What Do I Do With Dad’s Timeshare When He Dies?

A timeshare at a beach resort
A timeshare isn’t always a gift your heirs will appreciate.

When a timeshare owner dies, the property will usually be part of the deceased owner’s estate, according to nj.com’s recent article, “My dad had a timeshare and died without a will. I don’t want it. What do I do?” The contractual obligations of the owner become the responsibility of the next-of-kin or the beneficiaries of the estate.

When the timeshare company hears of the owner’s death, they may keep sending letters to him for his expenses. Is there any way that the owner’s children could be held responsible for the expenses?

Legally speaking, a timeshare is an agreement or arrangement in which parties share the ownership of or right to use property. Each owner is entitled to use the property for a specific period of time. Some examples of timeshare ownership are a vacation club at a tropical resort or a villa at a ski destination.

There are three basic types of timeshare programs: fee simple, leasehold, and right-to-use (‘RTU’). In addition, there are some variations of RTUs, like points systems and fractional/private residence clubs.

The executor or administrator of the estate will need to contact the timeshare company and/or locate a copy of the owner’s contract to find out what the financial and legal obligations are under the contract. In addition, the executor may decide to contact an estate planning attorney, especially if the property is out-of-state. This is important as the laws concerning timeshare agreements and inheritances vary from state to state.

The next-of-kin and estate beneficiaries do have the option of declining an inheritance, including a timeshare. If they want to do this, they’ll typically be required to sign and file an inheritance disclaimer document. If the property is disclaimed, it would pass to the next individuals or entities with a right to inherit.

If the estate fails to make the payments on the timeshare while the owner’s estate is being probated, fees and penalties may accrue. At that point, the timeshare company and the property manager may file a lawsuit against the estate to get their money due them pursuant to the agreement.

However, if the property is disclaimed by all of the heirs, the property manager may likely foreclose on the timeshare, so any accrued debt would be paid from the estate’s assets. That foreclosure shouldn’t impact the credit of any heir who disclaimed the property.

Reference: nj.com (June 3, 2019) “My dad had a timeshare and died without a will. I don’t want it. What do I do?”

Other articles you may find interesting:

Using a Power of Attorney for a Parent

What Happens To Mom’s House When She Dies?

A Basic Form Doesn’t Work for Estate Planning

A basic form Will
A basic form Will or Trust may not protect your family or properly document your wishes.

It’s true that an effective estate plan should be simple and straightforward, if your life is simple and straightforward. However, few of us have those kinds of lives. For many families, the discovery that a Will that was created using a basic form is invalid leads to all kinds of expenses and problems, says The Daily Sentinel in an article that asks “What is wrong with using a form for my will or trust?”

If the cost of an estate plan is measured only by the cost of a document, a basic form will, of course, be the least expensive option — on the front end. On the surface, it seems simple enough. What would be wrong with using a form?

Actually, a lot is wrong. The same things that make a do-it-yourself, basic form seem attractive are also the things that can make it very dangerous for your family. A form does not take into account the special circumstances of your life. If your estate is worth several hundreds of thousands of dollars, that form could end up putting your estate in the wrong hands. That’s not what you had intended.

Another issue: any form that is valid in all 50 states is probably not going to serve your purposes. If it works in all 50 states (and that’s highly unlikely), then it is extremely general – so much so that it won’t reflect your personal situation. It’s a great sales strategy, but it’s not good for an estate plan.

If you take into consideration the amount of money to be spent on the back end after you’ve passed, that $100 basic form Will becomes a lot more expensive than what you would have invested in having a proper estate plan created by an estate planning attorney.

What you can’t put into dollars and cents is the peace of mind that comes with knowing that your estate plan – including a Will or Trust, power of attorney, and health care power of attorney – has been properly prepared.  As such, your assets will go to the individuals or charities that you want them to go to, and your family will be protected from the stress, cost, and litigation that can result when Wills or Trusts are deemed invalid.

Here’s one of many examples of how a basic, inexpensive form created chaos for one family. The father had decided to forego seeing an attorney and executed a do-it-yourself Will. After he died, chaos ensued because his intentions weren’t clear. The father had properly filled in the blanks but used language that one of his sons felt left him the right to significant assets. The family became embroiled in expensive litigation, and became divided. The litigation has ended, but the family is still fractured. This was not what their father had intended.

