Passing on Your Timeshare Without Problems:

Set Up a Trust

by Gerald A. Garcia, Attorney at Law
(dba Hawaii Document Service)
From TimeSharing Today, MAR/APR 2007

Many timeshare owners will consider, at some point, that they want their children or family members to have their timeshare when they die. Many, if not most, timeshares are real property interests. How you hold title to your property affects how title is transferred upon your death. Most property owners want to help their children avoid the cost and delays of Probate proceedings after they die. Probate is the court process to determine the new owners of property after an owner's death.

Having a will does not avoid probate; it only directs the probate court how to distribute your assets. Probate proceedings can tie-up your property for up to a year or longer and can cost your estate thousands of dollars in probate costs and attorneys fees. Often the heirs cannot use the timeshare until the probate is completed; yet the maintenance fees must still be paid. Advance planning can save money and allow for a smooth transfer of title to accomplish your estate planning goals.

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If two owners, such as husband and wife, own the timeshare as "Joint Tenants" or as "Tenants by the Entirety," probate is avoided when one owner dies because the co-owner has automatic "rights of survivorship" and becomes the sole owner. This can defer probate, but not avoid it; when the surviving co-owner or sole owner dies, probate then becomes necessary.

Some timeshare owners avoid probate for the timeshare by conveying the timeshare to the children while the owner is still alive, or by adding children as joint title holders. Is this the wise choice for you?

Any estate planning option has positive and negative aspects which need to be considered. A good plan for one family is not the best choice for another. Before a decision is made, it is wise for a timeshare owner to consult with his or her estate planning attorney and to read some books or articles about estate planning.

Adding children on title so that all owners are Joint Tenants can avoid probate and is a good option for some owners. Of course, only adult children should be added on title to the timeshare. A minor child cannot sign legal documents if the timeshare needs to be re-transferred or sold.

There can be some drawbacks with this option; for example: a) the owner loses the freedom of independent control of, and planning for, the timeshare; co-owners will have to agree on sharing the timeshare, whether each year to bank it or exchange it, who's turn it is to pay annual fees, etc. b) There can be exposure to possible creditor claims against the joint tenant. For example, if a son who is on title loses his job and can't pay his debts, his interest in the timeshare is an asset subject to judgment liens; c) if a daughter who is on title gets divorced, the timeshare is a property interest to be considered in the divorce action; d) the gift of the timeshare to the added owners is final (if it is time to sell or change ownership to the timeshare, all owners have to be available and agree to sign the necessary papers).

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As one can imagine, having additional owners on title can create unanticipated problems. Arguments or bad feelings can result when co-owners can't agree on use weeks or cost sharing due to changed circumstances such as busy work schedules, loss of work, being tied to young children's school or athletic commitments, etc. Some adult children cannot make good use of a timeshare due to their current circumstances and don't want the responsibility or regular expense. The children should be consulted prior to deciding whether to add them on title.

Many people are now using revocable living trusts for estate planning purposes, probate avoidance and/or tax benefits. The problems of adding adult children on title to the timeshare are avoided with a trust.

Some of the advantages of creating a revocable living trust and conveying the timeshare (and other property) into the trust are:

  • You retain full control; the owner is usually the initial trustee of the trust. Theowner retains control over the property, can amend or revoke the trust agreement, and can sell or transfer the timeshare and other property in the trust, as circumstances require. There is no need to consult with the children or to obtain their signatures in order to schedule, bank, exchange or transfer the