Liz Weston: How not to inherit mom's timeshare

Timeshare owners James and Barbara Ruh enjoy their annual vacations in Hawaii, but they don't want their daughters to be obligated to take over the contracts when they die. So the Ruhs, who are attorneys with offices in Santa Barbara, California, and Edwards, Colorado, created a trust to hold their timeshare interests.

The daughters, who are co-trustees with their parents, can keep the timeshares, sell them or abandon them after the parents' deaths, Barbara Ruh says. The trust is designed to prevent the timeshare resort developer from going after their daughters for any unpaid or ongoing costs.

"If our daughters do not want the timeshares, they will not be liable individually for any fees," Ruh says.

Timeshare experts say it's usually not necessary to create a trust, with its attendant hassles and expense, to avoid inheriting a parent's vacation ownership. Families have a variety of options to assure nobody's getting an obligation they don't want.

For those who don't know, timeshares are a way to use vacation property for a week each year. Traditionally timeshares included a real estate deed, but now they're commonly sold as a "right to use" contract "that's more like a gym membership," says timeshare attorney Michael Finn of Largo, Florida.

In addition to the upfront cost of buying, owners must pay annual maintenance fees, which currently average about $900 but can total $3,000 or more for higher-end properties. Owners may also face special assessments to cover repairs or damage from natural disasters.

Since timeshare contracts typically include "in perpetuity" clauses, owners can be on the hook for these fees for life — and the obligation to pay passes to anyone who inherits the contracts at the owner's death.

The good news: No one has to inherit an unwanted timeshare.

"Timeshare companies sometimes assert they will chase offspring and heirs for debts, (but) I have never heard even one anecdotal story of this happening," says Jeff Weir, chief correspondent for RedWeek, a timeshare rental and resale site.

Here are three important things to know:

1.TIMESHARES DON'T HAVE TO BE FOR LIFE

If it's clear none of the kids wants the timeshare, owners may be able to sell or give away their interest before death, assuming any financing used to purchase it has been paid off. (See my previous column, "How to Get Rid of a Timeshare .")

In some cases, owners who are too frail or poor to travel have had success simply asking the resort to take back their timeshares, says Brian Rogers, owner of Timeshare Users Group, a forum for timeshare owners. If the resort refuses, the owner can abandon the timeshare, although that may lead to collection actions and damage to the owner's credit. Resorts are unlikely to sue elderly customers over abandoned, paid-off timeshares, Rogers says, and many older owners don't care what happens to their credit anyway.

2. THE KIDS' NAMES SHOULD NOT BE ON THE DEED

Timeshare salespeople may encourage putting heirs' names on the deed as a "convenience" to make it easier for an owner's children to use the property on their own, Finn says. What this actually does is trap the kids into inheriting the timeshare. Parents who fell for this gambit can ask the resort developer to remove those names from the deed, and the developer likely will comply if there's no loan outstanding against the timeshare, he says. Another tip: The kids shouldn't ever pay the maintenance fees directly, even if they're handling the rest of the parent's finances. Those fees should always come from the parent's bank account, Finn says.

3. HEIRS CAN DISCLAIM THE TIMESHARE

If the timeshare is the "right to use" type, the heirs should direct the executor to inform the resort that the owner died, so the resort can take steps to take back the timeshare, Finn says.

If the timeshare has a real estate deed or there's a specific bequest in the owner's will — "I give my timeshare to my daughters Sally and Simone," for example — Finn recommends the heirs file a written disclaimer of interest with the probate court handling their parents' estate.

"You're letting everybody know, 'I do not have or want any interest in this property. If I ever did have any, I am disclaiming any interest now,'" Finn says.

This column was provided to The Associated Press by the personal finance website NerdWallet.

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Liz Weston is a columnist at NerdWallet, a certified financial planner and author of "Your Credit Score." Email: lweston@nerdwallet.com. Twitter: @lizweston.