Other issues that may not be properly addressed when basic forms are used: naming the proper executor, guardians and conservators, caring for companion animals, dealing with blended families, addressing Payable-on-Death (POD) accounts and end-of-life instructions, to name just a few.

Avoid the “repair” costs and meet with an experienced estate planning attorney in your state to create an estate plan that will suit your needs.

Reference: The Daily Sentinel (May 25, 2019) “What is wrong with using a form for my will or trust?”

Are No-Contest Clauses Valid In Florida?

No-contest clause in a will.
No-contest clauses threaten troublemaking heirs with disinheritance.

A Brief History of No-Contest Clauses

No-contest, or in terrorem, clauses have been used in Wills for centuries. These clauses usually state that if a beneficiary under the document contests the validity of the document and loses, that beneficiary receives nothing. Of course, if the beneficiary wins, the document is invalid and so is the clause. These clauses were almost always upheld because, under the common law (non-statutory law created by custom and courts), there was no legal right to inherit anything. A bequest was a gift made by the deceased person, who had complete discretion as to how and when to leave that gift. So any action taken by a beneficiary that was detrimental to the probate of a Will violated the no-contest clause and the beneficiary’s bequest was forfeited.

But things changed over time and U.S. courts, including those in Florida, began to construe those clauses very strictly. For example, in 1959 in Kolb v. Levy, a Florida appeals court ruled that a contractual claim filed by one beneficiary against her mother’s estate – a claim so large that if she succeeded in a lawsuit it would have consumed most of her mother’s estate – did not violate the non-contest clause because it didn’t directly challenge the validity of the Will.

That’s where Florida law stood until the 1990s, as ideas about an individual’s right to have access to the courts to redress grievances changed. The Florida state legislature declared that no-contest clauses violated such public policies and passed two statutes prohibiting the enforcement of no-contest clauses in Will and Trusts.

Florida’s No-Contest Statutes

Florida Statute §732.517 states that a “provision in a will purporting to penalize any interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable.” Its sister statute, Florida Statute §736.1108, applies to Trusts created on or after October 1, 1993, and states that a “provision in a trust instrument purporting to penalize any interested person for contesting the trust instrument or instituting other proceedings relating to a trust estate or trust assets is unenforceable.”

Currently, Florida is the only state that absolutely prohibit the enforcement of no-contest clauses in Wills and Trusts. A couple of states still enforce them most of the time, but the majority of states consider them on a case-by-case basis. If your Will or Trust was drafted in another state and includes a no-contest clause, it won’t be enforced in a Florida probate court.

Why Are No-Contest Clauses Sometimes Still Used in Florida?

So why do some Florida attorneys still put no-contest clauses in Wills and Trusts if they know they’re not enforceable? Mainly to try to prevent frivolous litigation. Many clients want these clauses in their documents – even though they understand that a Florida court won’t enforce them – because they hope that it shows their beneficiaries, and potentially a judge, their intent as to how they wanted their assets distributed. Does it work? I don’t know. Maybe it does sometimes, but a truly litigious person certainly won’t be stopped by it.

Many Floridians now use a Trust as their primary estate-planning tool. With a Trust-based estate plan, there’s virtually no risk of a Will contest since a Pour-Over Will essentially says nothing. But Trust litigation is always a possibility. Occasionally, the contest relates to the validity of the trust, but, more often, trust litigation involves disputes between a beneficiary and the trustee regarding trust interpretation and asset distributions.

Alternatives to No-Contest Clauses

Depending on the client’s specific situation, there may be other ways – other than using unenforceable no-contest clauses – to prevent or minimize potential litigation risks when a Trust is involved. Creating and funding separate Trusts for problem beneficiaries, adding Trust Protector provisions, or adding a mediation clause may help keep a disgruntled beneficiary from depleting trust assets in a drawn-out court battle.

So, while Florida courts won’t enforce a no-contest clause in a Will or trust, there may be other ways to minimize – although not completely eliminate – the possibility of litigation. Greed, jealously, family dynamics, and money problems are great motivators for litigation, and a few words on a piece of paper are unlikely to stop all.

