Dan McCarthy was recently admitted to practice in the United States Supreme Court. An attorney must be admitted to the Court in order to participate in any cases before the Court. McCarthy Law Office was retained by the Fraternity Forward Coalition and the Fraternity Housing Association to file an amici curiae brief in a case arising out of the Indiana Supreme Court. The case, UJ-Eighty Corporation v. City of Bloomington Board of Zoning Appeals, Case Number 21-113, involves whether a municipality can delegate zoning authority to a third-party (Indiana University in this case). The case has wide-ranging implications for fraternity and sorority chapters across the country. Our clients urged the Court to accept the case due to national significance of the issues presented. The Court is currently considering whether to accept the case for its next docket. More information to follow.
Timeshares have come a long way since they first arrived in the real estate market back in the ’70s. In the early days of timeshare ownership, high-pressure sales tactics, exceedingly vague contracts, and inflexible scheduling policies caused many people to quickly regret such purchases. Over time, however, timeshares have become more consumer-friendly with greater transparency in the terms of the contract, more flexibility in scheduling timeshare weeks, more diversity in the location of the vacation properties, and less pressure during the sales experience. That is not to say that all timeshare companies are ethical and transparent. There are plenty of modern-day examples of abuses within the timeshare industry. However, it is not uncommon to find very happy timeshare owners who have obtained great value out of their timeshares and view them as highly valuable and desirable property in their estates.
When it comes to your estate planning though, how should you handle your timeshare? If you have a revocable trust, should you transfer ownership of the timeshare to your trust? Should you instead continue to hold it in your name, or jointly with another family member? What if you do not use it very often and, despite your efforts to get your adult children to use it, it mostly just goes unused? Here are a few things to consider when deciding how to plan for your timeshare.
The Case for Owning Your Timeshare in Your Trust
Suppose you find significant value in timeshare ownership. It may be worth the effort to purchase the timeshare in the name of your revocable living trust initially. If you obtained ownership before the formation of your trust, however, you may want to consider retitling the contract in the name of your living trust. In some states, and depending on the timeshare contract, you may be an owner of rights in real property. This is important to know because in most states if you die owning real property, it will be subject to an often timely and perhaps expensive probate proceeding for it to pass to your heirs unless it is owned through a probate avoidance tool such as a living trust, joint ownership with rights of survivorship, or payable on death or transfer on death designation. Owning your timeshare in your revocable trust is one of the most common ways to ensure that your named trust beneficiaries will have the right to either use or take ownership of your timeshare after you are gone without needing to utilize the probate court to do so.
When you first purchase a timeshare, it is crucial that you understand the requirements to transfer it at your death. If the person selling the timeshare to you cannot with certainty tell you how you can transfer the timeshare (and show you language in the contract supporting their answer), you should seek the counsel of an experienced timeshare or real estate attorney before signing the contract. This distinction can make a difference of thousands of dollars of probate costs and frustration upon your death or disability. You will also want to check your contract or with the timeshare management company to determine whether there will be a fee assessed for the transfer of your timeshare from your name to the name of your trust. Some timeshare companies charge steep fees for transfers like these.
Ultimately, the decision to title your timeshare into the name of your trust is a very fact-specific decision. Asking questions and reading your timeshare contract carefully can help you avoid costly mistakes.
Reasons Not to Title Your Timeshare in the Name of Your Trust
Maybe you have used your timeshare frequently in the past, but now, for health reasons, you just cannot get away as you used to and no one in your extended family seems to ever want to use your weeks either. In that case, you might consider trying to sell the timeshare before you pass away. One of the main complaints people have with timeshares that they no longer use is that most, if not all timeshares, have annual maintenance fees or dues assessed to the owners. Some consumer reports estimate that the average timeshare maintenance fees are $800 to $900. In addition, special assessments can be levied on owners when the property incurs damage from a natural disaster, fire, or other mishap, or needs maintenance. Special assessments can often add thousands of dollars a year to the cost of ownership. If you are not using the timeshare regularly, these extra costs can be very burdensome with little benefit.
If your living trust owns the timeshare, your trust beneficiaries will inherit these maintenance fees and special assessment obligations that the trust is bound to by contract. If none of your beneficiaries want the timeshare, your trustee will have to try to sell the timeshare on the open market. Thus, you should be aware that, even today, the market for timeshares is very limited. There are a handful of websites where you can list your timeshare for sale or attempt to rent out your weeks; it is important to note, however, that it is rare for people to sell their timeshares for even a small fraction of their original purchase price.
