Time-shares are a popular, and economical, way for people to own an interest in a fabulous vacation property in a dream location without having to spend a small fortune. If you own a time-share and you have established a trust agreement or plan to do so in the near future, you may be wondering how time-shares are funded into a trust.
A time-share operates by legally splitting the ownership of a property into segments based on time, usually weeks. Several purchasers are then able to own a “share” of the property. That share entitles them to use the property for the amount of time they purchased. For example, imagine you want to own a luxury condo in Paris, a location where real estate prices are typically high. Purchasing a condo in the heart of Paris would cost $2 million, far more than you (and many other people) can afford. To make the dream of owning a condo in Paris possible, the condo is offered as a time-share for $40,000 per share with one share equaling one week. You are then entitled to spend one week each year in the condo for every share you purchase. If you purchase two shares you may spend two weeks there and so on. Maintenance, upkeep, and taxes are typically split among the time-share owners or included in the cost of ownership.
What many people forget when they are transferring property into a trust agreement is that ownership in a time-share is, indeed, an ownership in real property that is deeded in the name(s) of the owner(s) as a general rule. If that is the case it can be transferred into your trust the same way any other real property is transferred. Typically, the transfer is accomplished by simply signing the deed over to the trust. Because there are always exceptions to a general rule, it is best to consult with your New York estate planning attorney about transferring your time-share into your trust.
One consideration, however, that applies any time real property is transferred into a trust is the tax consequences of the transfer of ownership. Because the property does, legally, change ownership it could trigger a change in assessed value and, therefore, a change in tax liability. Always check the tax consequences of your intended transfer before actually effectuating the transfer.
If you have additional questions or concerns about time-shares or trust agreements, contact the experienced New York estate planning attorneys at The Law Offices of Kobrick & Moccia by calling 800-295-1917 to schedule your appointment.