Divorcing couples in Indiana face many financial and property division issues, one of which is the fate of their timeshare. Whether a timeshare is a vacation retreat, an investment, or simply an unused expense, determining what happens to it during divorce proceedings can be complex. We all have sat through the dreaded timeshare presentations – now who gets it? Understanding how Indiana law treats timeshares in divorce can help couples make informed decisions about their assets. Sometimes timeshares are very valuable or more sentimental to an individual. This blog will help explore the nuances of timeshares.
Indiana is an “equitable distribution” state, meaning that marital property is divided in a manner deemed fair and just, though not necessarily equally. It is important to note that Indiana also uses the “one pot” theory. This applies to all assets brought into the marriage, as well as acquired during the marriage, including real estate, vehicles, retirement accounts, and, notably, timeshares. The court considers several factors when determining the division of property, such as:
- The contribution of each spouse to the acquisition of property
- The economic circumstances of each spouse at the time of property division
- The conduct of the parties during the marriage (such as financial irresponsibility or misconduct)
- The earning abilities of each spouse
- Custodial arrangements for any children
The treatment of a timeshare in a divorce depends on several factors, including whether the timeshare is paid off, how it is titled, and its fair market value. Courts in Indiana typically handle timeshares in one of the following ways:
- Selling the Timeshare and Splitting the Proceeds
In many cases, divorcing couples choose to sell their timeshare and divide the proceeds. This option works best when the timeshare has significant value or when neither spouse wants to retain ownership. However, selling a timeshare can be challenging due to market conditions. Many timeshares depreciate over time, and resale values may be lower than the original purchase price. If the timeshare is sold at a loss, both parties must agree on how to handle the financial shortfall.
- One Spouse Keeps the Timeshare
If one spouse wishes to keep the timeshare, they might be able to “buy out” the other spouse’s interest in the property. This typically requires an independent appraisal to determine the fair market value. The spouse retaining the timeshare may compensate the other spouse by offsetting other marital assets, such as a retirement account or home equity.
Additionally, the spouse keeping the timeshare must consider ongoing costs, including maintenance fees, special assessments, and property taxes. If the timeshare is financed, the spouse keeping it must either refinance the loan in their name or assume full responsibility for payments.
- Co-Ownership After Divorce
Though rare, some divorcing couples agree to continue sharing a timeshare. This of course depends on how amicable your divorce may be. This arrangement requires a detailed written agreement outlining how the timeshare will be used, how expenses will be divided, and what happens if one party later wants to sell their share.
While this option allows both parties to retain access to the vacation property, it can create future conflicts if one party becomes unable or unwilling to contribute to expenses. Further, divorce is meant to separate you from your spouse. If you continue to comingle assets, this might be a recipe for disaster or cause for future argument.
- Surrendering the Timeshare to the Resort
If a timeshare has little or no resale value, and neither spouse wants to keep it, they may attempt to return it to the resort or timeshare company. Some companies offer a “deed-back” program that allows owners to surrender their timeshare, often for a fee. However, not all timeshare companies provide this option, and some may impose restrictions on deed-backs.
- Allowing Foreclosure or Default
If the timeshare has an outstanding loan and neither spouse is willing or able to continue making payments, foreclosure may be an option. Defaulting on a timeshare can significantly impact both spouses' credit scores, so this should be a last resort. If foreclosure is unavoidable, it’s crucial to understand the legal and financial consequences, including potential liability for outstanding fees and costs.
Before finalizing the division of a timeshare in an Indiana divorce, couples should consider the following factors:
- Maintenance Fees and Special Assessments: Timeshares often have ongoing fees that must be paid regardless of usage. These costs should be factored into any decision regarding ownership.
- Usage and Accessibility: If the timeshare has specific usage restrictions or blackout dates, it may affect its desirability and value.
- Tax Implications: Depending on how the timeshare is divided or sold, there may be tax consequences. Consulting a tax professional can help clarify potential liabilities.
- Legal and Contractual Obligations: Reviewing the timeshare agreement can reveal important details about ownership transfer, restrictions, and penalties for non-payment.
Timeshares can complicate divorce proceedings due to their unique financial and legal characteristics. Whether a timeshare is sold, awarded to one spouse, or co-owned post-divorce, careful planning and negotiation can help ensure a fair and practical resolution. Divorcing couples should consult an experienced Indiana family law attorney to explore their options and make informed decisions regarding their timeshare and other marital assets. If the timeshare is important to you, this should be something you and your experienced legal team make a cohesive plan to protect. With the right legal guidance, couples can navigate property division efficiently and move forward with financial security.
The experienced family law trial attorneys at Ciyou & Associates, P.C. work to protect the assets that matter most to you. Perhaps we are a good fit for you. Consulting with one of our lawyers will not only give you peace of mind, but allow you to move forward in your divorce with confidence.
This blog is not legal advice. This blog is an advertisement.
