One of the biggest challenges for personal representatives of estates if often how to handle timeshares. Sometimes, just one heir is interested. Sometimes, several. Often, none.
The first case is the easiest, though it can often be difficult to get the timeshare company to cooperate on transferring ownership. When there are no other probate assets it may be necessary to open a probate solely for the purpose of conveying the timeshare. (Jointly-owned property, accounts with named beneficiaries, and trusts pass outside of probate.)
Also, if the estate is to be divided equally among several heirs, how should the timeshare be valued? Clearly it has some value since at least one person wants it, but probably not much since the right to use the timeshare unit is coupled with an obligation to pay an annual fee.
If more than one heir wants the timeshare, things can get a bit more complicated. The timeshare company will probably allow two or more people on the contract or deed. (Timeshares can be deeded property or simply contracts to use units owned by a resort company.) All the owners will be obligated to pay the annual fee whether or not they actually use the timeshare. If they all cooperate, that shouldn’t be a problem, but what happens 20 years in the future when one of the owners is no longer interested, or none are, or one passes away? It can be difficult to get off of the timeshare if the other owners are not willing to cooperate.
More often than not, none of the heirs is interested in the timeshare. If any of them wants a timeshare, there is always ample opportunity to buy one that better fits their circumstances and interests. Ideally, the personal representative would sell it and distribute the proceeds. But the market for timeshares is quite weak, in part because resort companies keep developing new (and perhaps better) facilities.
So, the best course of action is usually to simply abandon the timeshare. The estate does have an obligation to make the annual payments under the timeshare contract, but there’s usually a statute of limitations on claims by creditors, in some states such as Massachusetts of just a year after the date of death. So it’s quite unlikely for the timeshare company to come after the estate for payment. And even if they do, if they estate has been completely distributed, there’s would be no money to pay the judgment. In theory, creditors can come after heirs to recoup money due from distributed funds, but the difficulty of pursuing such an action will likely deter them, especially for what would be the relatively small amount of unpaid timeshare obligations.
So, if you own a timeshare and would like to pass it on to one or more heirs without causing these difficulties, what can you do? The best bet is to transfer the contract now while you’re alive. You can agree that you’ll still make the annual payments and have use of the timeshare, but doing this now can help avoid difficulties in the future. Another alternative, if permitted by the timeshare company, is to transfer it into a revocable trust. That way, upon your death the ownership does not change, just the beneficiary or beneficiaries. But make sure you do this in coordination with the timeshare company to be certain the transfer will be effective.