. (LOL) You won't be around anymore when that happens.

BMK

This is a clear 'roadmap' of how to deal with the act of 'non inheritance' of a timeshare (or other negatively valued 'asset') when you want to free your heirs from the responsibility of owning your TSs, while still being able to use them during your life- as long as you keep the fees paid. (imo) The information contained herein ought to be in a TUG Sticky.

Jim

 

[KACTravels]

This may be a ridiculous question, but can you name the HOA as the beneficiary of the Timeshare?

 

[KossB]

This may be a ridiculous question, but can you name the HOA as the beneficiary of the Timeshare?

LMAO. That's not at all ridiculous.

That's probably one of the most creative and brilliant ideas I've heard.

What are they going to do? Refuse it? So it gets stuck in the estate, which can't pay the fees? And then they have to foreclose on it, when they could have just accepted it in the first place?

The lawyer for the HOA would probably laugh his a** off.

One could even name their child (or sibling, whatever) as the primary heir, thus giving them the option of accepting it, and name the HOA as the alternate heir, so that they get it only if their child refuses it.

BMK

 

[tcornel]

An issue to be resolved with just disclaiming the interest from the estate is the timeshare is still the property of the estate. The executor is usually personally liable for settling the obligations of the estate before distributions to the heirs can be made. That includes medical bills, mortgages, personal indebtedness etc. All property must be disposed of also which includes the timeshare.

I would seek the advice of an attorney about forming an LLC and transferring the timeshare to it with the LLC owners being (eventually) the estate. The LLC is responsible for the timeshare not the owners of the LLC. This can vary so SEE AN ATTORNEY. If the timeshare company wants to sue the LLC........let them. If the LLC's only asset is the timeshare they will have to take it back either voluntarily or file a court proceeding. This should allow the estate to b

 

[joybeckerley1]

Ah, maybe I have been thinking of it backwards. Maybe I would put it in a trust if I wanted to make sure that our kids were owners after we pass away? I guess I am confused as to why the trust would be a good idea. There’s so many articles online etc, it’s hard to figure out what to do! I really appreciate everyone’s comments.
So...to sum up, I think what I have learned is that because our kids are beneficiaries, they will inherit the timeshare but then can refuse to accept it. They would likely need to work with an attorney to complete the process, I assume?

my timeshares are in our trust. However my 2 children are named as successor trustees on the trust . I am wondering, upon our demise, if they can then refuse any of the timeshares they do not want?

 

[Passepartout]

my timeshares are in our trust. However my 2 children are named as successor trustees on the trust . I am wondering, upon our demise, if they can then refuse any of the timeshares they do not want?

Nope. The trust will live on after your demise, and the trustee(s) will be responsible for it's MF & fees & SA's until it is sold, given away, surrendered, or otherwise removed from the trust. THIS is why you don't put timeshares in trust.

Jim

 

[traumaguy]

No, if you put the timeshares in the trust and both of you pass away, the trust then owns the timeshares and is responsible for the maintenance fees. Just put yourself and your husband on the deed. As stated before, your beneficiaries can refuse any inheritance they don't want to accept.

if you put it in a trust true the trust owns it, but unless you give someone the name of the trust and it's trustees you cannot find out who's in the trust without some serious reason, most courts will not pierce a trust unless some heavy federal laws are broken,

 

[traumaguy]

if you put it in a trust true the trust owns it, but unless you give someone the name of the trust and it's trustees you cannot find out who's in the trust without some serious reason, most courts will not pierce a trust unless some heavy federal laws are broken,

i know because years ago i set up a trust funded it with a bank account and a timeshare i brought from a large company we all know and hate, i wont mention any names, stopped paying the jacked up maintenance fees and 5 years later the money is still in the account , stopped hearing from the timeshare company years ago. if you notice many timeshare contracts now state no trust or LLC ownership allowed. i'm just relating my own experience not making any recommendations to each his own.

 

[Larry M]

If we have it our way, we will get rid of our timeshare portfolio in 10 to 12 years time when we no longer want to make regular trips to timeshare resorts. In the meantime, I can only leave instructions in my "to be opened upon my death letter" for my son to disclaim our timeshare if we pass away suddenly.

Why not tell him now? The letter could get lost or misplaced or forgotten until after fees are paid and you get into "account stated" issues (essentially he owns it if he paid a bill or used it). Tell him today "We know you're not interested in our timeshare. If something happens to us, tell [company name and address] that you refuse the inheritance."

 

[VacationForever]

Why not tell him now? The letter could get lost or misplaced or forgotten until after fees are paid and you get into "account stated" issues (essentially he owns it if he paid a bill or used it). Tell him today "We know you're not interested in our timeshare. If something happens to us, tell [company name and address] that you refuse the inheritance."

There are alot of stuff in the letter which he will need to know upon our death. He has a language communication learning disability in that his short-term memory processing is at the 5th percentile of the general population, which means whatever we tell him he is unlikely to remember. These days his disability falls under the generic term of Autism Spectrum Disorder. He is plenty smart in that he has very high IQ. In his case, written instructions work better than "telling" him.

 

[KossB]

my timeshares are in our trust. However my 2 children are named as successor trustees on the trust . I am wondering, upon our demise, if they can then refuse any of the timeshares they do not want?

It sounds like you probably have a revocable living trust, but you need to check with your attorney. Trusts are very complicated. You need to understand the difference between trustees and beneficiaries. In a revocable living trust, usually the trustees and the beneficiaries are the same, i.e., you and your husband are both the trustees and the beneficiaries. But after both of you are dead, the trust becomes irrevocable, and the trustees and the beneficiaries may be different people.

In some cases, the language of the trust calls for the trust to be dissolved after your death, which means that all assets are distributed out to the beneficiaries, and the trust ceases to exist. When that happens, the beneficiaries can indeed refuse to accept a distribution.

But that does not fully address your question. Like the estate that I described in my earlier post, the timeshare could get "stuck" in the trust if none of the beneficiaries wants it, and if the trust has no other money or assets to pay the fees, then the resort will foreclose or agree to take it back. But a trust and an estate are two different things. You really need to check with your attorney. Depending on the language of the trust and applicable state law, it might be harder for the trustee to distribute everything out except the timeshare. The trustee might be obligated to keep the trust alive indefinitely, and keep money in the trust to pay the fees, if he can't get rid of the timeshare.

In a worst-case scenario, in theory, this could actually tie up money or assets in the trust that were meant to go to your children. In other words, if the beneficiaries won't take the timeshare, the trustee might be required to keep the trust active, keep the timeshare in it, and also keep money in the trust (to pay the fees) even though that money was intended to be distributed out to the beneficiaries.

There are certain assets that simply don't belong in a trust. But this varies greatly with differing state laws, and the specific terms of the trust document. It may be very easy to get the timeshare out of your trust. You need to consult an attorney.

A trust is a legal entity, like a corporation, that is separate from the person who set it up, separate from the trustee, and separate from the beneficiaries. A trust is usually designed to continue its existence for at least a certain period of time after the death. Sometimes, in the case of minor children, the trust may continue to exist for many years after the death. It functions a lot like a corporation, and the trustee serves in a role that is similar to the president of a corporation. Beneficiaries have a role that is similar to shareholders of a corporation. Many people who set up a trust--even if they do it with an attorney--do not fully understand this, and they think the trust is just another name for a will. It's not. It is indeed an alternative to a traditional will, because it avoids probate, and it can have other advantages. But it is NOT simply a fancy will, or a different type of will. Setting up a trust is like forming a corporation or an LLC. It is an independent legal entity under state law.

BMK

 

[TUGBrian]

some outstanding explanations and details in this thread!

 

[CalGalTraveler]

If we move our timeshares out of our Revocable Living Trust to just our names to ensure that they don't live on in the trust, would the developer (HGVC, Vistana) charge us for an ownership change?

As a fallback, upon death could we automatically pour all assets into another trust once all bills are settled for example, pour the assets except for the timeshares into another trust (similar to how a special needs trust is funded for a disabled child), and then close the original trust containing the timeshares?

 

[Karen G]

if you put it in a trust true the trust owns it, but unless you give someone the name of the trust and it's trustees you cannot find out who's in the trust without some serious reason, most courts will not pierce a trust unless some heavy federal laws are broken,

If the timeshare is put in a trust, the title of the trust is listed as the owner. The timeshare company already has the name of the trust--it's not a secret.

 

[Karen G]

If we move our timeshares out of our Revocable Living Trust to just our names to ensure that they don't live on in the trust, would the developer (HGVC, Vistana) charge us for an ownership change?

When we put our timeshares into our trust we had to pay a fee to each one to change the name of the owner from our own names to the name of the trust. I would assume there would be a fee to change the name of the owner back to your own names, but I don't know if that would be the case for everyone.

As it turned out, it was all pretty much a waste of money as we sold or gave away all our timeshares when we stopped using them.

 

[KossB]

If we move our timeshares out of our Revocable Living Trust to just our names to ensure that they don't live on in the trust, would the developer (HGVC, Vistana) charge us for an ownership change?

As a fallback, could we give the the successor trustees the capability to drain the irrevocable trust into another trust except for the timeshare and then shut down the old trust?

Probably. In the case of a deeded timeshare, to remove it from a trust, the trustee actually has to sign a deed, and it has to be filed with the county recorder, like any other real estate transaction. That means that you generally have to pay an attorney and/or a title company to prepare the deed and file it properly.

If it's points, or a membership, or RTU, then it's all an internal matter within the timeshare company, but they probably would charge you fees for a change of ownership. You just have to ask. If they recognize that you are not really changing the underlying ownership interest, then maybe they'll waive the fee or reduce it. For example, they might have a reduced fee or no fee if someone gets married and simply wants to add the spouse to a timeshare they already own. This might be treated in the same way. I'm sure it varies from one company to another, and the senior management may have some discretion to adjust the fees based on the circumstances.

Changing the terms of the trust, to allow for some assets to be "drained" into another trust, might work. You would have to check with your attorney.

