09 Dec My parents died. What do we do with their timeshares?

Q. Both my parents have passed and my siblings are their executors. My father had two timeshares that we don’t want. My father’s attorney said to just walk away from the timeshares and let them go into foreclosure. Can they place a lien on the estate? I know it will not affect our credit, but my father also has some properties that need to be sold before the estate can be settled.
— Beneficiary

A. Timeshares may seem great when they’re first purchased, but they often turn into headaches.

You will have some protections, but a lot will depend on the timeshare contract.

Let’s start at the beginning.

Estates generally have both assets and liabilities, said Catherine Romania, an estate planning attorney with Witman Stadtmauer in Florham Park.

She said beneficiaries are not liable for estate debts except to the extent of the property they take from the estate.

“Beneficiaries cannot take distribution of the assets and leave the liabilities in the estate claiming no responsibility,” Romania said. “If you do not want responsibility for the timeshare obligations, do not accept the timeshare units as beneficiaries.”

However, she said, just because you do not take the timeshare units does not mean the timeshare corporation is precluded from seeking recovery for outstanding obligations due from other assets of the estate.

“Some creditors only have limited ability to collect against certain assets,” she said. “For example, if an estate has an interest in a limited liability company and the company owes a debt, the creditor generally can only collect the debt from the limited liability company, not the other assets of the estate.”

Romania said you need to review the timeshare documents.

“Assuming the corporation does have a legal right to recover fees against the estate, consider that (i) most creditors are willing to negotiate with beneficiaries of an estate where a debt is owed; and (ii) provided the corporation can regain title to the unit at no additional cost, most timesharing corporations generally do not pursue additional fees against the estate as it is bad publicity, expensive, time consuming, and may tie-up the timeshare during the legal process,” she said.

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This story was originally published on Dec. 9, 2020.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.