The benefits of owning timeshare property are many. The majority of timeshare owners also wish to pass on that valuable property to their children when they die. However, timeshare ownership is not as straightforward as owning your home, or even owning a summer home. So, if you are considering establishing a trust as part of your estate plan, you should understand how funding a timeshare affects trust administration.
The benefits of funding a timeshare to your trust
If you have a living trust, especially, including your timeshare in your estate plan is a worthwhile planning decision. For the majority of timeshare owners, the property is located in a state other than their state of residency. In order to avoid probate involving the out-of-state timeshare property, you need to include the timeshare in your living trust. This will avoid complications down the road.
What happens if I don’t include my timeshare in my trust?
The consequences of leaving your timeshare out of your trust can be disconcerting for your family in the future. When your timeshare property, or any other property for that matter, is not included in your trust, then your estate must be distributed through the probate administration process. There would be a separate probate procedure in each state where you own property, including the state where your timeshare is located, in addition to any other state where your assets may be located. In other words, your loved ones will be forced to participate in the expensive and time-consuming court process, both in California and some distant state like Florida or Hawaii.
The difference between deeded and non-deeded timeshares
If you own a deeded timeshare, it means you physically own a portion or percentage of the property. Non-deeded, or “right to use” timeshares only afford the right to stay at the property. So, if your timeshare property goes under, and you only have a “right to use,” then you would likely lose the ability to use the timeshare program you belong to, in most situations.
Funding a Deeded Timeshare
When you own a deeded timeshare, that means you actually have an interest in the property. You will be given a deed for the property. It is no different than receiving a deed for your home, or any other real estate you own. When it comes time to fund a deeded timeshare to a trust, you must obtain a new deed. This new deed will transfer the property ownership rights from you to the living trust you have established. Your estate planning attorney will ensure, through your timeshare association, that there are no rules with which you must comply in order to make the transfer.
Funding a Non-Deeded Timeshare
Funding a right to use timeshare can be a more difficult process since you do not actually have an ownership interest in the real estate. Basically, you can assign your rights to use the timeshare to someone else, including your trust. However, you should consult once again with your timeshare association to confirm that this type of transfer is allowed.
Choosing the proper trustee for your trust
For those who are in the process of establishing a trust, there are many factors that should be considered when choosing the right trustee. You should select someone that will be able to carefully manage your trust assets. That person should be capable of exercising the proper level of attentiveness when it comes to following your instructions. Your trustee should also be able to place the interests of your beneficiaries above all others. Talk to your estate planning attorney for help in selecting the right trustee for you.
The services of a trustee are critical to successful trust administration. As the trustee, you are the individual responsible for ensuring that the requirements set out in the trust agreement are satisfied. The trustee is also responsible for managing the assets that have been placed in trust, as well as maintaining accurate records of all transactions that involve the trust property. Because this obligation is very important, here are a few common mistakes that should be avoided in trust administration.
Join us for a free seminar today! If you have questions regarding estate planning, trust contests, or any other trust administration issues, please contact the Schomer Law Group either online or by calling us in Los Angeles at (310) 337-7696, and in Orange County at (562) 346-3209.
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