Timeshare contracts are so binding that even death doesn't necessarily offer an escape. Most timeshare agreements contain a "perpetuity clause." Basically, the clause requires you to pay the associated costs of owning the timeshare for the rest of your life. When you pass away, the timeshare becomes part of the estate. The obligation is inherited by the designated beneficiary or next-of-kin. Depending on your child's ability to keep up with the fees, the timeshare may be a gift or a curse.
TL;DR (Too Long; Didn't Read)
If your children are the beneficiaries, your timeshare will get passed on to them after your death.
Responsibility to Pay
Your estate and the heirs are responsible for maintenance fees after your death. As the timeshare depreciates in value, the fees will likely increase. The timeshare company can't go after your beneficiaries if they choose not to pay, but it can go after your estate. When the payments aren't made, the late fees accumulate. The resort will foreclose and take back the timeshare. If the estate has assets at the time of death, the assets must be used to satisfy your debt. Some assets are exempt, such as your homestead property, but assets subject to probate are often unprotected.
Subject to Probate
The way your timeshare title is held affects how it passes to your beneficiaries. If you own the timeshare with a co-owner as "joint tenants" or "tenants by entirety," it automatically passes to the surviving owner. Probate is eliminated, at least temporarily. When the surviving owner or sole owner dies, the timeshare is subject to probate.
A will doesn't avoid probate, but instead directs how the assets should be distributed. The length of time it takes to complete probate varies based on the state laws and value of assets. During probate, your beneficiaries can't use the timeshare. The executor of the estate is responsible for making sure the maintenance fees are paid while the timeshare is in probate. If you want to keep the timeshare out of probate, consider adding your child or beneficiary to the deed as an owner or placing the timeshare in a revocable trust.
Even though your timeshare may pass on to your children upon your death, they aren't forced to accept it. By completing a written disclaimer document, your children can decline the timeshare. Specific requirements may differ among states, but a letter or statement refusing the timeshare is generally acceptable. Your children only have nine months from the date of your death to submit the disclaimer to the court. Once the disclaimer is approved, it's irrevocable. The asset will pass to the next beneficiary in line.
If you don't want to burden your heirs with the responsibility of your timeshare, get rid of it while the contract is still in your name. Although timeshare agreements are designed to last indefinitely, there are potential escape routes. You can have an attorney review your contract to check for discrepancies. If the sales representative or resort misinterpreted the facts to lure you into the sale, you may have a legal way out.
Selling the timeshare also cancels the contract. You'll most likely lose some money, but you'll eliminate the obligation to pay maintenance fees year after year. A lesser-known option is a deed-back. If you own the timeshare, contact the resort to inquire about a deed-back program, allowing you to give back the timeshare and relinquish ownership rights. You'll need to negotiate directly with the lender to complete a deed in lieu of foreclosure if there's a mortgage on the timeshare.
Jeannine Mancini, a Florida native, has been writing business and personal finance articles since 2003. Her articles have been published in the Florida Today and Orlando Sentinel. She earned a Bachelor of Science in Interdisciplinary Studies from the University of Central Florida.