Estate Planning Blog Articles

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Why Timeshares are One of the Worst Assets to Inherit

Timeshares are often marketed as affordable vacation ownership. However, what happens when they become part of an estate? Many heirs are surprised to learn that timeshares do not function like traditional real estate assets—instead of inheriting a valuable investment, they may be left with ongoing maintenance fees, restrictions on resale and unexpected legal obligations.

Understanding the downsides of inheriting a timeshare can help beneficiaries decide whether to keep, sell, or disclaim the property.

The Hidden Costs of Inheriting a Timeshare

Unlike traditional real estate, timeshares come with mandatory fees and restrictions, making them a financial liability rather than a valuable inheritance.

1. Ongoing Maintenance Fees

One of the most significant downsides of inheriting a timeshare is the never-ending maintenance fees, which must be paid whether you use the property. These fees:

  • Increase annually, often outpacing inflation
  • Can amount to thousands of dollars per year
  • Must be paid even if the timeshare goes unused

Failure to pay can result in collections, credit damage, or even foreclosure.

2. Difficulty Selling or Transferring Ownership

Many assume they can sell an inherited timeshare. However, resale is notoriously difficult. Timeshares:

  • Depreciate quickly and often have little to no market value
  • Have limited buyer demand, even for desirable locations
  • May include contract clauses that restrict resale or transfer options

Some heirs spend years trying to offload an unwanted timeshare, only to realize they are stuck paying fees indefinitely.

3. Potential Legal Liabilities

If a timeshare is deeded property, heirs become legally responsible for all associated costs. This means:

  • The management company can take legal action to collect unpaid fees
  • Inheritance laws may force multiple heirs to share financial obligations
  • Some contracts bind heirs indefinitely, making it hard to walk away

Even if a timeshare seems appealing initially, the long-term costs and restrictions can outweigh any perceived benefits.

How to Avoid Inheriting a Timeshare

1. Disclaiming the Inheritance

Heirs are not required to accept a timeshare inheritance. If an estate includes an unwanted timeshare, beneficiaries can legally disclaim it by filing a formal refusal with the probate court before taking ownership.

However, disclaiming must be done before using the timeshare or making any payments, as this can be seen as accepting ownership.

2. Negotiating a Deed-Back with the Resort

Some resorts allow heirs to return the timeshare through a “deed-back” program. This involves:

  • Contacting the timeshare company to check eligibility
  • Submitting necessary paperwork to relinquish ownership
  • Paying any final fees required to exit the contract

Not all resorts offer this option; some may charge a fee for releasing ownership.

3. Seeking Legal Assistance to Exit a Timeshare

If a resort refuses to take back the timeshare, an estate planning attorney can help explore other legal options. This may include:

  • Reviewing the contract for loopholes
  • Negotiating with the management company
  • Exploring legal exit strategies that protect the estate from liability

Many families assume they must accept an inherited timeshare. However, it may be possible to legally remove this financial burden with the right approach.

Should You Keep an Inherited Timeshare?

While most heirs choose to avoid inheriting a timeshare, some may find value in keeping one under the right conditions. It may be worth keeping if:

  • The location is desirable and frequently used by family members
  • The maintenance fees are affordable compared to rental costs
  • The contract allows for flexibility in usage and resale

However, long-term costs and restrictions should be carefully evaluated before deciding.

Protect Your Estate from Unwanted Assets

If you or a loved one owns a timeshare, addressing its future in an estate plan is essential to prevent heirs from inheriting an unwanted financial burden.

Our law firm helps clients plan for complex assets, negotiate timeshare exits and protect their heirs from unnecessary liabilities. Schedule a consultation today to discuss your estate planning options.

Key Takeaways

  • Timeshares come with lifelong financial obligations: Maintenance fees increase yearly and must be paid whether the timeshare is used.
  • Reselling a timeshare is difficult: The market for used timeshares is small, and many contracts restrict transfer options.
  • Legal liabilities can pass to heirs: If a timeshare is accepted, the beneficiary is responsible for all associated costs and fees.
  • Heirs can disclaim a timeshare inheritance: Legally refusing the inheritance before assuming ownership can prevent financial responsibility.
  • Legal guidance can provide exit options: An estate planning attorney can help navigate disclaimers, deed-backs and contract negotiations.

Reference: Yahoo Finance (Aug. 16, 2024) “Inheriting a timeshare can be bad news. Here’s why, and how to avoid it”

Boomers, Beware: Don’t Spend Your Money This Way in Retirement

Whether because they feel like they’ve earned the right to splurge or because they don’t understand how problematic overspending can be for a retirement budget, there are several things Boomers really need to skip. This recent article, “8 Things Boomers Should Never Buy in Retirement,” from msn.com, explains.

Overpriced vacations. Most retirees hope to travel during their golden years. If it fits with their budget, that’s great. However, even if your nest egg boasts seven figures, a $50,000 around-the-world cruise every year will quickly empty even the biggest retirement accounts. This is an exaggeration, of course, but what is “overpriced” depends on your lifetime and your retirement funds.

Extravagant gifts. Retirees are often a little too generous with making gifts, enjoying seeing the next generation or grandchildren benefit from their largesse. However, too many gifts will empty the savings needed for a long retirement.

Unnecessary or Overly Expensive Home Renovations. There’s nothing wrong with occasionally upgrading your home if you plan to age in place. Putting in grab bars in showers, adding lighting, etc., will make your home safer and could enhance its resale value. However, is now the time to install the latest solar panel system or redo the kitchen with top-of-the-line kitchen appliances? It is probably not the best investment for your retirement budget.

Buying Discretionary Items on Credit. Most retirees live on a fixed income from Social Security and retirement or pension income. If they spend beyond those amounts, they’ll do so by going into debt. Credit card debt is very expensive and will drag down even the best-created retirement budgets.

Timeshare Vacation Homes. Traveling to another location for a few weeks or a month every year or trading with other time-share owners to go to different locations is very appealing. However, the reality is that timeshares are expensive and restrictive. They are not easily re-sold, rarely appreciate value, and have ongoing expenses. You’ll be better off taking traditional vacations.

Excessive Life Insurance. If you didn’t purchase life insurance in your 40s or 50s, by the time you reach retirement age, the cost of a new life insurance policy could prove to be prohibitively expensive. If your kids are grown, the mortgage is paid off and your retirement accounts are in good shape, this may be an expense you can skip.

Out-of-Network Medical Services. Medical expenses typically increase as we age. However, don’t spend more than you must. Most insurance plans charge more if you use a doctor or other healthcare provider who’s out of network, so it pays to find an in-network provider before undergoing any procedures.

Let Your Children Pay for Some Things. It’s natural to want to spend money on your family but be protective of your nest egg. Gifts are one thing, but paying for an adult’s cell phone bill, rent, or credit card debt will drain your resources fast.

Everyone’s financial situation is different, but remember that spending in some of these categories will likely cause more financial difficulties than you need. The best advice? Stick to a budget, and don’t live beyond your means. It’s much harder to dig yourself out of a financial hole when living on a fixed income.

Reference: msn.com (Aug. 18, 2023) “8 Things Boomers Should Never Buy in Retirement”

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