DVC Deed Title: DVC deeds, like any other real property, can be passed down to heirs.
If you’re getting ready to close on a DVC purchase, please be aware that your decision on how to deed your real estate interest might affect your rights and/or tax liability depending on if you live in a community property state, or an equitable distribution state.
I am not an attorney, nor am I giving or asking for legal advice. Please don’t rely solely upon the information in this post in making any decision on how to deed your DVC purchase. It’s probably best to consult with an attorney or real estate professional to help you make the best decision for your particular situation.
Many people don’t realize that the law of the state your DVC is physically located in governs what happens in the probate of a will. If a North Carolina resident died owning DVC in their name individually, he or she would most likely have to have someone to open a probate estate in FL, SC, CA or Hawaii to dispose of their DVC interest.
Since real estate laws vary by state, I’m not sure which options are even available when you purchase in Florida, South Carolina, California or Hawaii – at least, I don’t know the choice of wording that is offered by DVC or your closing company in each state.
However, with timeshares in general, I’ve seen the following terms used:
Joint Tenancy means that each person owns an undivided interest in the entire property, and creates a Right of Survivorship. This right provides that if any one of the joint tenants dies, the remainder of the property is transferred to the survivors. A will or trust does not control where the property goes on the death of a joint tenant. Because the deceased owner’s share automatically goes to the remaining owner probate can be avoided for this property – at least until the last owner dies.
Community Property is used for married couples in community property states (such as California). Similar to joint tenancy, each person owns an undivided interest in the entire property and when one spouse dies the survivor automatically receives the entire interest, thereby avoiding the need for probate. As with joint tenancy property, property titled as community property will not be controlled by a person’s will or trust.
TENANCY BY THE ENTIRETY
Tenancy by the Entirety is a special form of joint tenancy for married couples, where one joint tenant cannot sell their interest without the other’s consent and creditors cannot force a sale of the property to pay the debts of only one of the joint tenants. If a deed is issued to “Husband and Wife” in the State of Florida, I believe it means it is a “tenancy by the entirety”.
TENANCY IN COMMON
Tenancy in Common is a slightly less restrictive form of ownership that sometimes results when joint tenancies cease to exist. A joint tenancy can be severed into tenants in common which would eliminate the right of survivorship. In many states (such as South Carolina and Hawaii), if a deed is issued to “Husband and Wife”, it means it is a “tenancy in common”. Tenants in common means that if either party passes, the property goes to the estate of the deceased party. With tenants in common each person owns a specified portion of the property and it does not need to be equal ownership. Upon the death of an owner that owner’s share is controlled by his or her will.
Married Person: Typically, title is taken as a married man (or woman) as his (or her) sole and separate property. This would typically require the spouse not taking title to sign a quitclaim deed in community property states.
TRUSTEES IN A LIVING FAMILY TRUST
Trustees in a Living Family Trust: If you have a revocable living trust, you can then take title in the trust name, update your trust to reflect this asset, and then the terms of the trust govern what happens with the property after you pass away. If you have created a trust for estate planning purposes you need to make sure all your assets are owned by your trust to obtain its maximum benefit. This is actually the best way for a married couple to take title. Owning property in your trust avoids probate upon the death of both the initial and surviving spouses, preserves the capital gains step up for the entire property on the first death and avoids property tax reassessment. As an added benefit, in the event that one spouse is incapacitated the other spouse, as the remaining trustee, will be able to sell and/or manage the property without worrying about obtaining a conservatorship or using a power of attorney.
WHAT TO CHOOSE?
As you can see the answer isn’t as simple as it first appears
To fully understand and plan for all the implications associated with your particular situation – property tax reassessment, capital gains tax minimization, probate and estate taxes – seek the advice and counsel of a qualified attorney.