What Happens to a Timeshare When You Die?

Some shady companies might try to tell you that your children will be forced to inherit your timeshare when you die, but that’s not necessarily true. There are many kinds of timeshares — and many kinds of timeshare contracts. What happens to your timeshare after your death will depend on what type of timeshare you own.

In most cases, your timeshare will become part of your estate and it may be passed on to your heirs, but there are steps you can take now to prevent this if you’re certain your loved ones don’t want it.

Will Your Children Be Forced to Inherit Your Timeshare?

It is possible that your children could inherit the timeshare without wanting it. It is not necessary. If you and your heirs make the right moves, they will not be forced to inherit your timeshare. Ownership of the timeshare could be an unwanted burden for your loved ones.

*Some companies that offer to get you out of your timeshare — for a large fee, of course — will tell you that if you don’t cancel the contract children — or other heirs — will be forced to inherit a timeshare upon the owner’s death. This is not true. As long as your children take the correct steps and avoid some pitfalls, they cannot be forced to inherit something they don’t want.

What is a “Perpetuity Clause”?

Many timeshare contracts – some sources say 75% – contain perpetuity clauses. A perpetuity clause states that your timeshare is yours in perpetuity: forever. When you die it becomes part of your estate. There is no termination clause. The contract simply carries on.

Benefits of Timeshare Estate Planning

The best time to deal with timeshare inheritance issues is when you are still alive. If you’re a timeshare owner, talk to all of your children and ask them if they even want the timeshare. Be sure that they understand the costs involved. Assess the current status of your timeshare. Are the fees paid on time? Is the mortgage paid off?

Once you know what you want to see happen to your timeshare, discuss it with an estate planner, the designated executor of your will, or your lawyer. They will have valuable insights into how to achieve your goals.

Set Up a Beneficiary Deed

If one or more of your children wish to take over your timeshare, consider setting up a beneficiary deed or transfer-on-death deed. This is a document that automatically transfers ownership of a property on your death. The property may not have to go through probate, depending on your state’s probate laws.

You may also be able to add a child’s name to the timeshare deed, which may achieve the same purpose. This may vary with the specific terms of your timeshare contract or with state laws: consult an attorney to be sure!

If any family members do not wish to inherit the timeshare, you will want to make sure that their names are not on the timeshare deed.

What Happens to a Timeshare When You Die?

When you die, a timeshare with a perpetuity clause will become part of your estate. It will go through the probate process, which will determine who will inherit the property.

During the probate process, the executor of the estate will be responsible for paying fees, mortgage payments, or other obligations out of the estate’s funds.

Probate

Probate is the legal process of assessing a deceased person’s assets and determining their disposition. Probate usually begins with an assessment of the deceased person’s will. If there is no will or the will is not legally valid, the person is said to be intestate, and their assets will be distributed according to state probate law.

The probate process also involves the settlement of any creditor claims on the estate. The deceased person’s debt will be paid from their assets before the distribution of assets to the heirs.

A will usually designate an administrator of the estate. If the deceased person is intestate the probate court will appoint an executor. The executor is responsible for managing the affairs of the estate until the probate process concludes and the estate’s assets are distributed.

Will a Will Avoid Probate Court?

An estate will pass through probate even if there is a will. A legally valid makes the probate process faster and easier, but the process must still take place.

Some assets may be removed from the probate process with a beneficiary deed or transfer-on-death deed. This will depend on your state’s probate laws. Check with an estate planning attorney to be sure.

What is a Disclaimer of Interest?

A disclaimer of interest is a legal document that allows an heir to renounce an inheritance. If you own a timeshare and your children don’t want it, each of them will have to file a Disclaimer of Interest to avoid inheriting it. They will have to be aware of several important points.

  • They must not use, visit, or rent the timeshare. If your children gain any value at all from the timeshare they may be forced to keep it.
  • They must not pay fees or mortgage payments from their own accounts. The estate should make all payments.
  • They must file the document on time. The time limit will vary with state laws but in most cases it is nine months from the death of the owner. Minor heirs will have until nine months after their 21st birthday.
  • The document must meet legal requirements. Have an attorney prepare the Disclaimer of Interest. It’s cheaper than inheriting a timeshare!

The Disclaimer of Interest must be filed with the probate court that’s handling the estate.

Is buying a timeshare ever a good idea? To learn more, check out this video:

Options to Get Rid of Your Timeshare Now

The most effective way to prevent your timeshare from being passed on to your heirs is to get rid of it before you die. As the original owner, it will be simpler and this will allow you to control the situation and resolve the outcome while you’re still around.

Getting rid of a timeshare isn’t easy. These are some options that can work in some cases.

Is there a Deedback Program?

Review your timeshare agreement. Some timeshare companies and resorts, notably Marriott, Wyndham and Bluegreen, have their own exit programs, which are often called deedbacks. The resort is taking the deed back from the owner. Not all resorts have these programs, and those that do may not advertise them. Search online for any discussion of a feedback or exit program. If you call the resort, ask specifically for whoever handles exits or deedbacks.

Do You Still Owe Money on the Timeshare?

Most timeshares are purchased with some form of financing. If you used the resort’s financing option your timeshare will be collateral for your loan. That means your timeshare is considered “encumbered” by that mortgage. It will be more difficult to sell the timeshare or to use a deedback option if your timeshare is encumbered.

