Many seniors have purchased timeshares. These vacation properties give the senior the right to vacation one week or more each year at a condominium that can be located anywhere from Florida, to Hawaii, to foreign countries. The timeshare market has changed dramatically over the past 10 years. Rather than owning a specific week in a specific property, owners’ have points that allow them to utilize many different properties.
How should you handle your timeshare property as a part of your estate plan? You will want to take steps to ensure your timeshare is not subject to probate in the state in which your timeshare is located. This problem can occur because the title (or deed) of the timeshare property is governed by the probate laws in the state in which the property is located. Your family could be faced with having to hire a probate attorney in that state, at considerable expense (sometimes as much as $1,500 or more in legal fees). Most property owners want to save their children the cost and delays of Probate proceedings. Probate is the court process to determine the new owners of property after an owner’s death. A Last Will and Testament does not avoid probate court! Rather a Will only directs the probate court as to how to distribute your assets.
How can you avoid the expense of probate court on your timeshare? You may want to create a Joint Tenancy with Right of Survivorship for your timeshare with your children so that the property passes automatically to your children at your death. Alternatively, you might consider transferring title to your living trust to avoid probate court. If you have already created a trust, you will want to make sure that you deed your timeshare into your trust.
In most states including Arkansas, if a 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. However, when the surviving co-owner dies, probate then becomes necessary if you do not take steps to avoid it. Finally, if you own a timeshare in a community property state (Texas, California, Arizona, and six other states), the joint tenancy or tenancy by entirely rules may not apply and there may even be probate at the death of the first spouse. That can create expense and worry for the surviving spouse and you will want to try to fix that.
In summary, if you own real estate located out of state (including timeshares, farm property, or vacation homes), this real estate can be subject to expensive and time-consuming out-of-state probate procedures. You will want to consider taking steps to avoid this to save your children both money and time.
Adam Williams is the Managing Member of Farrar & Williams, PLLC, and can be reached at the law offices of Farrar & Williams, PLLC at the First National Bank Building, Section Line Road, Hot Springs, Arkansas; Phone: 501-525-4401.