As many Americans know far too well, a timeshare is a vacation property that allows you to share property costs and maintenance fees with others in exchange for an allotted amount of time that you may vacation there. Timeshares are a $10.2 billion industry, larger than the revenue created by the MLB. In fact, there are over 200,000 timeshare units in our country alone. Although almost ten million U.S. households participate in some form of timeshare ownership, the importance of accommodating these properties into estate plans is often overlooked.
Although you may just see it as your annual family trip to Yosemite, a deeded timeshare is actually an interest in real estate. Similar to any other real estate, once an owner of a property dies, the probate laws that govern that state (in our case, California) will apply to the timeshare. As such, you must take the same deliberate estate planning steps you would with your house for your deeded timeshare.
Types of Deeded Timeshare Ownership
Joint tenancy with right of survivorship is taken by two or more co-owners of a property. To be classified as joint tenants, each individual must take title at the same time, and they all own an equal share of the property. For example, if a married couple were to purchase a home as joint tenants with right of survivorship, one spouse would own 50%, and the other would also own 50%. Since it is possible for more than two individuals to take title as joint tenants together, an example of that situation would be four siblings, all co-owners of one home, and all with an equal interest of 25%.
The term right of survivorship refers to the fact that if one co-owner dies, the remaining joint tenant(s) will absorb the deceased co-owner’s share of the property no matter what they may have willed or otherwise expressed.
A significant benefit of joint tenancy in the context of estate planning is that probate is not necessary in the case of a co-owner’s death because the other owners automatically inherit the share.
Tenancy in Common
Tenancy in common entails two or more individuals owning a property together. Being “tenants in common” with your co-owners means that each owner has their own, specific interest in the real estate, which can be, but does not have to be, equal. For example, one individual may own 30% of a property, while the other owns 70%. In the case of three people, we may see a situation where one owns 25%, the second owns 30%, and the third owns 45%.
One of the most significant differences between tenancy in common and joint tenancy is that with tenants in common, each owner can specify who they would like to will or give their interest in the property to after their death, and even lease out or sell it while they are still living. This means that in the event of a co-owner’s death, the outcome of who will be granted the interest is in favor of their heirs, even if they have not specifically willed it to anybody.
Unfortunately, unlike joint tenancy, properties in which title has been taken with tenancy in common are subject to probate, which is handled by the California Probate courts. If one tenant in common dies without the proper estate planning in place, his or her heirs will be required to probate that share of the property.
Avoiding Probate in California
If a timeshare is held in joint tenancy with right of survivorship, the remaining property owner or owners can avoid probate by absorbing the deceased co-owner’s share. In California, such surviving joint tenant or tenants may consider retaining an estate planning attorney to draft and record an affidavit of death of joint tenant deed to remove the deceased co-owner from title.
If the deceased co-owner is a tenant in common, however, the property may be subject to probate if the total value of the estate exceeds $150,000. To avoid this outcome, each tenant in common should transfer their interest into a trust.
Disclaimer: The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship. Brittany Britton is licensed to practice law in the state of California only.