If you’re worried about preventing potential litigation, or if you think you may have a legitimate reason to contest a Will or Trust, contact an attorney for guidance.

Your Executor Doesn’t Want to Serve?

Your Executor may decline to serve.
Your Executor (Personal Representative) may decline to serve if you don’t prepare ahead.

When you’ve finally decided who you trust enough to serve as your Executor (called a Personal Representative in Florida), you’ll need to take the next step. It involves having a conversation with the person about what you’re asking her to do. You’ll need to ask if she is willing, says the Pocono Record in the article “Don’t assume person is willing to be your executor.” People are often flattered at first when they are asked about this role, but if they don’t fully understand the responsibilities they may decide not to serve just when you need them the most.

Once your Executor has agreed to act on your behalf and you have a Last Will and Testament prepared by an estate planning attorney, tell your Executor where your original Will is located. Remember that in addition to knowing where the document is, she’ll also need to have access. If the original Will is kept at home in a fire-proof box or a locked document box, be sure to tell her where the key is located.

If you feel that the Will would be safer in a bank’s safe deposit vault, make sure that your Executor will be able to access the safe deposit box. That may mean adding her to the list of people who have access. After your death, she may be permitted to enter the box with a bank representative solely for the purpose of obtaining the Last Will and Testament – nothing else.  However, you should check with your branch first.

After you die, your Executor (Personal Representative) and your estate’s attorney will file your original Last Will and Testament with the probate court. The judge then issues Letters of Administration (called Letters Testamentary in other states), which says that your Executor has the authority to open the safe deposit box to inventory its contents. The Executor must complete an inventory form and have any personal property found in the safe deposit box appraised at its fair market value as of the date of your death.

To make your Executor’s job easier, create a list of your assets and debts and include information she’ll need to complete her task, such as account numbers, titling, etc. She’ll also need contact information and account numbers for insurance policies (homeowners, car, Medicare supplements, life), veterans’ benefits, pensions, retirement accounts and any other assets.

Some people store their information on their computer. But if your Executor can’t access your computer due to distance, or can’t get into your computer because she doesn’t have your password, you may want to create a hard copy document in addition to keeping the information on your computer.

Taking on the role of an Executor (Personal Representative) is a big job. You can show your appreciation, even after you are gone, by making it easy for your Executor to find all the information she’ll need.

Reference: Pocono Record (May 1, 2019) “Don’t assume person is willing to be your executor”

Prince’s Estate Battle Drags On

Prince's estate is bleeding money
Prince’s estate is bleeding money because he never created an estate plan.

Three years later and Prince’s estate remains as unsettled as it was on the day he died in his beloved Paisley Park mansion, located just outside of Minneapolis, says the New York Post’s Page Six in the article “Fight over Prince’s $200 M estate could go on for years.”

The estate, which includes a 10,000 square foot Caribbean villa in addition to Paisley Park and master tapes of his recordings, has been estimated by some to be worth in the neighborhood of $200 million. But what will be left after all the battles between heirs and the consultants (whose fees are adding up)?

The heirs are now in a court battle with the estate’s administrator, which has already blown through $45 million in administrative expenses. That’s from a probate-court petition filed by Prince’s heirs. They’ve asked the court for a transition plan and a new administrator, which is scheduled for the end of June.

One observer noted that Prince’s estate may take decades to resolve – all because there was no Will.

So a judge had to determine who Prince’s heirs were. More than 45 people stepped up to claim inheritance rights when the Purple One died in 2016. Some said they were wives, others said they were siblings and one said he was the artist’s son. DNA testing debunked that claim.

The list of heirs has been narrowed down to six: his full sister, Tyka Nelson, and half siblings Norrine Nelson, Sharon Nelson, John Nelson, Alfred Jackson and Omarr Baker.

Until fairly recently, the heirs were divided and quarrelling among themselves. For now, they have come together to challenge the court appointed bank, Comerica, that became the estate’s administrator. They don’t agree with Comerica’s cash flow projections, accounting, or inventory of Prince’s estate assets. They also claim that Comerica is not being responsive to their concerns and that Comerica is the reason that Prince’s estate is $31 million behind on estate taxes.

