DVC and Estate Planning

[bethy]

I know this is a question for our attorney but I just wanted to get some quick input here. I often see posts that mention leaving DVC contracts to their children. And then there are often comments about the ongoing dues being a burden to them.

My question: Are heirs obligated to pay dues on your contract after you die? I cannot imagine that would be true . . . much like credit card debt is not passed down either. Children are not obligated to pay their parents' debts (but of course the estate is . . . )

Anyway, I will ask our attorney about this next time we meet with him about estate planning. We might have to set up some sort of provision for dues, though for us hopefully our contracts will expire before we do! But you just never know.

 

[erionm]

My question: Are benefactors truly obligated to pay dues on your contract after you die? I cannot imagine that would be true . . . much like credit card debt is not passed down either. Children are not obligated to pay their parents' debts (but of course the estate is . . . )

Yes they would. DVC is a deeded real estate interest (just like a house) and the heir would become the owner of that deed. They would need to continue to pay the annual dues or DVC would foreclose and take the points back.

 

[DebbieB]

I know this is a question for our attorney but I just wanted to get some quick input here. I often see posts that mention leaving DVC contracts to their children. And then there are often comments about the ongoing dues being a burden to them.

My question: Are benefactors truly obligated to pay dues on your contract after you die? I cannot imagine that would be true . . . much like credit card debt is not passed down either. Children are not obligated to pay their parents' debts (but of course the estate is . . . )

Anyway, I will ask our attorney about this next time we meet with him about estate planning. We might have to set up some sort of provision for dues, though for us hopefully our contracts will expire before we do! But you just never know.

It's the same as if you leave your house to your children. If they keep the house, they are obligated to pay the taxes on it. If they don't want DVC, they would have to sell it but they can't keep it and not pay dues.

 

[jarestel]

You don't transfer ownership of your credit cards to your children when you pass, but in the case of DVC you will, in effect, pass on your ownership interest and all of the duties and obligations relating to it. So if they become the owners, they will need to pay the dues.

 

[bethy]

I get what you are saying. But what if you don't "leave" it to them? Is it possible to exclude it? I guess this is definitely a question for our attorney. I do get that if they become the owners then they of course would be obligated to pay dues.

 

[DenLo]

The MFs are for the life of the contract. If your heirs want to use your DVC membership they would need to pay the annual dues.

It's really no difference than your heirs having to pay the property tax on your residence. If they choose not to pay the dues then the DVC can file a lien and eventually take back the contract and points for failure to pay the MFs. And your heirs might not be even compensated for the value of the contract.

 

[jarestel]

I get what you are saying. But what if you don't "leave" it to them? Is it possible to exclude it? I guess this is definitely a question for our attorney. I do get that if they become the owners then they of course would be obligated to pay dues.

I see what you're saying. That's an interesting point. Since the DVC would be part of your estate, I suppose you could simply have it liquidated by the executor of the will, but you're probably entirely correct in thinking this is best answered by an attorney. Let us know what you find out!

 

[DenLo]

I didn't see your last post about it staying in the estate. It definitely sounds like a question for your attorney. I would also ask how it would affect the distribution of the items to your heirs. I would assume the estate would go through probate which causes some delay but would unsold property (the DVC contract) be an additional factor?

 

[DebbieB]

I get what you are saying. But what if you don't "leave" it to them? Is it possible to exclude it? I guess this is definitely a question for our attorney. I do get that if they become the owners then they of course would be obligated to pay dues.

It would be part of the estate, it would have to be sold from the estate. Any outstanding dues would have to be paid before the sale closes.

 

[pumpkinboy]

I cannot see maintenence dues being a much of a burden on heirs, since if they are not able to go one year, they can always rent out the points and use that money to pay the annual dues. Or at least, that's what I would do.

Other timeshares are more problematic, and not as easily marketable on the renatal market. We ended up abandoning a non-DVC timeshare inherited from DFIL since it was hard to rent out and expensive to maintain. With the very liquid rental market for DVC points, I don't see this as much of a problem for DVC owners. Whether renting thru an aggregator or directly to friends (or even strangers) I cannot see a time when you could not rent your points for more than the annual maintenence fees; let's hope that continues to be the case, eh?

 

[jdmn2010]

I get what you are saying. But what if you don't "leave" it to them? Is it possible to exclude it? I guess this is definitely a question for our attorney. I do get that if they become the owners then they of course would be obligated to pay dues.

