Timeshares in Estate Planning
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Many of the clients our estate planning attorneys in Chapel Hill serve own property in multiple states, and some of the properties are timeshares. Timeshares are generally considered real property, with a deed as evidence of ownership. Without a proper estate plan, the probate and tax laws in the jurisdiction where the timeshare is located will determine the distribution of assets after the timeshare owner’s death.
One of the best estate planning tools for individuals who own properties in more than one state is a revocable living trust. When timeshares or other out-of-state real property are placed in trust, probate in the state of ownership can be avoided. The trust, when formed and funded correctly, bypasses the court-supervised probate process and determines who receives the timeshare. Aside from trusts, an estate planning attorney can review different ways to hold title for timeshares and the benefits and challenges these choices create.
How is a timeshare defined in North Carolina? The North Carolina Time Share Act states:
“Time share” means a right to occupy a unit or any of several units during five or more separated time periods over a period of at least five years, including renewal options, whether or not coupled with a freehold estate or an estate for years in a time share project or a specified portion of a time share project. “Time share” shall also include a vacation license, prepaid hotel reservation, club membership, limited partnership, vacation bond, or a plan or system where the right to use a time share unit or units for periods of time is awarded or apportioned on the basis of points, vouchers, split, divided, or floating use, even if on a competitive basis with other purchasers.
The Act governs North Carolina timeshares under state real estate law, which means probate of timeshares in the Tar Heel State follows the same laws as real property. This means that if a timeshare is part of a decedent’s assets, the timeshare automatically belongs to the intestate heirs or beneficiary or beneficiaries. They then have the responsibility of paying maintenance fees and taxes. However, since they are not bound by the original contract signed by the decedent, they can choose to abandon the timeshare with no further obligation imposed. When properties in multiple states are involved in an estate, generally legal counsel is needed in each state.
