ESTATE PLANNING WITH TIME SHARES & VACATION HOMES

Most people are unaware that having a time share can create estate planning problems. Time shares are typically considered real property, and the ownership is evidenced by a deed. As such, they are considered an asset for estate planning and tax purposes. They are used as vacation homes and are therefore usually located in another country or in a state which is not your primary residence. Since the time share is located out-of-state, it means that when you pass away, your heirs will need to do an ancillary probate. In short, that means they will not only need to probate your will or administer your estate in the state where you reside, but it will also need to be done again in the state or country where the time share is located. Of course, if the time share is located outside of the United States, that becomes a more complicated matter.

When engaging in estate planning, it is important to keep in mind that vacation homes other than time shares are also assets which must be dealt with. Vacant lots purchased with the intention of building on them tend to be forgotten assets. Often, they are not worth much in terms of monetary value. Again, if these lots or other vacation homes are located in a state outside of the state where you reside, a second estate proceeding will need to be done upon your death.

What is the solution? Establishing a revocable living trust and transferring the time share, vacant lot or vacation home into the trust will avoid probate, at least with respect to the property you transfer into it. This usually also involves the preparation and recording of a new deed changing the ownership to your trust. Another option, which is probably a better one for time shares or other property located outside the United States, is to add at least one joint owner to the deed, as an owner with rights of survivorship. Generally speaking, putting your childrens names, or the names of another family member, on your assets is a bad idea. If that child gets sued or divorced, the property could be at risk. You would also need that child’s consent to dispose of the time share or make changes to it. If the time share is not very valuable, it is certainly an option, especially if the time share is located in a foreign country. If you own a vacant lot in another state, you may consider selling it during your lifetime so that your family does not encounter problems in this regard.

Of course, before transferring any time share or vacation home to a trust or adding an additional owner, one should seek legal counsel to see what is the best option, given one’s particular situation.