Moreover, it can be very difficult to simply walk away from your timeshare while you are alive. Many timeshare companies are experts at pressuring timeshare owners to pay their annual maintenance fees through threats of litigation and using collection companies. As a result, if you feel that your timeshare no longer provides the value that it once did, and if your children or other family members are unlikely to want to inherit it once you are gone, you might consider leaving it out of your living trust entirely. Many timeshare contracts have provisions where the contracts terminate at the death of the owner. If your trust owns the timeshare, however, such a termination on death provision would likely not be applicable because a trust cannot die and the trust would continue to be obligated for the maintenance fees.
Even if your timeshare contract does not terminate at the death of the owner, from a practical standpoint, if the only asset in your name was the timeshare (because all other assets passed via the trust or beneficiary designation), and your family had no interest in inheriting the timeshare, then the timeshare company would have to initiate a probate proceeding to seek payment from the estate for the unpaid maintenance fees. Doing so would not likely benefit the timeshare company, leading them to abandon any claims against the estate for anything more than a reversion of the timeshare’s title to the company.
Owning timeshares can provide significant benefits for those committed to using them regularly and who know how to maximize the value for themselves and their families. Under circumstances in which a timeshare can continue to benefit a family and successive generations, it may be wise to title ownership of your timeshare in the name of your trust. However, when timeshares become more of a liability than an asset to a family, it is important to review your obligations under the timeshare contract, perhaps with the help of your attorney, and determine whether owning your timeshare in your trust is a good idea. It may not be the right thing to do. Remember, timeshare contracts can vary widely in their terms and obligations. If you are unsure of your rights and obligations under your timeshare contract, seek the help of your attorney to understand the best course of action for your family when it comes to your estate planning.
Most people think of probate (the process of collecting, managing, and distributing a deceased person’s money and property) as a private process. However, because wills are filed at the courthouse, probated estates become a matter of public record. That means that anyone can simply go down to the courthouse or hop online and find out about your probate, including your family information and a detailed inventory of all of your assets.
A Public View Into Your Family and Money…
In Ohio, once an estate is opened with the Probate Court, the documents are public records and available to the world. While nosy people may just be an annoyance, others can get access to your public records and make your beneficiaries’ lives miserable, such as:
- Financial predators. While today’s digital world is convenient, it’s also dangerous. Financial predators find ways to access sensitive personal information online. Since courts are part of a bureaucratic process that often moves slower than a glacier, months can elapse before you (or the court) realizes that your beneficiaries have been swindled.
- Charities. Even the most well-meaning charities can become an annoyance when money is considered “up for grabs.” This is especially true in an estate situation when those inheriting assets want to do the right thing and honor their loved one.
- Will challengers. Since a will that is filed with the probate court becomes a public record, those believing they have an interest (whether valid or invalid) can access the document and challenge the will. This can result in added costs and time defending the will from what could amount to a frivolous claim.
Keep your affairs private with a Trust
Trusts are not filed with a court, either before or after your death. Probate courts are not involved in supervising your trust administration. So, you can avoid intrusions by busybodies and predators by creating a trust. While some state laws require a total or partial disclosure of information regarding the trust to beneficiaries, it is still the best way to keep your legal affairs private.
Contact us today and let us help you create a trust to avoid probate and keep your family and financial affairs private. We are available to speak with you via telephone or through video conferencing if you prefer.
Congratulations! Graduation is the culmination of years of hard work, and often years of private school tuition payments. Graduation from high school also generally means that you are at least 18 years-old. Aside from purchasing alcohol, there is now very little you cannot legally do. Even though you may not feel any different, from a legal standpoint, a lot has changed.
When you were a minor (under the age of 18), your parents were considered your legal guardians and were responsible for making all of your decisions for you. Now that you are an adult, their legal authority is much more limited. Although this new found freedom may sound exciting, there are a few things you need to consider:
- Access to medical information. As a legal adult, you are protected by the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA). This means that your private medical information can only be disclosed to those individuals you have authorized. If you want your parents to continue having access to this information, you will need to have a HIPAA Authorization Form prepared appointing your parents, or anyone else you designate, as an Authorized Recipient.
- Medical decisions. Chances are, if something were to happen to you rendering you unable to make decisions, it would be your parents that you would rely on to make decisions about your medical treatment. As a minor, your parents automatically had that authority, but now that you are an adult, you must formally grant them this authority. This can be accomplished through the preparation of a Health Care Power of Attorney.
- Financial decisions. If you are planning on going away to college or spending any significant time away from home, having a Durable Financial Power of Attorney in place may be helpful to you. Up until now, if you needed a parent to make a withdrawal from a bank account, or sign something on your behalf, there was no need for any additional steps because they were your legal guardians. However, now, if you want them to continue providing the same services, you will have to grant them this authority through the Financial Power of Attorney.
