What Happens to a Timeshare When the Owner Dies?

A timeshare can be a solid investment—cheaper than purchasing a home or condo in a popular destination area, and responsibilities like maintenance are left to the property manager.

But before you enter into a timeshare agreement—or if you find yourself the heir of a timeshare—it’s important to know what happens when the owner of the timeshare dies.

How a timeshare works

Let’s first briefly review how a timeshare works. Timeshares are based on the premise that plenty of people want to purchase access to beautiful vacation spots but simply don’t have the financial means to buy a home or condo in these locations.

As the name indicates, if you purchase a timeshare, you’ll be sharing “ownership” of a property with others. Each owner will get “custody” of the property during the time period dictated when purchasing the timeshare. For many, this is a 1/52 share, meaning you own access to the property one week a year.

For people who don’t want to buy into a yearly vacation, they can choose less frequent options, like a 1/104 (one week every other year), while others can choose more frequent or longer stays, like 1/12 (one month a year).

What happens when a timeshare owner dies?

In addition to things like frequency and dates, timeshare agreements also typically include what is known as a perpetuity clause, meaning the timeshare will be valid for the lifespan of the original owner.

However, in the case of the owner’s death, a timeshare becomes part of the estate, and therefore, the obligations attached to it are passed onto the next-of-kin or the beneficiary of the estate.

Depending on the fees and any existing payments, the timeshare can either be a welcomed gift or a financial nightmare. If you inherited a timeshare, here are a few things you should (and should not) do:

• Read the contract, immediately. It’s never easy to deal with the passing of a loved one, and worrying about financial and legal obligations is often the furthest thing from your mind. However, it’s important to understand the timeshare contract to avoid penalties or legal recourse that can happen for late fees or breach of contract.
• ​Consult a lawyer. Timeshare contracts and inheritance laws are complicated and can vary state by state. You will need to understand the inheritance laws in your state and the state in which the timeshare is located. Also, you will need to have your lawyer look into any will or estate documentation. A lawyer can make this much easier and help you avoid costly mistakes.
• ​Don’t stop making payments. If you’re the owner of the newly inherited property but are hoping to get rid of it, it might be tempting to stop paying. But fines and fees can quickly accrue, and some property management companies might start legal proceedings in as little as 60 days or less.
• ​An inheritance can be declined (often through a disclaimer document). If you do not want ownership of the timeshare, you can choose to decline the inheritance, in which case it would go to the next-of-kin. If they deny it, then the property would likely be foreclosed on and any debt would be paid through estate assets, if available. In this case, the heirs would not suffer from credit damage typically associated with foreclosures.
• Don’t wait. Though processes like probate (determining who legally owns the property after death) can take time, you should have an idea of what course you’re going to take as soon as possible to avoid compounding the issue.

What are your options if you inherit a timeshare?

If you inherit a timeshare after the death of its owner you have a couple options—you can transfer, or sell, the timeshare. Or you can keep it. Here is a closer look at the two options.

Transferring the timeshare

Transferring a timeshare can be a good idea if you don’t want to keep it and didn’t decline the inheritance. It’s also a good option if it can make you a little money or take the property off your hands for little to no cost (which can be better than mounting fees).

If you’re planning on selling, it’s important to know it’s not as simple as selling a house. Instead, the contract could include specific stipulations about transferring. For example, it might be illegal for you to transfer the timeshare privately or without contacting the management company. As such, if you’re considering selling, there are a few steps to take:

1. Read the contract thoroughly to avoid any issues.
2. Consider a listing company that doesn’t require upfront fees to find out what, if any, value is associated with the timeshare.
3. Contact the timeshare property to see if they can help sell the property. Some companies, like hotels that offer timeshares, may be willing to sell the timeshare for you for a large commission, which might just make everyone happy.

Because timeshares are a big business, be wary of third-party sellers that promise quick sales and demand upfront closing costs. Instead, contact the company and request a list of licensed brokers.

After death, a timeshare can quickly turn into an expensive burden. But if you carefully review both the contract and your options and seek legal counsel, you might be able to avoid long-term financial issues.

Keeping the timeshare

If you inherit a timeshare after the death of its owner, you could consider keeping it. If that’s the case, you’ll want to consider the risks to ensure you’re making the right choice.

The biggest risks associated with timeshares is the costs of keeping them. First, you’ll be responsible for a few fees, including:

• Annual maintenance fee: These can run around $1,000/year on average but vary wildly by property.
• Assessment fees: These fees can include resort upgrades, management or ownership changes or lapses, and weather-related damages and repair. In many cases, these are unanticipated and can be costly (thousands of dollars), particularly in the case of extreme weather damage from hurricanes, earthquakes, and volcanoes.

Toss in the price to travel to the destination of your choice, and it’s easy to see how the cost and responsibility can add up.

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