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Why Do Timeshares Go Against Your Estate

Updated on March 29, 2015

The Perpetuity Clause

in every timeshare contract there is a clause that places the document in
Perpetuity; Perpetuity is a word that means forever binding, or in accounting it
reads, for an indefinite period. Originally Timeshare Management Companies use
this as a selling point, explaining that you will be able to vacation for the
rest of your life – and not just you but your kids and your grandkids. The
problem with the Perpetuity Clause is it legally binds you to the contract for
an indefinite period, and not just to the benefits , but to the association fees
as well. All financial intuitions, especially banks, consider timeshares to be a
legally binding liability, that is billed indefinitely. This means that the
association fees will be owed to the company rather you actually use the product
or not - for the rest of your life. After that it becomes very simply, all debt
that you have is tied to your estate after your passing, thus your timeshare
liability is also tied to your estate at the time of your death.

What are Some Possible Solutions

The majority of owners first begin to sell their timeshare or fall into several resale scams in attempt to avoid collections and hefty inheritance charges; what they realize is their company has the right to refuse an owners right to sell and is very uncooperative in providing any possible options. Don’t fear, there are some avenues you can take to protect your asset.

these avenues are:

1. Will Before Your Death – if you can work out an arrangement with your next of kin, you can actually transfer your timeshare down before your death so the Timeshare Management Company cannot push the contract against your assets. Typically timeshares are forcefully passed down regardless, helping your children understand their obligation can protect your assets from being effected in the process.

2. Rent Your Timeshare – A lot of timeshare owners rent out their timeshare
interest for a small profit. Building up this profit can assist you in paying
for the total expense of the willing process.


What If My Kids Don’t Want My Timeshare

Realistically there are very few people that are able to get out of their
timeshare interest; if you are unable to find a way out of your contract, then
it will be passed down to your next of kin. Every year timeshare companies are
in court more and more often to push contract debt down. The best thing you can
do is try to will your contract to someone who you know can afford it. Currently
the biggest expense of inheriting a timeshare contract is in the cost of Capital
Gains. Capital Gains is a surcharge that represents the difference between a
past to future market value on a contract; to a timeshare company this is the
total opportunity cost that timeshare company has the right to capitalize on at
the time of transfer. Because of constant market spikes in the timeshare market,
these upfront cost can run into tens of thousands of dollars; you need to be
sure that the person your willing your timeshare to is comfortable with
accepting such a large amount of debt.

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