What Is a 529 Plan? A 529 plan is an investment account that offers tax…
When a timeshare owner dies, the timeshare will usually be part of the deceased owner’s estate, according to nj.com’s recent article, “My dad had a timeshare and died without a will. I don’t want it. What do I do?” The contractual obligations of the timeshare owner become the responsibility of the next-of-kin or the beneficiaries of the estate.
When the timeshare company hears of the owner’s death, they may keep sending letters to him for his expenses. Is there any way that the owner’s children could be held responsible for the timeshare expenses?
Legally speaking, a timeshare is an agreement or arrangement in which parties share the ownership of or right to use property. Each owner is entitled to use the property for a specific period of time. Some examples of timeshare ownership are a vacation club at a tropical resort or a villa at a ski destination.
There are three basic types of timeshare programs: fee simple, leasehold, and right-to-use (‘RTU’). In addition, there are some variations of RTUs, like points systems and fractional/private residence clubs.
The executor or administrator of the estate will need to contact the timeshare company and/or locate a copy of the owner’s contract to find out what the financial and legal obligations are under the contract.
In addition, the executor may decide to contact an estate planning attorney, especially if the timeshare is out-of-state. This is important as the laws concerning timeshare agreements and inheritances vary from state to state.
The next-of-kin and estate beneficiaries do have the option of declining their inheritance, including a timeshare. If they want to do this, they’ll typically be required to sign and file an inheritance disclaimer document.
If the timeshare is disclaimed, it would pass to the next individuals or entities with a right to inherit.
If the estate fails to make the payments on the timeshare while the owner’s estate is being probated, fees and penalties may accrue. At that point, the timeshare company and the property manager may file a lawsuit against the estate to get their money due them pursuant to the timeshare agreement.
However, if the property is disclaimed by all of the heirs, the property manager may likely foreclose on the timeshare, so any accrued debt would be paid from the estate’s assets. That foreclosure shouldn’t impact the credit of any heir who disclaimed the timeshare.
Learn how a living trust can avoid the hassles of probate.
Reference: nj.com (June 3, 2019) “My dad had a timeshare and died without a will. I don’t want it. What do I do?”