Experience as Beneficiary/Successor Trustee of DVC Membership in a Trust?

[jjanne]

Hi - I'm considering putting DVC in a living trust, but wanted to understand what the process will be like for my successor trustees and beneficiaries

For folks who's acquainted or had experience being a successor trustee or beneficiary in a trust where the DVC membership was passed on them, appreciate if you can please share what your experience has been and how the process proceeded with Member Services - who did you contact, what documents did Disney require, how long did it take, etc?

Thank you!

 

[crvetter]

Essentially it works no different than anything else held in a trust. If you (and all current trustees) pass away the successor trustees become the current trustee. Thus they immediately are eligible to be members in DVC.

The reason you use a living trust is as it passes to successor trustees the ownership switch is basically instantaneous because the ownership is still the trust. Just the trustee changes.

At that point the successor trustees should make efforts to put into their own trusts or name. But again there really isn’t a lot of work unlike a willed piece of property that has to go through probate.

 

[tx911]

Hi - I'm considering putting DVC in a living trust, but wanted to understand what the process will be like for my successor trustees and beneficiaries

For folks who's acquainted or had experience being a successor trustee or beneficiary in a trust where the DVC membership was passed on them, appreciate if you can please share what your experience has been and how the process proceeded with Member Services - who did you contact, what documents did Disney require, how long did it take, etc?

Thank you!

Not to answer your question with a question, but I've assumed in that scenario the trust would be responsible for the dues whether your heirs want that or not. I'm not sure if this is correct?

That's the one thing that gives me pause about putting DVC in a trust.

 

[jjanne]

Essentially it works no different than anything else held in a trust. If you (and all current trustees) pass away the successor trustees become the current trustee. Thus they immediately are eligible to be members in DVC.

The reason you use a living trust is as it passes to successor trustees the ownership switch is basically instantaneous because the ownership is still the trust. Just the trustee changes.

At that point the successor trustees should make efforts to put into their own trusts or name. But again there really isn’t a lot of work unlike a willed piece of property that has to go through probate.

Right, it's not going to be an automatic tranfer so I'm trying to understand the part where the successor trusteee/beneficiary need to reach out to Member Services to get the membership formally transferred.
e.g.
What did Member Services require to process the transfer?
How long did it take ?
How easy was the process or what problems / issues did the trustee/beneficiary have?

 

[crvetter]

Right, it's not going to be an automatic tranfer so I'm trying to understand the part where the successor trusteee/beneficiary need to reach out to Member Services to get the membership formally transferred.
e.g.
What did Member Services require to process the transfer?
How long did it take ?
How easy was the process or what problems / issues did the trustee/beneficiary have?

I talked to DVC when I did mine, they told me just a death certificate and the trust document (which I think I had to provide when I bought). And they would add them online access as the member.

But technically speaking they are members instantly on the passing of the trustee, the rest is just an IT/formality setup. So, there would be no legal steps need to be taken (other then to transfer out of that living trust to their own, which is just good practice but technically not necessary).

This is no where near the length of a willed deed, deed transfer upon death, etc. We are just talking Disney Member Administration setting them up in the IT system and verifying your passing.

 

[crvetter]

Not to answer your question with a question, but I've assumed in that scenario the trust would be responsible for the dues whether your heirs want that or not. I'm not sure if this is correct?

That's the one thing that gives me pause about putting DVC in a trust.

I believe that is correct because the trust is the owner. Technically your estate would be responsible too, and DVC could sue to get dues covered by the estate. And usually if they win they can claw back money/assets distributed from the estate. I just don't see Disney doing any of that they rather just take it back.

In practicality, unless something drastically changes DVC can be dumped at a guaranteed of $0 per point, likely instantly if offered.

 

[jjanne]

Interesting.

