What is a Timeshare?
In simple terms, a timeshare is ownership of a property (typically, a vacation home) for a limited period of time (one to two weeks).
As all timeshare contracts are different, it is important to understand the specific terms of your agreement. In addition to maintenance fees, owners may be required to pay a special assessment if, for example, structural damage occurs to the property. Many timeshares are old and need to be reconstructed, and the cost of this could pass on to the owners if there is a provision in the contract stating so.
Inheriting a Timeshare
Most timeshare agreements include an “in perpetuity clause”, meaning that the individual who inherits the property can be required to pay the annual maintenance fees for the length of time it is owned. This obligation would pass on to any individual who inherits the timeshare upon the original owner’s death. While the beneficiary can be held liable for this debt, in our experience, no timeshare actually seeks these funds from the recipient. In most cases, the timeshare liens and forecloses on the actual timeshare sold, and the debt is considered paid.
We have found that most children are not interested in inheriting their parent’s timeshare and the associated debt. If you no longer use your timeshare and would like to remove it from your estate, we suggest looking into organizations such as www.sellmytimesharenow.com, or speaking to the property owners and advising them that you no longer want ownership. Please be aware that if you stop paying these maintenance fees prior to being removed from your contract, the timeshare may try to sue and collect in debt.
If you do want your timeshare to stay in the family, you may want to consider holding it jointly with your spouse, or adding your children to your contract (after speaking with them and learning that this is an asset they are interested in inheriting). If you already added your children to the contract and later realized that they do not want to inherit your timeshares, you can ask the developer to remove their name so they are not trapped into inheriting the property.
If your child does inherit your timeshare as a result of a clause in your will, they can write to the timeshare and advise that they disclaim inheritance. In one case, our office had to file and appear in the Alberta Court of Queen’s Bench to have the Justice order that the timeshare was not to pass to a beneficiary.
It is important to consider a timeshare as part of your estate when working through the estate planning process. If you have any further questions, please contact our office at (780) 458-8228 or at [email protected]. Remember, we are here to help.