Today’s word is “timeshare.”
Wait – did you hear that? That ominous minor chord of impending doom that blared out when I said “timeshare.”
There it is again.
It’s not that I have anything against timeshares in theory. They are marketed as exclusive, beautiful resort properties that are available to you at your slightest whim for a fraction of the cost.
It’s just that I oppose timeshares in practice. Why? To explain, I will talk about timeshares in the context of a Texas guardianship.
Understanding Texas Guardianship
Guardianship, as you know, is a court-created relationship when someone – the ward – has been found to be incapacitated and there is no reasonable alternative to removing that person’s rights and giving them a guardian.
A guardian of the estate is the court-appointee who handles the ward’s financial interests. The ward’s financial resources must be used prudently. One of the guardian’s duties is to evaluate the ward’s assets and decide whether retaining that property is in the best interests of the ward’s estate.
Types of Assets
Assets come in many flavors. There are:
- Investments
- Real property
- Personal property
- IRAs
- Firearms
- Mineral interests and leases
- Life insurance
- Cash
- Businesses
- Promissory notes
While each asset comes with its own difficulties, all of them put together pale against the difficulty caused by timeshares.
Here is why.
The Problem with Timeshares and Guardianship
Evaluation
The guardian’s evaluation of a ward’s timeshare is undertaken against the backdrop that the ward is incapacitated and is highly unlikely to ever use the timeshare again. Thus, the benefit of using the timeshare is valued as zero.
Market Value
The guardian must first consider the timeshare’s market value. Market value is the sales price when the property is sold by a willing buyer to a willing seller.
The market for selling timeshares is usually dismal. They can be difficult to sell and often require that the ownership be transferred to the resort or to a buyer for a reduced price. Setting a market value usually requires taking a significant discount on the face amount.
Ongoing Costs
The guardian then must look at the costs associated with the timeshare, such as ongoing maintenance costs, annual dues, special assessments, and property taxes. These ongoing costs must be paid from the ward’s assets and constitute an ongoing drain on the guardianship estate.
Co-Owners
Sometimes there are additional complications, such as co-owners. It is not unusual for family members to go in together to purchase a timeshare contract. The other family members may not be willing to sell the timeshare or contribute their portion of expenses. The guardian will have to evaluate the terms of the timeshare ownership agreement.
Final Considerations
Once the guardian has completed the evaluation, the guardian must consider if the costs of maintaining the timeshare outweigh its benefit to the guardianship estate. If they do, then the guardian may seek court approval to sell the timeshare.
If the timeshare cannot be sold, then the guardian may request court approval to abandon the asset.
I look at timeshares as sticky bombs. They always end in a destructive explosion.
Beware of Companies Offering to End a Timeshare Agreement
Let’s take a moment and discuss companies that advertise that they can get you out of a timeshare. My recommendation is that you read their contract before you sign it. I’ve seen contracts where the company asks for a blanket authorization to charge the seller’s credit card for any penalties and costs the resort chooses to charge to take the timeshare back, in addition to the company’s own fees.
Hammerle Finley is Here to Help With Timeshares and Guardianship
Our team of experts is here to help with your guardianship and timeshare dilemma. Schedule a consultation today.
In my opinion, dark foreboding music should be required listening during every timeshare sales pitch.
Virginia Hammerle is an accredited estate planner and represents clients in estate planning, probate, guardianship, and contested litigation. She may be reached at legaltalktexas@hammerle.com. This blog contains general information only and does not constitute legal advice.
