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Old September 16, 2007, 07:39 PM   #1
ljane
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[ 2007 ] Legal Question on Death of Timeshare Owner

I was confronted with this question that I do not have an answer too. Could some of the legal minds out there help with this question?

"If a man dies without a will, and his timeshares were deeded in his name only, who is responsible to keep paying the maintenance fees after his death?

Can his children or his wife be made responsible for these maintenance fees, when neither his children or his wife want his timeshares? What if his estate does not have the finances to continue to pay for them?

Thanks for all answers
ljane

Last edited by ljane; September 16, 2007 at 09:24 PM.
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Old September 16, 2007, 07:55 PM   #2
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Without a will means he died "intestate," and state law give the rules for who inherits - - typically an allocation between the surviving spouse and children, if any, or if there are none, his siblings and children of deceased siblings. State law also provides for an "administrator" to be appointed - - whose job it is to pay the debts and distribute the remaining assets to the heirs.

On the maintenance question, maybe management will just foreclose and take the unit for nonpayment, but there's no guarantee. Assuming that the estate is "solvent" (the assets are worth more than the debts), then if management is able to treat the fees as a "debt" they may be able to get a judgment against the administrator and the heirs who got property from the estate.

In other words, if I die with $100 in assets and $10 in debts, if my heirs inherit the $100 they can be sued for the debt. More likely, my administrator will hold back $10 for the creditor and distribute only $90. If he distributes $100 he as well as the recipients can be sued for the $10.

If I die with $100 in assets and $200 in debts, the administrator of my insolvent estate should pay the $100 to my creditors and nothing to my heirs - - and my creditors cannot sue my heirs. If he distributes the $100 to my heirs he risks being sued by my creditors (and they can also sue the heirs).
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Old September 16, 2007, 08:06 PM   #3
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I had an Aunt die, intestate, I being her only next of kin.I became the administrator of the estate. She owed 35k in debt, had only 10k in savings....how it works is..
the funeral expenses are paid first ( that about took the savings)
the attorney was paid second
nothing left to pay the debt
I cannot be sued for the debt.
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Old September 16, 2007, 08:08 PM   #4
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A person can refuse an inheritance, especially if it is a liability or would be too costly. You'd have to file a written form with the IRS to disclaim the property.
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Old September 16, 2007, 08:27 PM   #5
ljane
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Legal Question on Death of Timeshare Owner

I was confronted with this question that I do not have an answer too. Could some of the legal minds out there help with this question?

"If a man dies without a will, and his timeshares were deeded in his name only, who is responsible to keep paying the maintence fee's after his death?

Can his children or his wife be made responsible for these maintence fee, when neither his children or his wife want his timeshares? What if his estate does not have the finances to continue to pay for them?

Thanks for all answers
ljane
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Old September 16, 2007, 08:31 PM   #6
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In some states, you can disclaim an interest in the decedent's property, in which case, the heirs would have no personal liability. You need to check with a lawyer.
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Old September 16, 2007, 08:47 PM   #7
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You definitely need to talk with a lawyer.

Keep in mind that if the heirs turn away that portion of the estate, the estate is responsible for the debts such as maintenance fees. So you could not leave them in the estate with monies owed but then take any cash out.

But each situation is different, do not take advice from the internet, see a lawyer.
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Old September 16, 2007, 08:57 PM   #8
ljane
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Thanks for all the quick reply's.

This man owns 9 timeshares and his maintenance fees are over $5,000.00 a year. His wife want's him to sell them or get rid of them now, because upon his death, it would be a hardship for her to be responsible for these maintenance fees indefinitely.

Of course he does not want to sell them as he enjoys using them. On the other hand his children and his wife do not want to keep paying fees for something they can not sell or sometimes even give away. (Most people do not want them)

By what has been stated so far, they would be responsible (with or without a will) and his estate would be tied up indefinitely till all 7 weeks of time share are disposed of (or his estate is drained) Is this correct?

Thanks again
ljane
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Old September 16, 2007, 09:08 PM   #9
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If I were in the latter part of my life and had 9 timeshares I really enjoyed visiting. I might separately setup and fund a trust to take care of the wife. Keep in mind that survivor's benefits from Social Security and Pensions are not part of the estate and would not be affected.

I would then keep my timeshares. How long will he be dead that he should give up what he really enjoys while living?

BUT MOST IMPORTANT. HE SHOULD SIT DOWN WITH A LAWYER AND DO ESTATE PLANNING.