The company stated that it was the best possible administrator of the estate and insisted it is making all tax payments necessary to settle the estate.

Everyone needs to have at least a Will (even with a small estate), so that heirs are not left battling over assets. While Prince may have thought of himself as too young to die, a Will and a plan for his estate would have preserved his assets for his heirs and let him determine what happened to his music and his artistic legacy.

Reference: New York Post’s Page Six (April 19, 2019) “Fight over Prince’s $200 M estate could go on for years.”

Other articles you may find interesting:

Tom Petty’s Heirs Battle Over His Estate

Angelina Jolie Leaving Her Estate to One Child?

Widowed? What Happens Next?

A new widow
Newly widowed? It can feel as if you’re in the middle of a tsunami of decisions; take it slowly and accept help.

Becoming a widow or widower after decades of marriage is crushing enough, but then comes a tsunami of decisions about finances and tasks that demand attention, when you are least able to manage it. Even highly successful business owners can find themselves overwhelmed, says The New York Times in the article “You’re a Widow, Now What?”

Most couples tend to divide up tasks, where one handles investments and the other pays the bills.  However, moving from a team effort to a solo one is not easy. For one widow, the task was made even harder by the fact that her husband opted to keep his portfolio in paper certificates, which he kept in his desk. His widow had to hire a financial advisor and a bookkeeper, and it took nearly a year to determine the value of nearly 120 certificates. That was just one of many issues.

She had to settle the affairs of the estate, deal with insurance companies, banks and credit cards that had to be cancelled. Her husband was also a partner in a business, which added another layer of complexity.

She decided to approach the chaos, as if it were a business. She worked on it six to eight hours a day for many months, starting with organizing all the paperwork. That meant a filing system. A grief therapist advised the widow to get up, get dressed as if she was going to work and to make sure she ate regular meals. This often falls by the wayside, when the structure of a life is gone.

This widow opened a consulting business to advise other widows on handling the practical aspects of settling an estate and also wrote a book about it.

A spouse’s death is one of the most emotionally wrenching events in a person’s life. Statistically, women live longer than men, so they are more likely to lose a spouse and have to get their financial lives organized under duress. The loss of a key breadwinner’s income can be a big blow to a widow who has never lived on her own. The tasks come fast and furious, in a terribly emotional time.

You’ll likely be very vulnerable after the death of your long-time spouse. Hold off on any big decisions (like moving, quitting a job, selling the house) and attack your to-do list in stages. Some of a widow’s first tasks will be contacting the Social Security administration, calling the life insurance company, and paying important bills, like utilities and property insurance premiums. If your husband was working, contact his employer for any unpaid salary, accrued vacation days, group life insurance, and retirement plan benefits.

Next, contact an estate planning attorney to make sure your own estate plan is in order. Name your adult children, trusted family members, or friends as agents for your financial and health care power of attorney, and consider creating a revocable living trust. Update your beneficiaries on life insurance and annuity policies. If probate is needed for your spouse’s estate, the estate planning attorney can advise you (many handle probates) or refer you to another lawyer.

Deciding how to take the proceeds from any life insurance policies depends upon your immediate cash needs and whether you can earn more from the payout by investing the lump sum. Make this decision part of your overall financial strategy – ideally with a trusted financial advisor.

Determining a Social Security claiming strategy as a widow comes next. You may be able to increase your benefit, depending on your age and income level. If you wait until your full retirement, you can claim the full survivor benefit, which is 100% of the spouse’s benefit. If you claim it before that time, the amount will be permanently reduced. If you and your spouse are at least 70 at his death, you may benefit by switching to a survivor benefit if your benefit is smaller than his. Your financial advisor or the Social Security office can help you crunch the numbers.

It’ll be quite a while before you feel like you’re on solid ground. If you were working when your spouse died, consider continuing to work to keep yourself out and about in a familiar world. Anything you can do to maintain your old life, like staying in the family home, if finances permit, will help as you go through the grief process.

Reference: The New York Times (April 11, 2019) “You’re a Widow, Now What?”

