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Thursday, March 13, 2014

SHOULD I PUT MY TIMESHARE IN MY TRUST?

For some people timeshares are the perfect vacation solution.  For others, they are a nightmare of fees and wasted time on paperwork.
The trick for estate planning is to figure out which category your children are in.

Most, but not all, timeshares are an interest in real property.  That means that you do actually own something (other than all of the fees).

Different timeshares are set up differently, but often they are what lawyers refer to as a “tenancy in common” where distinct people or entities have a percentage ownership in a piece of real estate.  The co-owners also have a timeshare agreement that designates the manner in which they share the property.


WHY YOU MAY WANT TO PUT YOUR TIMESHARE IN YOUR TRUST



Here in California, people who have accumulated assets are often advised to place those assets in a revocable living trust.  If you want to fund the trust with real estate you draft up a deed and record it just like you do with any real estate transaction.  There are a lot of benefits, which you can read about in my post “What is a Trust?,” but the big selling point is that the real estate is no longer part of your estate and will not be subject to probate, which in California is often more expensive and time consuming than administering a revocable living trust (however, is really depends on the nature of your assets).  But is this really a benefit when it comes to timeshares?


WHY YOU MAY NOT WANT TO PUT YOUR TIMESHARE IN YOUR TRUST

When an estate is probated in California part of the process is determining the value of the property in the estate.  The re-sale value of a timeshare is often very low, the cost of traveling to the timeshare destination can be high, yet the fees continue on whether you use the timeshare or not.  This trifecta can cause your fabulous Hawaiian timeshare to be a burden on your heirs, especially if your children are not at a point in their lives where they can afford the time away from work and travel fees to vacation in Hawaii.  If this is the case for you, consider leaving the timeshare in your estate.  Some people choose to move everything of value except the timeshare into their revocable living trust.  That way, if the children want the timeshare, they have the option of doing a small estate probate.  If they don’t want it, they don’t bother with a probate at all.  The timeshare company can choose to open a probate itself and demand the fees from the estate (which, like I said, might only contain the timeshare itself), but it will bear the expense of that probate.


If you are getting the idea that this is a complicated area of the law, you would be right.  I’m all for people empowering themselves with legal information, but, as I said before in my post “Should I use Online Legal Forms?”  I don’t consider trusts to be do-it-yourself material.  It is just too easy to have all of your effort be for naught because of one little oversight.



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