From what I understand, the transfer of membership should not be automatic upon passing of the original member (grantor) since the beneficiaries can disclaim inheritance in a trust. If the Successor Trustee reaches out to DVC, provides the death certifciate and requests the transfer, it sounds like that will trigger the process. I wonder if you can use the membership at this point OR if the beneficiary / new member will have to wait for the updated deed which will create the new membership before DVC will allow for the membership to be used.

I'm anticipating this is how it will play out, but curious if anyone has gone through this process and what the step by step is.

 

[jjanne]

I believe that is correct because the trust is the owner. Technically your estate would be responsible too, and DVC could sue to get dues covered by the estate. And usually if they win they can claw back money/assets distributed from the estate. I just don't see Disney doing any of that they rather just take it back.

In practicality, unless something drastically changes DVC can be dumped at a guaranteed of $0 per point, likely instantly if offered.

Agree with this.

In the other timeshare website, TUG, some folks mention putting the timeshares in a separate trust so the rest of your estate does not have the risk of covering dues, esp. if beneficiaries do not want it.

I like what @crvetter mentions that in the worst case scenario, the trust can sell or even dump it at $0 (which will probably taken in ROFR). That's an option if beneficiaries did not want it,. At least that's the case for now, even near term for DVC ...

Now this got me thinking -- what's the likelihood of DVC timeshares going to $0 and hard to dump a decade or so from now.......

 

[crvetter]

Interesting.

From what I understand, the membership should not be automatic upon passing of the original member (grantor) since the beneficiaries can disclaim inheritance in a trust. If the Successor Trustee reaches out to DVC, provides the death certifciate and requests the transfer, it sounds like that will trigger the process. I wonder if you can use the membership at this point OR if the beneficiary / new member will have to wait for the updated deed which will create the new membership before DVC will allow for the membership to be used.

I'm anticipating this is how it will play out, but curious if anyone has gone through this process and what the step by step is.

The new trustees would still be the owners, there isn't a way around that since the trust owns the asset. They will not need to wait for any deed to trigger a new membership, as the owner is the trust. The ownership of the trust changes upon your passing not the owner of the DVC. Thus DVC only needs to be informed the owner of the trust has changed through a simple form, and on the backside they adjust it to the new trustee.

The new trustees can select to move the ownership out of the trust, which would be a deed change.

The difference of what you say is they are disclaiming the trust, which at that point the DVC asset is owned by the trust and the trust is in legal limbo.

The easiest way to understand is that the trust is the owner. And DVC is just giving access to the use of the membership to the current trustee. DVC is not involved in any legal process to the trustee change upon death.

 

[jjanne]

The new trustees would still be the owners, there isn't a way around that since the trust owns the asset. They will not need to wait for any deed to trigger a new membership, as the owner is the trust. The ownership of the trust changes upon your passing not the owner of the DVC. Thus DVC only needs to be informed the owner of the trust has changed through a simple form, and on the backside they adjust it to the new trustee.

The new trustees can select to move the ownership out of the trust, which would be a deed change.

The difference of what you say is they are disclaiming the trust, which at that point the DVC asset is owned by the trust and the trust is in legal limbo.

The easiest way to understand is that the trust is the owner. And DVC is just giving access to the use of the membership to the current trustee. DVC is not involved in any legal process to the trustee change upon death.

Ah, good point. I think I have a better understanding from your response - thank you @crvetter
- the trust, not the grantor, owns the DVC membership.
- With one's passing, there is no change in ownership though (the membership is still owned by the trust, right? There are situations where the successor trustee is not beneficiary so I don't think they should be considered legal owners) but there's a change in the control of the trust so the membership will now be managed by the successor trustee, and DVC automatically acknowledges this as you originally said.
- If/when the successor trustee decides to transfer the property outside of the trust to a beneficiary, this will be the time the ownership of the membership changes and a deed transfer will need to happen
- I've read posts where the membership works as usual (no pause, no cancellations of existing reservations), during the process of deed transfer (e.g. putting a membership into a trust's name) so it seems like transferring it out of a trust's name to a beneficiary will follow this.