Legal advice obtained for free via the internet is guaranteed to be worth at least as much as it costs

Maybe he should leave his money to a little yappy dog like Leona Helmsley if his wife and kids aren't concerned with his happiness. Again, good estate planning can do magic.
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Old September 16, 2007, 09:24 PM   #10
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If there are still charities that accept timeshare donations, he might specify in his will that the timeshares be donated to any charity that will accept them. Again, he should discuss all these ideas with an estate planning attorney.
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Old September 16, 2007, 09:34 PM   #11
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TS

A cheap way to resolve this would be for him to approach people he knows and ask them if they want a TS or two upon his death. If they say yes, then put them in joint tenancy with them but withhold from them the right to bank and use them. Then upon his death and before the will operates, the TS would transfer. The estate would be easy to close. The heirs would owe no maintenance fees. He would then also have the right to use the TS during his life time. Of course, the laws vary from state to state, but the concept of joint tenancy is fairly universal. The problem might be finding people to take them- but advertise this on here and you might get more people. Count me for one if you let me have my choice I would not set up a trust and spend a great deal of money on a lawyer. That is self defeating. You might consult a lawyer about an estate plan but I don't think he would come up with a cheaper or more effective solution to this specific issue. Finally, as a disclaimer, the above is simply an idea to explore and not legal advise.

Last edited by Jimster; September 16, 2007 at 09:41 PM.
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Old September 16, 2007, 09:45 PM   #12
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With full respect for Jimster who is a very knowledgable and helpful member of this forum. A Joint Tenancy is invalid if one of the owners already holds an interest in the property. This can get even more complex based on individual states laws.

To borrow for Wikipedia, here is a good example (note JTWROS mean Joint Tenancy with rights of survivorship):


In order for a JTWROS to be created, the co-owners must share the "four unities":

Time = the property interest must be acquired by both tenants at the same time.
Title = both tenants must have the same title to the property in the deed - if the deed places a condition on one tenant and not the other, they do not have the same title, and the attempt to create a JTWROS is invalid.
Interest = both tenants must have the same interest in the property - e.g. three owners each having a 1/3 interest.
Possession = both tenants must have the right to possess the whole property - if one owner can prove that he or she has been improperly excluded from the property by the other, the JTWROS will be invalidated.
If any one of the four unities is missing, the JTWROS is invalid, and becomes a tenancy in common.
-------------------------------------------

Therefore not only would it be an invalid joint tenancy, but the outside person could demand usage rights while he was alive (and under the false impression that he had created a survivorship based estate solution).

Being Tenants in Common. The timeshares would then have to be probated in each state/location where they physically exist.

Last edited by johnmfaeth; September 16, 2007 at 09:49 PM.
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Old September 16, 2007, 09:57 PM   #13
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Jt. tenancy

John, well, we certainly agree that Tenants in Common is not a wise choice given the situation.

As to the joint tenancy, I still think it is quite possible but I don't want to enter into a debate here (especially since we don't know what state law applies), but I will now modify my statement, in deference to you, to reverse my position to the extent I simply say consult an attorney in the relevant state and let him/her present viable options including will substitutes.

Last edited by Jimster; September 16, 2007 at 10:01 PM.
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Old September 16, 2007, 10:06 PM   #14
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Hi Jimster,

There are indeed ways to avoid this, one is the interim sale to a third party followed by a fresh purchase by the joint tenancy, you are indeed correct in that there are always angles.

But such things are slippery slopes. Especially in the context of state laws of states unknown.

I concur fully that the OP should consult counsel from their state.

More important IMHO is your other advice. Find people now who want them. At worst you can do a sale/leaseback, where they own them but you have a multiyear lease. I know Marriott lets you have a rental lease of up to five years without considering it an ownership transfer (in this case back to the original owner). That should work legally, especially if the lease has a clause specifying that it terminates upon the lessee's death. There are many ways such things could be structured, that is just one example of a possibility.

Again, a sharp lawyer will suggest something like that.
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Old September 17, 2007, 04:03 AM   #15
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You do need to talk with a lawyer. One thing is that, while you can disclaim an inheritance under a will, I'm not sure if you can do that for intestate succession. I know that your creditors can take property you inherit intestate to satisfy your debts, while they can't take property you inherit under a will if you disclaim it. So, check with a lawyer about that. My guess is that you could still refuse the inheritance of a timeshare, in which case you would not be responsible for payment of annual fees. Also, I suspect that any fees that come due after the estate is distributed will not be a debt of the estate, and any heirs who don't inherit the timeshare cannot be liable for the debt.

But I don't know for sure, so you should talk with a probate lawyer.
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Old September 17, 2007, 05:28 PM   #16
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So, ljane let's review...

1. The answer to your question is yes. Dies intestate, probate required, goes to heirs and the one who is lucky enough to be appointed by the court (executor) will be studk with the debts.

2. It makes no difference hiers do not want or do not like the timeshares. The fees are due and owing and the estate is responsible after paying the good folks listed above.

3. As both John and Jim pointed out above, there are ways to prevent this while Gramps is still alive. I agree with Jim that Joint Tenancy would work by statute in morst jurisdictions (the old common law unity stuff does not apply in the majority of places anymore but is always good to know especially if one intends to take a bar exam somewhere in the East). Tenants in Common could work if owners are tenants in common with rights to survivorship.

4. The best advice is to have this person get a will, where he can express where the timeshares are to go. I suspect this fellow with 9 timeshares needs some estate planning and may even be eligible for a revocable trust.
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Old September 18, 2007, 01:26 PM   #17
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Wouldn't a Life Estate be better than Joint Tennancy?

