An executor for a parent’s estate in Brooklyn recently called my office. While sorting through financial records, she found a deed for a timeshare in Florida, purchased 20 years ago. A week later, a bill arrived from the resort for $4,000 in annual maintenance fees, addressed to the estate. She assumed she could simply sell the timeshare and settle the bill. But in the original contract, she found the problem: a perpetuity clause. The vacation home her parents enjoyed twice a year had just become a potential financial obligation for her and her siblings, forever.
This is a situation we see with increasing frequency. A timeshare, often bought with the best intentions, becomes an unwelcome and enduring liability for the next generation. The problem is the perpetuity clause, a contractual term that demands careful review during estate planning.
What Is a Perpetuity Clause?
A perpetuity clause makes a timeshare agreement last indefinitely. The ownership—and more critically, the financial obligations tied to it—is intended to pass from the original owner to their heirs, and to their heirs’ heirs, in perpetuity. It is a contract designed to outlive you.
The core of the problem isn’t the one-week vacation slot; it’s the unending stream of maintenance fees, special assessments, and property taxes. These fees rarely stay static. They rise annually, and the timeshare association can levy significant special assessments for capital improvements with little input from the owners. When you pass away, that stream of bills doesn’t stop. It flows directly to your estate and, if the asset is accepted, to your beneficiaries.
What was once an asset on a personal balance sheet transforms into a perpetual liability for your children. They inherit not a vacation, but an invoice. Stewardship means planning for the transfer of valuable assets. It also means preventing the transfer of financial burdens.
The Clash with New York Property Law
This concept of perpetual ownership runs contrary to a foundational principle of property law: the Rule Against Perpetuities. For centuries, the law has resisted attempts by property owners to control their assets long after they are gone—a concept often called “dead hand” control. In New York, this principle is codified in the Estates, Powers and Trusts Law (EPTL) § 9-1.1.
This statute is designed to prevent property interests from being tied up for an unreasonable amount of time. It ensures that property can be freely bought and sold by future generations. A timeshare contract with a perpetuity clause, however, attempts to create exactly what the law was designed to prevent: a commercial interest that cannot be easily terminated and which binds future generations who never signed the original agreement.
Timeshare developers argue that their contracts are not subject to this rule, creating a legal conflict between contract law and established property law. While the contract you signed may be enforceable against your estate, the question of whether it can truly bind your heirs indefinitely is a complex one. The one certainty is that the timeshare company will act as if it does, pursuing the estate and its beneficiaries for payment.
Planning for an Unwanted Inheritance
Dealing with a timeshare in an estate plan requires deliberate action. Ignoring it is not a strategy. As fiduciaries, we have to account for every asset and every liability, and a timeshare with a perpetuity clause is often both.
So, what are the contingencies?
First, we look at the contract itself. Some newer agreements may contain provisions for an exit, though often with significant costs. Many older contracts, however, were designed to be inescapable. The secondary market for timeshares is notoriously difficult; many have little to no resale value, and in some cases, owners have to pay a third party just to take the deed.
Second, we consider the probate process. An executor can attempt to disclaim the property on behalf of the estate. This, however, does not simply make the problem disappear. The timeshare company can still place a claim against the estate’s other assets for any outstanding fees. The “asset” may be gone, but the debt remains.
The most prudent approach is proactive. If you own a timeshare, it must be addressed within your lifetime as part of a generational estate plan. This could involve trying to deed the property back to the resort, exploring exit programs, or structuring ownership through a specific legal entity, like an LLC, that can be dissolved, severing the perpetual obligation.
A timeshare is unlike any other piece of real estate. Failing to plan for its unique contractual burdens can leave a legacy of debt and frustration. A proper plan ensures your loved ones inherit your legacy, not your liabilities.
If you own a timeshare, the prudent first step is to have the original purchase agreement and association documents reviewed. My firm reviews these contracts to identify language creating perpetual obligations and to determine how the property should be handled in your estate plan.