- A Will: At first glance, this may seem a little silly for the average broke college kid. In our digital age, there are some hidden complexities. For example, on average, an email account today is tied to 130 or more online accounts, each with their own username and password. Who should manage your social media and email accounts, receive valuable gaming accounts, and close down other apps and accounts?
We’ve been helping families attain peace of mind for years. Planning for recent high school graduates as they prepare to head to college or start their careers is an important part of a family’s estate plan. Contact McCarthy Law Office to get started.
It can be hard to get motivated about your estate planning; it sounds about as fun as getting a root canal. However, you also probably want to make sure that your loved ones are protected and receive your hard-earned money and property – regardless of whether you have $10 million or $10,000.
Do not let these common roadblocks stop you from protecting yourself and your loved ones:
- Who Wants to Talk About Death? Discussions of death, dying, and illness – money and family – will and trusts – make many folks uncomfortable. Of course, that is normal. But, do not let a few minutes of feeling uncomfortable stop you from taking care of yourself and your loved ones.
- This Is Not a Good Time. Everyone is busy. We understand that, but there is never going to be a better time. Call our office, get on the calendar, and get it done. We are available for in-person and virtual appointments.
- I Do Not Get It. Familial details are discussed; finances are discussed; the law is analyzed. It is common to feel uncomfortable in a world you are not familiar with. If that is what you are thinking, you are not alone. We will translate complex legal concepts into everyday layman’s terms for you, and ensure that you are comfortable with each step we take in your estate planning process.
The truth is that estate planning is not really that bad. In fact, with our help, estate planning is easy. We will talk with you about your goals and concerns, analyze your family and financial situation, and work with you to come up with a solid plan. You provide the information, which we always keep confidential, and we will take care of everything else.
There is no better time than today to start the estate planning process. Give us a call to schedule your in-person or virtual consultation.
Did you know…? If you don’t have a valid will or trust, then Ohio laws will determine how your assets pass, to whom they pass, and when they pass. This could lead to unnecessary estate and income taxes, your estate being consumed by creditors, your estate being tied up in probate court (possibly for years), and other undesired results, and is perhaps the most costly and emotionally draining way to pass assets to your loved ones. Here is a brief check-up on the status of your plan.
Do you have a Will or a Trust in place?……………………………………………………. Yes No Don’t Know
Even if you circled “Yes” above, Congress, state legislatures, and the courts are constantly changing the rule book. In fact, there have been several major estate and income tax law changes in recent years. Depending on your circumstances, an out-of-date estate plan might be missing valuable planning opportunities and could cost your family dearly in extra taxes and administration costs.
Has your Will or Trust been professionally reviewed in the
last two years?……………………………………………………………………………………. Yes No Don’t Know
Does your current Health Care Power of Attorney permit the
person of your choosing (spouse, child, family) to make
emergency health care decisions for you in the event you are
unable to do so?………………………………………………………………………………….. Yes No Don’t Know
Does your estate plan contain a customized plan to determine
if you are mentally disabled?…………………………………………………………………. Yes No Don’t Know
Does your current estate plan give instructions for your care
and the care of your loved ones in the event of disability?……………………………. Yes No Don’t Know
If you have a Revocable Living Trust in place as part of your
estate plan, is your trust fully funded so that your family can
avoid the delays and expenses of probate?……………………………………………….. Yes No Don’t Know
Have you recently checked the beneficiary designations of
your retirement plans and life insurance policies, and are you
confident that you have not listed your estate or any minor
children as either primary or secondary beneficiaries?………………………………… Yes No Don’t Know
Does your current estate plan provide creditor and lawsuit
protection for assets passed to your surviving spouse?………………………………… Yes No Don’t Know
Does your current estate plan provide creditor and lawsuit
protection for assets passed to your children?……………………………………………. Yes No Don’t Know
Does your current plan protect your children’s inheritance
from a divorcing spouse?……………………………………………………………………… Yes No Don’t Know
Are you satisfied with the persons you named as guardians
of your minor children in your current plan?…………………………………………….. Yes No Don’t Know
Are you satisfied with the persons selected as executor
and trustee in your current estate plan?……………………………………………………. Yes No Don’t Know
Are you confident that your executor, power of attorney,
and successor trustee are prepared to act on your behalf
when asked to?…………………………………………………………………………………… Yes No Don’t Know
Did you circle No or Don’t Know anywhere on this check-up?
If you did – please complete the bottom of this form and send it to us by email, fax, or mail. We will contact you to schedule your complimentary consultation.
Yes! I’d like to receive a complimentary consultation with McCarthy Law Office to discuss my estate planning needs.
Your Name: Date:
Email Address: Phone: