What can we do with a timeshare in an estate?

[bogey21]

We met with a lawyer recently to update our wills, and she seemed to think TS's in general are a problem when it comes to handing an estate.

A couple of years ago I wrote a new will. Nothing complicated in my estate. It cost me $69 on Legal Zoom.com. They did a nice job. The biggest problem was getting all the witnesses and witnesses to the witnesses in one room at the same time.

George

 

[dougp26364]

Read this thread and never saw the answer to a real potential problem.

Suppose an estate has only $10K cash and one worthless timeshare with all fees paid to date. Suppose that timeshare cannot be given away to anyone, not even the developer. The heirs do not want it either.

Is the estate required to PAY whatever is necessary to dispose of the timeshare? I have heard that disposal of timeshares this way can sometimes cost thousands of dollars. If so, does it have to be done before the remaining disbursements are made.

... OR can disbursements be made of the $10K and the timeshare be abandoned?

If there is a loan against the timeshare and, if the holder of that loan is notified in accordance with the appropriate laws and if the hold of that loan files the appropriate claim with the estate in probate court, then the estate is obligated to settle all legitimate claims against it before the estate is distributed to it's heirs.

As for MF's, I believe that any MF's owed before the time of death are legitimate debts against the estate. Any MF's due after the date of death are probably not a legitimate debt against the estate but would be paid by anyone wishing to take the timeshare. Otherwise, it's reposesed by the HOA, which I would believe is a method of disposing of the unwanted timeshare in the event of the timeshare ownerd death.

Every state is different so, it's best to get a good probate attorny. I found it invaluable to have a good probate attorny to settle my mothers estate, even though it was not a very large estate.

This, of course, is just my opinion. I'm not a lawyer. The best reference will be to either ask the probate court or an estate planning attorny. Free advice on the internet is usually worth what you've paid for it. I can only speak from personal experience as to what I believe is true.

 

[vckempson]

As for MF's, I believe that any MF's owed before the time of death are legitimate debts against the estate. Any MF's due after the date of death are probably not a legitimate debt against the estate but would be paid by anyone wishing to take the timeshare. Otherwise, it's reposesed by the HOA, which I would believe is a method of disposing of the unwanted timeshare in the event of the timeshare ownerd death.
.

I don't believe that's accurate. Until and unless the TS is disposed of, the estate of the deceased remains as the lawful owner of the TS and has an ongoing obligation to pay the MF's. Typically an estate will retain an amount of money sufficient to cover ongoing expenses until all property is either distributed to beneficiaries or disposed of. I'm not sure what the end game of this is. As a Certified Financial Planner, my partner & I meet with several lawyers every month or two to share information in our respective fields that may apply to us all. I'm going to bring this topic up to the estate planning lawyer in the group and get his take on this at our next meeting.

 

[rrlongwell]

They might want it back to resell to some neophyte as a "new" TS at full-frieght.
(Its been done.)

If timeshares are owned by someone who dies, than the Estate process has to be gone through in each and every state that a timeshare is located in. Some states require an attorney to probate an estate. If more than one timeshare is involved this can be a very expensive proposition even if the heirs take one or more of the timeshares. In order to close the primary estate which is where the person dies lived, normally, all other probate actions have to be complete. As a practical matter, for estates that have asests, one or more of the heirs usally end up taking the worthless timeshares. Timeshares of value to the Property Owners Association will usally be taken back. Westgate and Bluegreen are two systems that would not take their timeshares back from my step-father's estate. The executor got stuck paying for the legal fees, mainance fees, etc. for these properties and is taking them over himself to dispose of. It is cheaper than other options. If this is a potential problem, then that is where estate planning comes in and a consultation with an Attorney before death would be a heck of a lot cheaper than disposing of the timeshares by the Estate after death.

 

[LisaH]

My dad recently passed away and owns two timeshares on Daytona Beach. We will certainly try to sell them, but does anyone know the legalities of disposing of the units if no one in the family wants them?

Which timeshare? I used to own one on Daytona Beach Shore and the resort would take the week back with $100 processing fee...

 

[dougp26364]

I don't believe that's accurate. Until and unless the TS is disposed of, the estate of the deceased remains as the lawful owner of the TS and has an ongoing obligation to pay the MF's. Typically an estate will retain an amount of money sufficient to cover ongoing expenses until all property is either distributed to beneficiaries or disposed of. I'm not sure what the end game of this is. As a Certified Financial Planner, my partner & I meet with several lawyers every month or two to share information in our respective fields that may apply to us all. I'm going to bring this topic up to the estate planning lawyer in the group and get his take on this at our next meeting.

You may be correct. I it seems to me that items like utilities continued to be paid by the estate during the settlement of my mothers estate.

Like I said, advice on a free forum is worth what you pay for it. A good probate lawyer is a must IMHO when settling and estate.

 

[Talent312]

The probate laws in many states have a procedure by which an estate may abandon a "wasting" asset of no value. Typically, notice is given and any interested party may file an objection and request a hearing. I doubt that a HOA's objection would carry much weight.

HOWEVER, as mentioned, all we do on TUG is armchair quarterbacking and not qualified legal advice. Each state is different, and so legal advice from an attorney familiar with that state's probate laws is needed to know for sure.

 

[thinze3]

I don't believe that's accurate. Until and unless the TS is disposed of, the estate of the deceased remains as the lawful owner of the TS and has an ongoing obligation to pay the MF's. Typically an estate will retain an amount of money sufficient to cover ongoing expenses until all property is either distributed to beneficiaries or disposed of. I'm not sure what the end game of this is. As a Certified Financial Planner, my partner & I meet with several lawyers every month or two to share information in our respective fields that may apply to us all. I'm going to bring this topic up to the estate planning lawyer in the group and get his take on this at our next meeting.

And please mention my example above, because many timeshare owners are in this position (including my bosses father). The timeshare has no loans, and is up to date on fees, BUT will cost thousands to sell. Does the estate have to pay those thousands to sell before distribution of any remaining funds.??

 

[JeffW]

And please mention my example above, because many timeshare owners are in this position (including my bosses father). The timeshare has no loans, and is up to date on fees, BUT will cost thousands to sell. Does the estate have to pay those thousands to sell before distribution of any remaining funds.??

Why should whether a timeshare is owned by living people, or the estate of dead people, make a difference? If my parents die, in order to liquidate their house (like above, no loans, and up to date on fees), I'm going to have to pay a real estate agent a fee (typically commission) to see it. If I don't want to pay those fees, I'm free to handle it myself.

In principle the main difference is that the current value of many timeshares is next to nothing. I'm sure a lot of people in Nevada, California, Florida would say the current selling price of their house is no where near what they paid for it, and in some cases, in similiarly unsellable.

I would tend to think an estate is obligated to pay any fees to liquidate the estate, up to the point that there is no money left.

Jeff

 

[Ridewithme38]

Its starting to sound more and more like PCC's have the right idea by putting all the TS's into a LLC or Corporate name then desolving that corporation

 

[AwayWeGo]

F. R. A. U. D. ?

Its starting to sound more and more like PCC's have the right idea by putting all the TS's into a LLC or Corporate name then desolving that corporation

Is that legal ?

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[e.bram]

Alan:
Why wouldn't it be legal?

 

[Mel]

Is that legal ?

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

It may be legal, assuming the LLC isn't formed for the purpose of defrauding the resorts. But some resorts are preparing to deal with such a situation.

One of my resorts made some major amendments to our Declaration of Condominium back in 2004.

The original stated that "Owners" were those people to whom the Developer had conveyed an undivided interest (no room for said owner to convey it to someone else - technically that person would not be considered an owner). Under such rules, if you purchased the unit from the developer, until that unit was returned to the developer (the only other possibility recognized in the DoC), you would remain an owner, and be subject to any assessments, including maintenance fees.

We changed that, to allow for owners to convey to new owners. But we also added other amendments. It now includes the following:

"Any transfer of title to an Undivided Interest shall operate automatically to transfer the membership in the Association to the new owners thereof. The new and former Owners shall be jointly and severably liable for the payment of Assessments on an Undivided Interest and shall be responsible for providing proof of change of ownership to the Association."

Further, from what I understand about most state laws regarding LLCs, if an LLC is disolved, the assetts must be sold or distributed to the members. Thus even if the LLC could somehow write off the past maintenance fees as a business debt, you still have the issue of the LLC owning an assett that must be transferred to somebody. Further, and good HOA will place a lein on the title of the undivided interest. In practice, I don't think placing the timeshares in an LLC is going to make any difference.

 

[vckempson]

It may be legal, assuming the LLC isn't formed for the purpose of defrauding the resorts. But some resorts are preparing to deal with such a situation.

One of my resorts made some major amendments to our Declaration of Condominium back in 2004.

The original stated that "Owners" were those people to whom the Developer had conveyed an undivided interest (no room for said owner to convey it to someone else - technically that person would not be considered an owner). Under such rules, if you purchased the unit from the developer, until that unit was returned to the developer (the only other possibility recognized in the DoC), you would remain an owner, and be subject to any assessments, including maintenance fees.

We changed that, to allow for owners to convey to new owners. But we also added other amendments. It now includes the following:

"Any transfer of title to an Undivided Interest shall operate automatically to transfer the membership in the Association to the new owners thereof. The new and former Owners shall be jointly and severably liable for the payment of Assessments on an Undivided Interest and shall be responsible for providing proof of change of ownership to the Association."

Further, from what I understand about most state laws regarding LLCs, if an LLC is disolved, the assetts must be sold or distributed to the members. Thus even if the LLC could somehow write off the past maintenance fees as a business debt, you still have the issue of the LLC owning an assett that must be transferred to somebody. Further, and good HOA will place a lein on the title of the undivided interest. In practice, I don't think placing the timeshares in an LLC is going to make any difference.

This all sounds rather obsurd. If someone's name is no longer on the deed, I can't see how you could dream of enforcing a liability on him, no matter how hard you try, or what the HOA says. I'm sure you'll get some suckers to fall for it, but it sure as heck won't be me. When my name comes off the deed, I'm obsolved of ALL liability for future MF's & assesments.

Maybe I'm misunderstanding your post?

 

[Talent312]

Many HOA's or TS-systems have provisions which, regardless of the form of ownership, require that there be identifiable individuals who are authorized to use and be held accountable for fees. In the case of trusts, many require that the the trustee(s) name be on the account.

OF course, their attempts to go beyond the form of ownership to make sure that someone is responsible are not always successful, and state laws may have something to say about it. But what's written on a deed is not not necessarily the end of the story when it comes to registering ownership with the resort.