Tom Petty’s Heirs Battle Over His Estate

Tom Petty's Wildflowers album
Tom Petty’s Wildflowers album is part of the estate dispute.

Rocker Tom Petty was wise enough to execute a revocable living trust before his unexpected death in 2017, but his heirs are now arguing over some of the wording in the trust.

Tom Petty’s widow and sole successor trustee of his trust, Dana York Petty, planned to include unreleased tracks from her late husband’s celebrated 1994 solo album, Wildflowers, as part of a 25th anniversary edition box set.

However, Tom’s daughters Adria and Annakim, his children from a previous marriage, have blocked the release, according to iHeartRadio’s article, “Tom Petty’s Widow, Daughters Battling Over His Estate.”

Dana says the daughters are interfering with her ability to manage Tom’s legacy. She’s reportedly requested that a judge name a day-to-day manager for the estate.

Adria argues that she and her sister were promised an equal share of control in their father’s estate, according to his will. She says her father’s “artistic property” was supposed to be placed into a separate company to be jointly administered by the three women. However, Dana disagrees with Adria’s interpretation of the term “equal representation.”

Annakim seems to reference the battle in a recent Instagram post. She displayed a photo of her father with the caption, “We don’t sell out. No Vampires 2019.”

A subsequent reply in the comments section mentions Petty’s will.

Wildflowers was initially designed to be a double album, with Petty completing more than 25 songs in the initial sessions. However, he was convinced by his record label to take some some songs off for the final version.

Throughout the years, a few of the extra songs were released on various collections. However, Tom never relinquished his idea of releasing the set as a double LP.

Petty was reportedly planning a Wildflowers tour, before his death in October of 2017, to showcase all the leftover material.

Reference: iHeartRadio (April 3, 2019) “Tom Petty’s Widow, Daughters Battling Over His Estate”

Other articles that may interest you:

Are No-Contest Clauses Valid In Florida?

Prince’s Estate Battle Drags On

What Happens To Mom’s House When She Dies?

Mom's house in Florida
Will Mom’s house in Florida need to be sold? Who handles that?

So, what happens to Mom’s house in Florida when she dies?

It’s not uncommon for a parent to leave her home to her children. At the parent’s death, questions often arise concerning how long the children have before they must sell it or change the deed. What if one sibling wants to live in the home for a while, before it is sold? What happens if there’s a mortgage on the house?

nj.com’s article on this subject asks, “Mom died and left us her home. What do we have to do next?” According to the article, the executor (Personal Representative, in Florida) is tasked with gathering the assets, paying the debts and taxes (if any) and then distributing the assets, in accordance with the parent’s Will.

If the home was in the parent’s name alone, in most states, that makes the property a probate asset that’s passed according to the Will. In Florida, things get more complicated due to our Homestead laws, but the home will still be subject to the probate process. The Will usually gives the Personal Representative the discretion to sell the house and other property and then make the distributions.

There also may be a specific provision in the Will covering the home.

There’s generally no specific timeline as to when the property has to be transferred. However, the Personal Representative is required to act prudently and in a reasonably timely manner. In Florida, a vacant house that’s not monitored and maintained can lose value quickly due to our humidity, bugs, mold, and homeless trespassers.

In most situations, the Mom’s house will likely be sold. It’s the Personal Representative’s responsibility (after consulting with the probate attorney) to hire a real estate agent; arrange for estate sales, cleaning, and maintenance; and pay the bills associated with the home – including the mortgage, electricity, water – until a buyer is found. If Mom didn’t plan ahead and leave plenty of cash or liquid investments in her estate, the Personal Representative won’t be able to pay those bills, and her children will have to pay for those expenses – and the thousands of dollars in legal fees for the probate – out of their own pockets. Hopefully they can be reimbursed after the home is sold.

If one of the siblings wants to live there, and it’s agreeable to everyone, make sure that she doesn’t refuse to leave, when it comes time to sell. Keep in mind that landlord-tenant laws protect a tenant and may create an issue. The Personal Representative may want to talk with an attorney to determine what steps are necessary to protect against the tenant refusing to leave.

Reference: nj.com (April 1, 2019) “Mom died and left us her home. What do we have to do next?”