Estate Planning for Timeshares
When we are working on estate planning for clients, one of the questions we routinely ask is whether or not the client has any timeshares. Timeshares are vacation properties that a person owns only in limited time increments. Those increments could be by the week, by the day, or even by a point system. Some timeshares are for a specific property for a specific time frame, but many timeshares now have multiple location options and floating or flex week assignments. Some timeshares are merely right to use licenses. Popular timeshare locations we encounter with our clientele include: Las Vegas, Nevada; Orlando, Florida; Key West, Florida; Park City, Utah; and Oahu, Hawaii. Some timeshare companies, such as Marriott Vacation Club and Disney Vacation Club, refer to their timeshare owners as members.
The concept of timeshare-based ownership began in the United Kingdom after the war, where families had the use of a country cottage during one of the four seasons. The season assigned to that family changed every year. The first timeshare in the United States was started by a company known as CIC in 1973. This Fort Lauderdale based company sold vacation properties located in St. Thomas, U.S.V.I. and St. Croix, U.S.V.I., on a week-to-week basis for a twenty-five-year time frame. Purchasers could switch between the two resorts as space was available, for an additional fee of twenty-five dollars.
Timeshares can be appealing as they offer beautiful and fun destinations without the full carrying costs of ownership. Timeshare owners typically buy into the timeshare for a fixed fee, and then make annual or quarterly maintenance fee payments. Many timeshares are for a thirty-year time frame, but some can be for less, and many have no ending date. The majority of our clients that have a timeshare have numerous timeshares. The negative aspects of a timeshare are boredom of location, difficulty to transfer/use, and the constant increase in the maintenance fees. Much like a boat, many clients’ happiest days are the day they buy into the timeshare and the day they exit the timeshare. There are a number of law firms locally whose full-time practice is getting owners out of their timeshare contracts.
The Florida Department of Business and Professional Regulation (DBPR) regulates timeshares in Florida through its Division of Florida Condominiums, Timeshares, and Mobile Homes. If you have a complaint about a Florida situs timeshare, there are complaint forms available online in English and Spanish. The website is:
https://www2.myfloridalicense.com/condostimesharesmobilehomes/complaints
Typical complaints that are filed on timeshares deal with issues relating to owner access to books and records of the property, maintenance and management issues, cancellation and reservation problems, and sales agent misrepresentations. Under Florida law, once you sign the contract to purchase the timeshare, you have ten days to change your mind.
In the estate planning process, we must first determine what exactly the client owns. Some clients have been deeded a small ownership interest in real property, while other clients merely own a fixed number of points to use every year. Once we have determined what is owned, each timeshare company has different rules. Therefore, the second step is to contact the timeshare company about the transfer process. Every timeshare company we have dealt with over the last twenty-two years has had a fee to transfer the ownership. Some companies, like Hilton Grand Vacations Company a/k/a Bluegreen Corporation and Worldmark by Wyndham, have a very specific process that must be followed in order to transfer the ownership of a timeshare. Many companies also allow you to easily add new owners to the existing account, of course for an additional fee. Almost all timeshare companies now include a right of first refusal for the company to buyback the timeshare, should the owner desire to sell. Other timeshare companies regulate which third-party companies a timeshare owner may use when attempting to sell a timeshare. Timeshares that include an interest in land may require a probate process to clear title and transfer the property. Clients with timeshares outside of Florida should be mindful of the need for an ancillary probate in another state at death.
Many times, the surviving family members do not wish to continue ownership of the timeshare. The death of the timeshare owner is an excellent time to break the timeshare agreement. The timeshare company could seek out future or past due payments from the probate estate. However, they rarely make the effort.
Donating your timeshare to charity is an option, but it is a difficult one. A few charities will accept a timeshare donation, but they usually utilize an outside thirdparty to process and receive timeshare donations. If a donor’s timeshare donation is accepted, the donor will receive a tax receipt for income tax purposes, along with additional info on how to process their charitable tax deduction. Donors can only take the income tax deduction if they itemize their income taxes. A written appraisal will be required if the donation is worth more than five thousand dollars.
