Aug 15, 2024
Receiving an inheritance is usually a good thing, but not if it's an unwanted asset.
Timeshares are a type of fractional ownership of vacation properties. When you buy one, you purchase the right to vacation at the property — or sometimes use "points" to vacation at timeshare properties — for a limited amount of time each year.
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Unfortunately, you also have an obligation to pay annual maintenance fees in addition to upfront costs to buy the timeshare. These maintenance fees can total thousands of dollars annually and increase over time. You can also get hit with interest fees if you've financed your timeshare, as well as booking or upgrade fees, exchange fees, special assessments and taxes.
If someone you love bought a timeshare and they've expressed a desire to leave it to you in their will, you should consider the consequences. You may also have to take affirmative steps to ensure you don't get stuck with one. Here's why.
The problems with timeshares
Timeshares are often sold based on the premise that you'll have a guaranteed place to vacation without having to go through the labor of performing maintenance on the property.
Potential timeshare buyers are commonly enticed to attend a sales presentation with promises of free nights in a hotel, show tickets or other luxurious perks. They’re then subject to a very long pitch and prompted to make a purchase.
People sometimes make a purchase without fully understanding all the costs they're committing to. They may not realize that these properties don't appreciate in value like other real estate and contracts are extremely difficult to get out of. There can be a series of fees associated with the timeshare, or they can be hit with special assessments that make their purchase even more expensive.
It’s important to remember that a person pitching you a timeshare is trying to make a sale, and many finance experts advise against purchasing timeshares. For example, radio personality Dave Ramsey, who has a particular disdain for timeshares, has referred to them as "legalized fraud" and "the worst industry on the planet."
The devil is in the details, as they say. Always read the fine print.
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Getting out of a timeshare inheritance
Many timeshare contracts contain "in perpetuity" clauses that can keep owners on the hook to fulfill any financial obligations for the rest of their lives, which could also pass on to heirs.
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If you do inherit an unwanted timeshare, consider filing a "disclaimer of interest," which is a declaration of intent to forgo or relinquish an inheritance. Laws on disclaimers of interest vary by state, so it’s best to do your research first to see if there are any specific requirements, according to Florida-based firm Finn Law Group. Time can be a factor, and you may only have a short window after you learn of the inheritance to file the paperwork.
It's also important to ensure the timeshare company receives a copy of the death certificate so it can stop collecting fees and that the mortgage company, if there is one, receives a copy to stop the timeshare from going into foreclosure, according to timeshare exit company Timeshare Specialists. Be aware that if there are debts or an outstanding mortgage, the bank and timeshare company may try to collect unpaid funds from the estate.
Lastly, be sure you do not use the timeshare to benefit yourself after inheriting, as this could prevent you from disclaiming your interest, per Finn Law. Also, you may want to warn other family members to file a declaration disclaiming their own interest as well in case the property goes to the next person on the list of heirs after you decline.
Note that filing a disclaimer does not by itself cancel the timeshare contract. The developer or owner association may ultimately have to foreclose on the property or terminate the membership in order to remove all obligations, Finn Law says. Consulting a lawyer may yield more specific recommendations in your case, and they can help you through the process.
By taking swift action, you can ensure that a timeshare you inherit doesn't become a problem that you yourself end up stuck with until you pass away. Don't worry if you hurt your family's feelings in the process — worry about protecting your own finances.
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Christy Bieber has 15 years of experience as a personal finance and legal writer. She has written for many publications including Forbes, Kilplinger, CNN, WSJ, Credit Karma, Insurify and more.
