Most of us have strong opinions when it comes to timeshares. Many see plenty of benefits in becoming a partial owner in a vacation property they can use without the headaches that come with owning his or her own property.
However, others only see timeshares as a waste of money. So, what happens during divorce or probate when a timeshare is involved? Is it an asset or a liability?
Timeshares and Divorce
Once a timeshare is purchased under a Shared Deeded Contract, wherein each owner retains the right to transfer ownership of their shares by selling, gifting, or willing them to someone else, often in perpetuity, the timeshare becomes a real asset. This means it must be divided equally among both parties in a divorce.
If both parties want to keep the timeshare, whether as a financial or sentimental asset, it’s recommended to share custody of the timeshare, so long as the divorce is amicable. Just make sure all conditions for payments, usage, and what happens if one spouse breaks the agreement, are set in writing,
In the case only one spouse wants to keep the timeshare, it is up to them to provide the other spouse something of equal value, which can be difficult to assess due to the fees involved and inevitable depreciation.
And what if neither spouse wants it? Then it’s time to sell the timeshare and split the proceeds. Just be wary of resale scams and other fees that come with selling to a broker or private buyer.
Timeshares and Probate
What many timeshare salespeople fail to mention (or gloss over) during their presentations are the continual costs involved in owning a timeshare. From maintenance and HOA fees to property taxes, insurance, management, and landscaping fees, owners can pay up to thousands of dollars a year even past their death.
Because of this, timeshares quickly becomes a financial burden to heirs that may not even want it to begin with. What can you do before probate to get around this?
- Add a joint owner so ownership is automatically transferred to the other owner.
- Create a beneficiary deed with the name of the owner upon your passing.
- Change the title on the timeshare to a trust.
- Sell the timeshare.
If the timeshare does pass into probate, the owner’s heirs must continue to pay the fees. If they fail to do so, the timeshare company can foreclose on the property and satisfy any debts from the probate assets.
And what happens if the timeshare is in another state? The inheritance would then be forced to go through an ancillary probate, governed by the state in which the timeshare resides. This costs even more in filing and lawyer fees.
In summary, timeshares may be a beneficial option for vacation consistency, but more often than not becomes a liability during divorce or probate. Take it or leave it, your choices will have consequences in perpetuity.