Buying in with Parents

[ZekeKelso]

Long story short - my parents and I inherited a small sum from my grandmother. We are looking for something "family related" to do with the money, and buying into DVC might be the right thing.

For this thread, could you guys give any information on the practical aspects of us buying into DVC under some sort of joint ownership. (I should also start a thread on one of the other DVC boards to ask advice on the personal side of joint ownership.)

Are there any restrictions on buying in as joint owners? Can either owner use any/all points? Who gets a bill for maintenance fees? Considering that my parents are somewhat old and not in the best of health - can the ownership be set up that I would just automatically be the sole owner after their death (or vice versa should DW and I die first) without their half being part of their estate.

I'm fairly familiar with how DVC works. So I'm specifically looking for info on the joint ownership angle. Also, while it may be better for us to each buy a smaller contract than to co-buy a larger one, that wouldn't work due to the "spirit" of what I'm trying to accomplish.

Thanks for you help,
Zeke

 

[Chuck S]

As joint owners, in most states the survivors will automatically inherit the DVC when someone passes, and in most states, joint ownership supercedes a will for that purpose. It will still be considered as part of the overall estate for estate taxes, etc.

Yes, all owners will have access/control of all the points unless you specifically designate otherwise though contract.

Remember that should any party on the deed declare bankruptcy, the DVC would be considered an asset and subject to court action.

Maintenance fees will be billed to the address/party you designate, but in the end you are all jointly responsible. If the annual dues are not paid, no one could use the membership.

 

[bcpage]

Does this work with add-on contracts as well? If I add-on at AKV can I put my parents on?

 

[BroganMc]

I have a joint ownership like that with my dad and my 3 siblings as co-owners. We set it up that way to give my siblings membership perks and the right to inherit. It's all part of a family trust we've set up. (The trust also accounts for annual dues so it is kept solvent until the last owner dies.)

The bills for annual dues go to my father and I am designated as the authorized person to make ressies on points. (We're at the same location so it's not a hassle.)

The only trouble is when we add on points we need to get everyone's signature on the deal.

 

[Dean]

Does this work with add-on contracts as well? If I add-on at AKV can I put my parents on?

Only if you buy the minimum number currently 150 but going to 160 coming up OR you can add them to your current contract prior to buying the ad on. You can also buy then change it later but will have to get a new deed and pay for a new recording as you would if you added them to your current contract. If you change the registration in any way, even to add your parents, the contracts will be totally separate just like you were different people. You will lose the aggregate banking totals and ability to combine the points directly, both small issues in my book but may not be to you.

 

[bcpage]

Only if you buy the minimum number currently 150 but going to 160 coming up OR you can add them to your current contract prior to buying the ad on. You can also buy then change it later but will have to get a new deed and pay for a new recording as you would if you added them to your current contract. If you change the registration in any way, even to add your parents, the contracts will be totally separate just like you were different people. You will lose the aggregate banking totals and ability to combine the points directly, both small issues in my book but may not be to you.

So which way do you think is better--add-on or new master contract?

 

[Dean]

So which way do you think is better--add-on or new master contract?

It's not a question of better overall but what is better for the person in question. Your choices through DVC are limited to either adding on to the same contract or buying the minimum new contract amount and potentially changing the registration. Of course you can do the add on then change the ownership later for a modest amount of work and cost.

 

[JimMIA]

To me, this is a classic example of a situation where a trust ownership might be helpful. I say that for several reasons. One is the transfer of ownership, the second is continuity, and the third is liability.

The issues in this situation are not so much how DVC works, but how ownership generally works.

You can buy DVC jointly. Normally, that would be done as a "joint ownership, with right of survivorship" in Florida. That means that all three persons would own the asset, and if one passed away, ownership would revert to the other two. Transfer of assets in that case is rather simple, usually only requiring a certified copy of a death certificate (and no court review) to transfer.

You could buy the DVC in your parents name, and have their will designate you as the recipient of that asset. Transfer in that event would require some legal action by the executor/personal representative at a minimum.

In either of the above events, anyone who had been designated as an owner or associate with DVC would still have use of the points during the transition period, but would not be able to sell the DVC.

The problem of those types of ownership is exposure to liability. Not the classic "slip and fall" liability, but financial liability. If you own something jointly, you have essentially entered into a partnership -- with each partner jointly and severally liable for debts of the other. So...in an extreme case, if one of your parents had a catastrophic end stage, the DVC ownership could be an asset creditors would attempt to attach to settle debts.