Under a life estate, the current owner would have full rights to the property until death. But then upon death all rights would pass directly to the new owner. You wouldn't need to deal with the four unitities then.

Since the timeshares are probably worth less than would be taxable as a gift, they could be transferred now, as a gift, and now have to worry about gift taxes, or the value being considered part of the estate. Or they could be sold for a small amount.

The "seller" is protected because the buyer has no fights to use of the property until he dies. The "buyer" is protected because the seller legally has to maintain the value of the property. The rest of the family is protected because they will never own the timeshares.

You would still want to talk to someone familiar with estate planning - and you would have to keep in mind the various laws in each of the states where the timeshares are located.

Some states have taken steps to deal with similar situations - Ohio has "Transfer on Death Deeds" which avoids probabe, thought it is subject to estate taxes. With these you designate beneficiaries who the property will pass to directly.
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Old September 18, 2007, 02:27 PM   #18
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Just curious how the govt would look upon a TS will settlement if the TS cost $25,000 when purchased direct from a developer but the most you could get for it on the resale market was $15,000 .... a $10,000 loss.

Would that help any in any tax or probate situation for heirs?

Brian
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Old September 18, 2007, 02:39 PM   #19
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Well, most of this is above my head! I'm just starting to reach the point in my life (based on both assets and age) where I have to worry about things such as will. But thank you to everyone who gave replies!

Quote:
Originally Posted by johnmfaeth View Post
... A Joint Tenancy is invalid if one of the owners already holds an interest in the property. This can get even more complex based on individual states laws....
John, does this apply even in cases where the proposed Joint Tenants are married? I thought a person could pretty much always make their spouse Joint Tenant of a property that the person owned (and that this might even happen automatically in community property states.) So, is the requirement that both parties acquire their interest at the same time waived in the case of a married couple?

Quote:
Originally Posted by johnmfaeth View Post
... Being Tenants in Common. The timeshares would then have to be probated in each state/location where they physically exist.
What about if there is a will? If a person owns, say, 15 different timeshares in 15 different states, and leaves them all to his nephew, does the will need to be probabted 15 times? Or, just once (presumably in the state where the deceased person resided at time of death?)

In general, what laws govern how a property gets transferred -- the laws in the owner's state of residence, or the laws where the property is located? For example, I live in Michigan (a non-community property state) but I own a timeshare in California (which I believe is a community property state). I've assumed that my California timeshare is not community property, because it's in my name only and I don't live in a community property state. Is that right? If I were to die without a will, would the fact that the timeshare is in a community property state affect my husband's right to inherit it?
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Old September 18, 2007, 06:44 PM   #20
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Hi Judy,

These are great questions. In many states Tenancy by the Entirity now exists as the best way to title something for a husband and wife. Unfortunately, this is again of function of individual state laws which do vary slightly (or more) from state to state.

Again, unfortunately, the titling and rules are determined by the individual states in which the timeshares exist.

Yes, your would have to probate a will first in your home state and then petition the probate/surrogates court in each individual state to be named an exectutor/executrix (in that state) to be able to dispose of each timeshare.

It gets even more fun in places like Puerto Rico and the US Virgin Islands where the courts follow US standards but lawyers are not cheap.

This is why determining a plan with a competant attorney in your state is so important. Luckily trusts and such are more uniform nationally so while a certain deed type (ie. Grant vs. Warranty) may be needed for different states to transfer title (without "polluting" the chain of title from future title insurance perspective) that is a detail that any competant closing service can handle.

For a large number of timeshares, a trust may be best (especially if there are other substantial assets. Your lawyer may determine that re-titling with some form of survivorship may be best (as only a death certificate is required when filing the deed selling the unit).

May this be a problem in the very distant future !!!

John
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Old April 11, 2014, 12:10 PM   #21
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Because your timeshare contract will certainly establish what happens to your timeshare when you die in one of its clauses, I highly recommend you to read the timeshare agreement cautiously. Some timeshares can be inherited, while others can be owned by more than one person, however, whatever the contract says, the truth is that all of the clauses will always benefit the resort. Also, ask as many questions as possible during the presentation if you are seriously considering acquiring a fractional ownership

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Old April 11, 2014, 12:24 PM   #22
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Never mind, sorry.
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Old April 11, 2014, 05:57 PM   #23
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Because your timeshare contract will certainly establish what happens to your timeshare when you die in one of its clauses, I highly recommend you to read the timeshare agreement cautiously. Some timeshares can be inherited, while others can be owned by more than one person, however, whatever the contract says, the truth is that all of the clauses will always benefit the resort. Also, ask as many questions as possible during the presentation if you are seriously considering acquiring a fractional ownership
Why are you responding to a post from 2007?????
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Old April 11, 2014, 07:19 PM   #24
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Denise, It was spam from Mexican TS Solutions. The link was removed.
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Old April 11, 2014, 07:26 PM   #25
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Denise, It was spam from Mexican TS Solutions. The link was removed.
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