I came across an article written by Christopher Yugo in the Times of Indiana. According to the article, Mr. Yugo is a member of the Indiana Bar and a vice president and senior trust officer for First National Bank’s Trust Department. The following question and answer (reposted here in part, see the original for the whole) appeared in last week’s column.
Q: My wife and I own a timeshare. Should it be titled in our trust? If so, how do we go about doing that?
A: Timeshares are fairly common assets that people own. I see them coming up in estate plans fairly frequently.
In my opinion, it should be titled in the name of your trust. Let me preface this by saying my knowledge of timeshares is somewhat limited. However, it’s my understanding that most timeshares are deeded interests in real property. In other words, you own a small undivided interest in a building and/or land. If you bought a timeshare, you likely received a deed demonstrating your ownership interest.
Since you have an interest in land hopefully in another warmer state, your family could face the prospects of the dreaded ancillary estate. An ancillary estate is a probate estate that is opened in a jurisdiction other than Indiana to administer out-of-state property. If your timeshare is in sunny Florida, an estate may need to be opened there to transfer ownership.
Fortunately, timeshares tend to have a limited value so any ancillary estate proceedings may take the form of an informal process such as using a small-estate affidavit. Unfortunately, I can’t tell you that for sure. Every state has its own rules.
One way around the ancillary-estate issue is to transfer ownership of the interest to your revocable living trust. As we all know, one of the benefits of using a trust is avoiding probate.
Mr. Yugo is absolutely right. As a trusts and estates attorney that practices in Florida, the state that probably has more timeshares than anywhere else, I have seen this hundreds of times. As he points out, a timeshare is generally an interest in real property — just like a house, an apartment, or a parcel of land. While personal property may be probated in the state where the decedent is domiciled, real property must be probated where it is located.
I have handled dozens, if not hundreds of ancillary estates for families with a loved one who lived out of state, but owned a timeshare in Florida. Depending on the circumstances, these cases can cost the family between $1200 and $1800, plus court costs. Under Florida law, they may not be handled by an out of state attorney. Only a Florida attorney can practice in front of Florida courts.
Usually these could be handled by what’s known as Summary Administration, which in Florida is for estates worth less than $75,000, as timeshares generally are. While I certainly don’t mind the business, I do feel bad that these families have to go through with this, when need for the ancillary probate could have been avoided with proper planning. If the Decedent had transferred the timeshare to his or her revocable trust before death, probate in Florida would not have been necessary.
Another big mistake that I’ve seen on more than one occasion is a husband and wife who purchase their timeshare together, but for some reason the deed specifically states that the property is held by them as tenants in common, and not as joint tenants with right of survivorship or as tenants by the entirety). Generally, unless they are purposely splitting assets for their own reasons (for example it is a second marriage and they want their share to go to their separate children), property is held jointly by spouses, so that when the first spouse dies, the second automatically inherits the property by operation of law, without any probate necessary. In each and every situation that I’ve come across in which a timeshare is owned by spouses as tenants in common and not jointly, the surviving spouse told me that that was not their intent, and that they had no idea it wasn’t titled properly.
So, if you own a timeshare, a condo, or any other real property in a state other than the state that you live in, you should talk to your estate planning attorney to see whether or not it would be wise to transfer your timeshare to your revocable living trust. In addition, check to make sure that the deed is titled properly with you and your spouse.