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Timeshare

Also known as: Holiday Ownership, Vacation Ownership

Definition

A timeshare is a property ownership arrangement or contractual right that allows you to use holiday accommodation for a specific period each year, usually carrying ongoing maintenance fee obligations.

Understanding timeshares is crucial in estate planning because they're legally classified as assets forming part of your estate, even though most have little or no resale value and create ongoing financial commitments that transfer to your beneficiaries.

What Does Timeshare Mean?

Under UK law, timeshares are governed by The Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 and the Timeshare Act 1992, which define them as rights to use accommodation for intermittent periods under contracts lasting at least three years. Timeshares take two main legal forms: deeded ownership (where you own a fractional legal interest in the property, either freehold or leasehold) and right-to-use (where you acquire contractual rights to use the property but own no actual legal interest). Deeded timeshares create property interests that automatically form part of your estate, while right-to-use timeshares are purely contractual arrangements. Both types require annual maintenance fees covering property upkeep and resort operations, and UK consumer protection law provides a 14-day cooling-off period for new purchases.

In estate planning terms, timeshares present unique challenges because they're legally classified as assets but typically have zero resale value despite original purchase prices often being £15,000-£30,000 or more. When you die, maintenance fees continue to accrue and become estate debts that your executor must pay from estate funds until the timeshare is either transferred to a beneficiary, surrendered to the developer, or sold. Sarah inherited her father's week 23 timeshare at a Spanish resort that had no resale value but carried £850 in annual maintenance fees. As a deeded leasehold interest running until 2042, it formed part of his estate. Sarah filed a Disclaimer of Interest to refuse the inheritance, and the executor worked with the resort developer to surrender the timeshare back—avoiding years of ongoing fee obligations.

Most timeshares are located overseas (particularly Spain, Portugal, and France for UK owners), creating cross-border inheritance complications. Unlike traditional second homes that may appreciate in value, timeshares rarely qualify for tax reliefs and cannot typically be mortgaged or used as collateral. Beneficiaries can refuse to inherit a timeshare by filing a Disclaimer of Interest, a written refusal submitted to the probate court, provided they haven't used or benefited from the timeshare. If no beneficiary accepts it, your executor must negotiate with the timeshare company to terminate the contract—some developers (especially Resort Development Organisation members) accept surrender upon the owner's death, while others pursue estates aggressively for continuing fees. Failing to address your timeshare explicitly in your will can create significant problems for executors and beneficiaries who must figure out what to do without any guidance from you.

Common Questions

"Do I need to include my timeshare in my will?" Yes, you should address your timeshare in your will. While often considered an asset, timeshares typically have little or no resale value and carry ongoing maintenance fee obligations. If you don't specify what happens to it, your beneficiaries may inherit both the timeshare and its annual costs, creating an unwanted financial burden for your estate.

"Can my family refuse to inherit a timeshare?" Yes, beneficiaries can refuse to inherit a timeshare by filing a Disclaimer of Interest with the probate court. This written refusal lets all parties know they don't want the timeshare. However, if no one accepts it, your executor must work with the timeshare company to terminate the contract or the estate may remain liable for maintenance fees.

"What happens to timeshare maintenance fees when someone dies?" Maintenance fees continue to accrue after death and become a debt of the estate until the timeshare is either transferred to a beneficiary, surrendered to the developer, or sold. Your executor is responsible for paying these fees from estate funds during probate administration, which can reduce the inheritance available to your beneficiaries.

Common Misconceptions

Myth: "My timeshare will be a valuable gift for my children"

Reality: The vast majority of timeshares have zero resale value and cannot be sold on the open market. Rather than being an asset, timeshares are often financial liabilities due to ongoing maintenance fees (which frequently increase by 3-8% annually). Many beneficiaries view inherited timeshares as unwanted burdens rather than valuable gifts, especially if they don't use the property or can't afford the annual fees.

Myth: "If I don't mention my timeshare in my will, no one will be responsible for it"

Reality: If you own a deeded timeshare (freehold or leasehold), it automatically forms part of your estate whether you mention it or not, and your executor becomes responsible for dealing with it. Maintenance fees continue to accrue as estate debts, reducing the inheritance available to all beneficiaries. Ignoring your timeshare in your will doesn't make it disappear—it often creates bigger problems for your executor and family who must figure out what to do without any guidance from you.

  • Overseas Property: Many timeshares owned by UK residents are located in foreign countries, making them a specialized type of overseas property subject to cross-border inheritance laws.
  • Second Home: Unlike second homes which typically appreciate in value and receive favorable tax treatment, timeshares are fractional or time-limited arrangements that depreciate and don't qualify for Residence Nil-Rate Band relief.
  • Property Ownership: Understanding different types of property ownership (freehold, leasehold, fractional) is essential when dealing with deeded timeshares versus right-to-use contractual arrangements.
  • Leasehold: Most deeded timeshares are structured as leasehold interests with finite duration, typically 20-80 years, meaning they expire and have diminishing value over time.

Need Help with Your Will?

Address your timeshare clearly in your will with specific instructions about whether it should transfer to beneficiaries or be surrendered by your executor. Failing to provide guidance can leave your family with unexpected financial obligations and complicated probate processes.

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Legal Disclaimer:

This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.