Valuing timeshares for probate purposes

Does anyone know how to go about valuing a timeshare in the UK which was gifted away some years ago for probate purposes?

Raegan Leather
Fursdon Knapper Solicitors

I think that a qualified surveyor or valuer would be able to do this, if provided with information about the annual charges payable and some data about the letting value of the property in question at different times of the year. Usually the scheme managers provide a service to unit owners in letting their property for unwanted weeks and can probably provide relevant letting data.

However, a professional fee may be quite expensive and it’s questionable whether it’s worth it. You can probably reach some kind of view based on the costs and benefit which you can offer to HMRC as an estimate. My experience is that they are more often a liability than an asset.

In a case I currently have in hand involving a taxable estate the managers run an annual ‘buy-in’ of unwanted timeshares and if their offer is accepted my executor clients will have to pay a premium approximately equal to four times the current annual management fee to rid themselves of the timeshare ‘rights’. I shall try and get the full amount allowed as a liability at the date of death- can anyone speak from experience about whether this is likely to be accepted?

Tim Gibbons

The last time I had to deal with timeshares, we looked at the other timeshares for sale in the same location at similar dates – the company actually kept a ‘catalogue’ of available timeshares that we were able to consult.

In the end, these were higher than what we were actually able to sell the timeshares for (as you would expect of asking prices), but they allowed us to complete the initial IHT return, and HMRC did not seem to have any problem with this approach.

Presumably, though, you are dealing with a timeshare that was not subsequently sold within a reasonable period. Since asking prices are public, but sale prices tend not to be, you may be stuck using the slightly higher values.

Taurean Drayak
Elliot, Bond & Banbury

I have recently had a timeshare based in Manhattan valued for IHT purposes by Confused About Timeshare.

They are company, based in the UK, which buys and sells timeshares, and they are members of the Resort Development Organisation, following its code of conduct. They will value timeshares, based on the data they hold about the market, for a fee and will provide a brief valuation report.

Kirsty McGeough
Turcan Connell

Having recently been tasked with disposing of my father’s timeshare, I wonder if there might be scope for declaring it as a substantial liability. From what I can see so far (peering through the morass of dodgy websites offering “advice”), there is little scope for selling for more than a nominal sum (you can buy second hand timeshares on many resorts for $1/E1) and the annual “management” fees often have escalation provisions far in excess of inflation - even before you take into account the effect of the weak £.

(As you can see, I am not very optimistic about this task).

Andrew Goodman
Osborne Clarke LLP

It may depend upon what form, on paper, the timeshare actually took, and also upon whether “it” is transferable per se on death.

The fundamental question is how is the share actually defined? They are rarely shares in land.

There are several variants, mostly subject to foreign law.

Certain of the continental variants give a share in a company which owns the property representing dates of enjoyment, in which case the scope for treating it as a liability is very limited, there is an asset whose value is dictated by demand.

Certain of the more esoteric offshore versions use more contractual type of relationship which could be interpreted as a liability.

Certain also work on the basis of a company limited by guarantee, which is of course fixed, but notwithstanding is a potential liability in the event that the project fails. Again it depends upon how the rights are worded and in what they consist

I would suggest that it is only possible with a clear and precise definition of what rights, and correlative obligations the timeshare consists Whilst a share in a company can be analysed as a bundle of rights, the timeshare may not in fact be a share in a "company "at all, and might be dismemberable or deconstructible into component assets and liabilities.

Otherwise you might simply wish to put the asset in as a foreign asset at its market value ( you cite $1 most timeshare schemes do an in-house transfer “value” as there are invariably limitations on transfers); and compile a list of liabilities at the date of death for which the estate is responsible to set against it.

This is not the simple straightforward response you may have looked for. It is based upon a Dreyfus analysis that the substance of the foreign right will be respected by the British Court , rather than being transmogrified into English, barring “administrative” provisions governed as such by the lex fori.

Others may have better ideas and solutions, but I sense that this is likely to be a “self help” issue.

Peter Harris