If the DVC were owned by both parents jointly, passing to you through probate, the situation would be the same, but there might be some limited protection, depending on your state law.

If the DVC is owned by a trust, however, the trust owns the asset. If someone passes away -- whether or not they are a trustee of the trust -- nothing changes. The surviving trustees still control the asset, it's fairly well protected from creditors, and you still have full use of it. In addition, if you need to sell it to satisfy final expenses, you have the ability to do that without any court action.

These are not happy thoughts, but nonetheless, things you have to anticipate and think about.

If you think a trust may be beneficial, you need to consult an experienced attorney who specializes in trusts in your state. This is not something to be left to brokers or amateurs.

If there are substantial assets, you really should check with an attorney who specializes in protecting assets. There are many options, and the best one will depend on your situation.

 

[JimMIA]

Incidentally, I'm not a big proponent of trusts generally...nor do I think they are right for everyone. But there are situations where they can be very helpful.

 

[bcpage]

Incidentally, I'm not a big proponent of trusts generally...nor do I think they are right for everyone. But there are situations where they can be very helpful.

Thanks for the input. Of the things you mention, the only one that really concerns me is the catastrophic event where this could be viewed as my parents asset, when in fact, it is bought and paid for by me. The only reason they would be on is to gain the AP discounts b/c they travel with us alot. I will take a look at the trust option. thanks again!

 

[JimMIA]

Thanks for the input. Of the things you mention, the only one that really concerns me is the catastrophic event where this could be viewed as my parents asset, when in fact, it is bought and paid for by me.

Yep. That's the rub! If you title anything jointly with your parents...it's their asset. Period.

You can explore the trust option and see if that makes sense in your case.

The only reason they would be on is to gain the AP discounts b/c they travel with us alot. I will take a look at the trust option. thanks again!

Or, you can just buy it in your name and list them as associate owners with DVC. They'll have full use of the the DVC, but will not have any of the ownership powers or liability.

 

[JimMIA]

The only reason they would be on is to gain the AP discounts b/c they travel with us alot.

This is a fine point, but still worth mentioning. AP discounts have nothing to do with DVC. They are benefits of holding an AP. Your parents would not be able to get the DVC AP price unless they were either owners or live with you (I think).

 

[Dean]

Thanks for the input. Of the things you mention, the only one that really concerns me is the catastrophic event where this could be viewed as my parents asset, when in fact, it is bought and paid for by me. The only reason they would be on is to gain the AP discounts b/c they travel with us alot. I will take a look at the trust option. thanks again!

You could do a 25 pt add on and transfer that into their name plus yours. Little risk and a minimal amount of cost and hassle. Then they'd get all the benefits of any other member.

 

[bcpage]

You could do a 25 pt add on and transfer that into their name plus yours. Little risk and a minimal amount of cost and hassle. Then they'd get all the benefits of any other member.

I may have misunderstood my DVC guide today, but i thought that he said that i couldn't add my parents to just the add-on...they would have to be added to the master and the add-on. Are you saying that I could split my add-on into a 100 and 50 pt contract and then just do the quitclaim deed for just the 50 pt add-on?

 

[Dean]

I may have misunderstood my DVC guide today, but i thought that he said that i couldn't add my parents to just the add-on...they would have to be added to the master and the add-on. Are you saying that I could split my add-on into a 100 and 50 pt contract and then just do the quitclaim deed for just the 50 pt add-on?

If you buy 150, you can add them at that time and can even do say two 75 pt contracts to do that I believe. Or you could add on say 25 points and then change it over later on your own or any combo such as buying 150 split up then change only a portion of it as per your last question.

 

[JimMIA]

I may have misunderstood my DVC guide today, but i thought that he said that i couldn't add my parents to just the add-on...they would have to be added to the master and the add-on. Are you saying that I could split my add-on into a 100 and 50 pt contract and then just do the quitclaim deed for just the 50 pt add-on?

Your guide is right. You can only do an add-on to an existing account; therefore, the add-on would have to be titled exactly the same as the original account. You could change it later, but you'd have to do a quit claim deed and send it through Disney's ROFR system. I believe they do an automatic ROFR waiver for transfers to family members, but it's still another step with paperwork. As Dean mentioned, there would be some cost, but not much.

If you are contemplating doing all of that just to get the DVC price on the AP, and other DVC member perks, the effort might not be worth what you'll save. And the cost of creating a trust certainly would not be worth the few bucks you'd save.