There are many benefits to owning timeshare property. The majority of timeshare owners also wish to pass on that valuable property to their children when they die. However, timeshare ownership is not a straightforward as owning your home, or even owning a summer home. So, if you are considering establishing a living trust as part of your estate plan, you should know that funding a timeshare into a living trust takes the expertise of your estate planning attorney.
What is a living trust?
A living trust is a favorite among clients when it comes to probate avoidance. Most clients are seeking ways to avoid the lengthy and expensive court proceeding. In the absence of a trust or some other estate planning tool, estates are required to go through probate. A “living trust” is a trust that becomes effective during your lifetime, as opposed to only becoming effective after your death. Like other types of trusts, property transferred to a living trust will be held and managed by your trustee until it is time to transfer the trust property to your heirs.
The basics steps in creating a living trust
Now that you know the truth about living trusts, there are just a few straightforward steps required to create a revocable living trust. Your estate planning attorney will initially meet with you to determine what your particular needs are. From this, your attorney will draft the trust document which contains all of the terms of the trust. That is, the instructions for the trustee to follow. After drafting the trust document, the property must be transferred or “funded” into the trust. It’s really that simple, if you have the assistance of an experienced trust attorney.
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 it 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.
Join us for a FREE seminar! If you have questions regarding living trusts and time shares, or any other estate planning issues, please contact the Schomer Law Group either online or by calling us at (310) 337-7696.