If you still owe money on your timeshare and you’d like to get rid of it, consider paying off the loan. If you can’t pay it off immediately, refinancing may be an option. Many timeshare loans carry high interest rates, so you may save money in the process. You may also be able to get rid of the timeshare, which means you won’t be paying fees and your children won’t have to worry about inheriting it.

Sell or Rent It

You can sell an unwanted timeshare, but resale may not be easy. If you own a timeshare at a high-demand resort in a popular destination (a Disney Vacation Club timeshare property in Florida, for example) you will probably find a buyer, but the price may be a small fraction of what you paid for it. Timeshares at low-profile resorts in less popular destinations may not sell at all.

Websites like Timeshare User’s Group and Redweek are popular and affordable venues for listing timeshares for sale. Checking their listings will give you a sense of what your timeshare is worth. Selling your timeshare may take a considerable amount of time.

Beware of sites that offer to sell your timeshare for a high price but demand a large listing fee upfront. They may make a convincing pitch, but the timeshare will probably not sell and the money you spend will be wasted.

Some timeshare contracts require the resort’s approval for any sale. Some contracts also allow the resort to come after you if the buyer fails to pay the fees. Check your contract for details.

If you’re struggling to pay the annual fees, timeshare rentals can be a good short-term option. You can also rent your timeshare out using listings on Timeshare Users Group or Redweek. Some resorts will also rent your timeshare out for you. You may earn enough to cover your annual fees, but your heirs will still have to eventually deal with the hassle of getting rid of the inherited timeshare.

Transfer the Deed

Some timeshare resorts will accept your deed back as a “deed in lieu of foreclosure” if you stop making payments. Foreclosure is an expensive legal process and the report may find it easier to simply take the deed back and resell it.

This will probably not work if you still owe money on your timeshare. It’s also risky. Late payments may be reported to the credit bureaus, which will affect your credit. The resort may proceed with foreclosure, which could damage your credit even more.

Give Your Timeshare Away

You may be able to find a relative or friend who is willing to accept your timeshare as a gift. You may even be able to give it to a stranger: Redweek and Timeshare Users Group have listings for giveaways. You can list the timeshare on Nextdoor or Craigslist.

Remember that the resort may have to approve any transfer and that you may still be liable if the new owner fails to pay the obligations, including late fees if they neglect to pay the annual maintenance fee in a timely manner. That liability may be inheritable: read your contract carefully and check with an attorney to be sure.

Hire a Timeshare Exit Company

Timeshare exit companies promise to get you out of your timeshare contract. Be careful. Many timeshare exit companies may not deliver what they promise. Some are outright scams. One popular company, Timeshare Exit Team, was recently sued by Washington’s Attorney General for defrauding thousands of customers.

Most timeshare exit companies will not quote prices upfront. They say the cost depends on the specific needs of your case, but in many cases, they will charge whatever they think they can get. If a company asks about your financial status before they quote a price, beware. Look for companies that use an escrow system that releases your money only when you are out of your contract.

Timeshare exit company reviews indicate that costs commonly range from $3,000 to $5,000, with many clients paying much more. That’s a lot of money. Do your homework carefully and do a detailed investigation of any company you’re considering working with. Start with this list of the best timeshare exit companies.

The Bottom Line

When a timeshare owner dies, in most cases the timeshare becomes part of the estate. That does not mean that your children have to inherit it. They can refuse the inheritance with a Disclaimer of Interest, but they will have to avoid using the timeshare or making payments from their accounts.

Each timeshare and each timeshare contract is unique, and state laws vary. You’ll need a strategy designed for your situation. Decide what you want to happen to your timeshare and consult a lawyer to be sure!

FAQs

What is a Timeshare and How Does it Work?

When you buy a timeshare you are buying the right to use a property or group of properties for a fixed period of time every year. You will pay an annual maintenance fee, which can go up, and you may have to pay special assessments for needed work. There are several types of timeshare contracts. Many contain perpetuity clauses, which mean the timeshare and its fees are yours for life and may be passed down to your heirs.

If I Stop Paying Timeshare Fees, Will I Qualify For a Credit Card?

If you stop paying timeshare fees the late or missed payments will be reported to the credit bureaus, and your credit score will drop. The resort may foreclose, which will hurt your credit even more. The actual damage to your credit will depend on what your credit score was before you stopped paying and how much information is in your credit file: if you have a thin credit file the impact will be greater. You may still be able to get a credit card but it will be more difficult and you may not get advantageous terms.

Will My Parents’ Timeshare Pass to Me?

Many timeshare contracts contain perpetuity clauses. These timeshares will become part of your parents’ estate upon their death. If you don’t want the timeshare you will have to file a Disclaimer of Interest within the time permitted by your state’s probate laws. Do not use or rent the timeshare and do not pay any fees or other costs from your own account. Consult a lawyer for specific advice.

Is My Timeshare Deeded Real Estate?

If your timeshare is owned by deed it is considered real property. It can be rented, sold, willed, or inherited, subject to restrictions in the contract. Not all timeshares are owned by deed. Some have a leasehold arrangement with a specific lease term. Consult your timeshare contract to be sure, and ask for legal advice if you don’t understand the terms of the contract.

What is the Difference Between a Revocable Trust and an Irrevocable Trust?

Revocable trusts can be changed by the living grantor. This means assets can be removed or the trust can be terminated. A revocable trust can allow your beneficiaries to avoid probate court and all of the guardianship or conservatorship proceedings. An irrevocable trust can’t be changed for any reason.