Since it is part of your estate, you can't just pretend it doesn't exist. I suppose you could, but if you have a will there is probably a provision that either already would include dvc in what you are bequething to someone already or there is a residuary clause that would give it to an heir in that way. If you don't have a will then your state's laws would decide who gets it. Better to provide for it in your will and you have tons of choices as to what you can do. Maybe give your children the option of ownership (with dues of course) or provide for the estate to sell it and if there are any net proceeds then they could be split between the kids, or maybe a trust, etc., etc. Your attorney will help you figure out what you want to do.

 

[OrangeCountyCommuter]

I cannot see maintenence dues being a much of a burden on heirs, since if they are not able to go one year, they can always rent out the points and use that money to pay the annual dues. Or at least, that's what I would do.

Other timeshares are more problematic, and not as easily marketable on the renatal market. We ended up abandoning a non-DVC timeshare inherited from DFIL since it was hard to rent out and expensive to maintain. With the very liquid rental market for DVC points, I don't see this as much of a problem for DVC owners. Whether renting thru an aggregator or directly to friends (or even strangers) I cannot see a time when you could not rent your points for more than the annual maintenence fees; let's hope that continues to be the case, eh?

I strongly disagree with this assmption. Leaving your heirs this as an asset and assuming they can "rent" out the points to pay the dues is just not sensible IMHO.

Folks think "gee my kids will love to get this" Really? Look at resale values right now. Look at the dues. Unless your kids love to go to Disney annually and can afford it, it's basically a liablity and liable to become more so as it ages IMHO!

 

[BWV Dreamin]

We plan on leaving a contract to each of our 3 boys. We have a revocable trust that I plan on moving these into. They can elect to keep them or sell them. Based on statistics, by the time I pass there may less than 10 yrs. left on them. It would not be a long time burden on them and in theory could just let Disney take it back if they couldn't sell them. The most important thing is to avoid probate and deed them accordingly.

 

[bethy]

Thanks everyone. I have been away from this thread and offline
Because we are on vacation at Aulani. We have a will but it was
Written before we bought DVC and also 2 kids ago! So we are
Preparing for an update. For me I consider DVC to be a liability.
For us it is worth it but for many (most?) people it would not be.

I looked into renting our points once thru a broker and it was
Too much for me to deal with. Just not worth the hassle for us.
So I definitely don't want to burden or their guardians with all that!

Aloha! (Aulani is AMAZING btw, there are no words!)

 

[drusba]

Leave it to kids in will and they take it subject to paying all future dues. They can, of course, sell it after getting it but you do not know how easy that is going to be including because you don't know when that is going to be. Moreover you have an additonal issue if you are leaving to more than one kid. You cannot split any particular contract. Thus, for example if you have 220 point contract with three 25 point add-ons you have four possible contracts to devise but the 220 one must go as one to whomever gets it. Thus, you have the issue that it is better to give separate and equal sets of points to each child for his own but you won't be able to do that.

An option is just to decide to will nothing as to your ownership interest and just designate them to be sold upon death.

Another option if you want kids to have it for use is a trust. The trust would own the contracts until they expire and the kids would be the benficiaries of the trust. You could put in terms that each gets to use some percentage of the points per year and can direct the trustee to bank or borrow their share of points. They can of course agree at any time to allow one sibling use of another's share during any particular year and otherwise agree to share their own designated percentage with others in the trust or even be able to rent their share. The big thing is what to due about dues. If you have the money to do so you could provide an interst accumulting fund to cover dues per year. If not the kids would have to come up with the money. If they cannot or don't want to, they can sell. If some can pay dues and others cannot, you can have provisions that allow dropping out as trust beneficiaries or allowing transfer of designated beneficiary interests among the kids. Kids could even be allowed to extend the trust by buying ownership extensions beyond end date if offered by Disney. In other words, if you really want kids to have DVC for use, there are a varity of things you can do if you set up trust. What is important in the trust is to cover as many contigencies as you can so that you avoid have the kids fighting with each other over how to use the points and who gets to use them, or sell them. Also, you ahve to have a trustee after you die which could be one of the kids or a third party. Just leaving the property in a will limits the things you can do.

 

[Granny]

For me, it is not a "one time" answer. If your children are young, I'd have the estate sell the contracts and proceeds to your children or their trust.

As the children get older (beyond the age of 21 for example), I'd simply ask them if they would want to get the contract with the dues payments. If so, I'd modify the will. If not, the original language would work.

 

[juncker]

If you're so worried about burdening your children with your DVC ownership, then find someone else to will them too. (You could will them to me !)

 

[henrylarry6]

That's definitely a good question for a lawyer. Estate planning can get really complicated; it's important to understand everything from a legal perspective.