I love the idea suggested earlier by KACTravels of making the HOA or the resort itself the heir of a timeshare in your will. In a similar fashion, the trust could be changed to specify that after your death, if all beneficiaries refuse to accept the timeshare, then the alternate beneficiary is the resort itself. But again, you gotta check with your lawyer before making any changes to the the trust.

BMK

 

[CalGalTraveler]

Thanks @KossB We are updating our revocable trust with a lawyer this year and there will be a pour over in assets for a special needs trust to a disabled family member. We would hate for this disabled family member to be burdened with this.

 

[KossB]

If the timeshare is put in a trust, the title of the trust is listed as the owner. The timeshare company already has the name of the trust--it's not a secret.

As Karen G has observed, the existence of the trust, and the name of the trust, and the name of the trustee, are NOT secret. In fact, in the case of a deeded timeshare, the name of the trust and the trustee appear on the deed for anyone to see in the public records of the county recorder.

However, the trust document, and the identity of the beneficiaries, can usually be kept secret. The trustee can choose not to disclose that information in most situations.

This is one reason people use trusts. A regular will gets filed in the courts and it becomes a public record. Trust documents generally do not become public.

But if someone files a lawsuit against the trust (and foreclosure is a type of lawsuit), then the court may order the trustee to provide them with a copy of the trust documents. Or maybe not. They may only be allowed to see the parts of the trust documents that are relevant to the lawsuit. Or the judge may review the entire document privately, to decide what they get to see.

In any case, in general, neither the trustee nor the beneficiaries are personally liable for the debts of the trust. Like an LLC, the timeshare company cannot go after the beneficiaries, or the personal assets of the trustee, if the maintenance fees are not paid. They can only attempt to collect from the trust itself.

Every rule has an exception somewhere. When there is fraud involved, sometimes the courts will hold a trustee personally responsible. And there are some important exceptions when it comes to taxes. If the trustee does not pay certain tax bills--particularly federal estate tax--and distributes out all the money and assets to the beneficiaries--then the IRS can recover those taxes from the trustee personally, or from the beneficiaries.

But this is all way beyond the scope of the original question...

BMK

 

[KACTravels]

KossB thanks for your explanations. I appreciate the time and expertise you put into your posts

 

[joybeckerley1]

It sounds like you probably have a revocable living trust, but you need to check with your attorney. Trusts are very complicated. You need to understand the difference between trustees and beneficiaries. In a revocable living trust, usually the trustees and the beneficiaries are the same, i.e., you and your husband are both the trustees and the beneficiaries. But after both of you are dead, the trust becomes irrevocable, and the trustees and the beneficiaries may be different people.

In some cases, the language of the trust calls for the trust to be dissolved after your death, which means that all assets are distributed out to the beneficiaries, and the trust ceases to exist. When that happens, the beneficiaries can indeed refuse to accept a distribution.

But that does not fully address your question. Like the estate that I described in my earlier post, the timeshare could get "stuck" in the trust if none of the beneficiaries wants it, and if the trust has no other money or assets to pay the fees, then the resort will foreclose or agree to take it back. But a trust and an estate are two different things. You really need to check with your attorney. Depending on the language of the trust and applicable state law, it might be harder for the trustee to distribute everything out except the timeshare. The trustee might be obligated to keep the trust alive indefinitely, and keep money in the trust to pay the fees, if he can't get rid of the timeshare.

In a worst-case scenario, in theory, this could actually tie up money or assets in the trust that were meant to go to your children. In other words, if the beneficiaries won't take the timeshare, the trustee might be required to keep the trust active, keep the timeshare in it, and also keep money in the trust (to pay the fees) even though that money was intended to be distributed out to the beneficiaries.

There are certain assets that simply don't belong in a trust. But this varies greatly with differing state laws, and the specific terms of the trust document. It may be very easy to get the timeshare out of your trust. You need to consult an attorney.

A trust is a legal entity, like a corporation, that is separate from the person who set it up, separate from the trustee, and separate from the beneficiaries. A trust is usually designed to continue its existence for at least a certain period of time after the death. Sometimes, in the case of minor children, the trust may continue to exist for many years after the death. It functions a lot like a corporation, and the trustee serves in a role that is similar to the president of a corporation. Beneficiaries have a role that is similar to shareholders of a corporation. Many people who set up a trust--even if they do it with an attorney--do not fully understand this, and they think the trust is just another name for a will. It's not. It is indeed an alternative to a traditional will, because it avoids probate, and it can have other advantages. But it is NOT simply a fancy will, or a different type of will. Setting up a trust is like forming a corporation or an LLC. It is an independent legal entity under state law.

BMK

Thank you so much! Yes it is a revocable living trust......and kids are listed as successor trustees. .the timeshare folks are as confused as we all are...years ago Marriott told me that if the kids were not in the trust or on the deeds they would not be be able to take advantage of any of the vacation points attached to the timeshares that is , if they just inherited the properties they could not use them to pile up vacation points or for trades to other vacation spots. ...I had to move heaven and earth to get them all deeded the same way I had to find an attorney in Hawaii and California. That is why we put them into the trust. So anyway...this is another point to consider that the timeshare entity may not honor your vacation club points if you just inherit them outright. I have discussed this at length with Marriott and can't get any definitive information. Thank you !