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Most, if not all, timeshare owners will have to decide, at some point in their life, who they want to receive their timeshares after they pass away. Most timeshares are real property interests, that are deeded into the owner(s)’s name(s). If a timeshare is held in an individual’s name at death, just like any other piece of real property, it will have to go though probate. Most people, and some estate planning attorneys, do not realize that timeshares are a real property, and forget to put it into their Revocable Trust. The majority of real estate owners want their children to avoid the cost and delays of Probate proceedings after they die, and to avoid this, a Revocable Trust is one of the easiest and cost-effective ways.
Having a Will does not avoid probate, and especially does not avoid probate when it comes to real estate interests like timeshares. Many people think putting two names on a deed avoids probate. That is not entirely true. It is better to say it delays probate. If two owners, such as husband and wife, own the timeshare as “Joint Tenants” or as “Tenants by the Entirety,” probate is avoided when one owner dies because the co-owner has automatic “rights of survivorship” and becomes the sole owner. This can defer probate, but not avoid it; when the surviving co-owner or sole owner dies, probate will follow.
Some timeshare owners try to avoid probate for the timeshare or other real estate property by conveying the property into one of their children’s names while the owner is still alive. This can cause major headaches down the road though. First of all, there are gift-taxes associated with doing this. Also, if the child goes bankrupt, gets a divorce, or is sued, the timeshare or other real estate interest is included in their estate for these proceedings.
Not only does the timeshare or other real estate interest get included in those proceedings, but the original owner has lost full control of the timeshare. If the owner and their children disagree, they cannot act alone as they once were able to. The timeshare owner will need their child(ren)’s approval for all actions in relation to that timeshare. They could no longer sell, convey, change, or do anything without the child’s signature.
Our attorney encourages her client’s to use a Revocable Living Trust for estate planning purposes, probate avoidance and/or tax benefits. The problems of adding adult children on title to the timeshare are avoided with a trust. To read more about the benefits of a Trust, please read our previous post Living, Revocable, and Irrevocable. Let’s talk trusts.
If you have already created a trust, you need to make sure that you transfer your timeshare and other real property into the trust by way of properly prepared and recorded conveyance documents. Please feel free to call our office today and set an appointment to make sure your trust is funded correctly. If you do not have a trust but are interested in finding out if you need one, call our office today for a free consultation!