How Timeshares Can Ruin Your Finances
You might be considering owning a timeshare as a great way to guarantee a holiday every year. You have seen the advertisements with exotic locations, or even just somewhere in sunny Spain that you’d enjoy going to. But, you need to think carefully about this decision before you start signing contracts. There are increasing fees and financial stress that can come along with a timeshare agreement. And, even your death doesn’t make you free of the responsibility to pay for the costs of upkeep and maintenance of the resort or villa.
Read on to learn more about how timeshares can ruin your finances and cause stress for your family when they are grieving. Without looking into every aspect of a timeshare agreement and considering all your options, you could end up losing assets and happiness to a timeshare.
Increasing Timeshare Maintenance Fees
When you sign a timeshare contract, you tie yourself to maintenance fees that can rise each year dramatically. This can be a source of significant financial stress, as you face growing costs that weigh you down. Hopefully, most people, when signing a timeshare contract, will have done some calculations beforehand to make sure the annual fees and costs are within their budget. But, when maintenance fees rise, it can make all your calculations and budget pointless as you are suddenly faced with more costs. This can lead to affordability issues and money troubles for you and your family as you try to find the extra money to afford the timeshare.
The resort or villa that you have a timeshare in does need to charge maintenance fees to cover the upkeep costs and keep the timeshare running correctly. If the timeshare company didn’t charge you these fees, the villa or resort would fall into disrepair and could even go bankrupt as they try to find the money for repairs and upkeep. That said, the problems appear for timeshare owners when their maintenance fees are increased past the rate of inflation or seem to include suspicious entities. You might start to feel that the amount of money you are paying for your timeshare is exceeding the quality of the resort or location.
Often, the maintenance fee clause in the timeshare agreement is in the small print, meaning you may have overlooked it upon signing it. This means you might not have even been aware that your timeshare company could increase the fees without notice, making it a huge surprise when you suddenly have more fees to pay.
Timeshare Passed Down to Your Kids
Timeshare contracts are legally binding, and sometimes, your death doesn’t necessarily mean your contract is erased. Most timeshare agreements have a ‘perpetuity clause’ which requires you to pay the associated costs of owning a timeshare for the rest of your life. But, when you die, the timeshare becomes part of the estate, and the obligation to pay these fees are passed on to the designated beneficiary or next-of-kin. This can be a gift or cure for your children based on their ability to keep up with the increasing fees.
Your heirs are responsible for the timeshare maintenance fees after your death, and as the timeshare depreciates, these fees will likely increase. If your children or next-of-kin refuses to pay, the timeshare company can’t go after them, but they can go after your estate. If your estate has assets when you pass away, these will be used to cover the debt of unpaid fees and debt. Assets subject to probate are often unprotected, meaning your family could be losing out as your timeshare takes these away to pay for costs.
The title of your timeshare also affects how it is passed down to your beneficiaries. If you are a ‘joint tenant’ with another co-owner, then the fees and timeshare agreement are automatically passed down to the surviving owner upon your passing. Probate is eliminated temporarily until the surviving owner dies.
A will doesn’t cancel probate either but instead directs how the assets in your will should be distributed. Laws and the value of assets all alter the length of time it takes to complete probate, and during this, your beneficiaries can’t use the timeshare. Whoever is executing your will is responsible for making sure the maintenance fees are paid while the timeshare is in probate. You can avoid this by adding a child or beneficiary to the deed as the owner of the timeshare upon your death. But, this isn’t a light decision to make as they may accept this and regret it later on due to the vast increases in fees year after year. Consider discussing this with them first.
There is a way that your children can avoid paying for the timeshare upon your death. They can complete a written disclaimer document to decline the timeshare, but they only have nine months from the date of your death to do this. Once the disclaimer is approved, they are free of any timeshare fees and the timeshare agreement will pass to the next beneficiary in line. Either way, the timeshare must be paid for, and if no one steps forward to accept it, your assets will be taken to cover the fees. It’s not much of a win-win situation, and your family end up losing assets you would otherwise have passed down to them.
Check out our website today to learn more about how we can help you exit an unwanted timeshare agreement. Don’t let increasing fees be the cause of your unhappiness or even depression. By working with a specialist timeshare solicitor, we can help you find a legal solution to exiting your contract.