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Chad, Christy, Alicia, and Vicky discuss their experiences deeding and titling their DVC contracts and estate planning as DVC members. The fundamental question of estate planning is what happens to my stuff when I pass on? DVC markets this product in a fashion that you can leave this deeded estate product to your heirs. However, to do that, you should probably learn a few terms before hiring your estate planning professional in your state.
We start with a disclaimer!
We are talking about estate planning and, if you hear nothing else, consider this whole episode a big ad for you to go out and hire an attorney who specializes in estate planning in your state, who can advise you according to your specific situation. No attorney-client relationship is being established between or with anyone. Our panel is composed of DVC owners. We're here to discuss options in our understanding as everyday members. Please look at our choices in what we have done as our personal choices. Again, we'd like you to do your own research, talk with your own attorney and financial advisors, and do your own planning for you. Nothing said by anyone in this podcast establishes an attorney-client relationship. If you do not agree with this, please stop listening to this episode and find another web page.
In today’s show we discuss options of how to title your DVC contract and how to locate what portion of which resort room you own based on your DVC deed!
What is Estate Planning
Estate planning, from a high level, is the process of putting into writing what happens to your things when you pass away. Property distribution, when you pass away, depends on the state where you reside.
You Buy Real Property Interests When Purchasing a DVC Contract
When you purchase a DVC contract, it is for 50 years and an interest in a DVC resort. You are buying your DVC points from the seller/developer Disney Vacation Development, and a deed gets recorded with the local county recorder’s office as a piece of real estate, similar to owning a home. How you decide to title your deed is part of estate planning.
Three Ways to Title Property
The three ways to title property are (1) as an individual or individuals, (2) in a trust, or (3) some type of corporate formation such as a corporation or LLC. The panel discusses titling as individuals or in trust. Although we do not discuss titling as corporations and the like in this episode, the DVC website FAQ section is very informative regarding who gets a blue card and who can be designated as members. We recommend hiring an attorney and tax professionals if you are considering titling your DVC contract as a corporation.
Titling as a Trust
The panel discusses some factors you would consider whether to title your DVC contract as a trust.
A trust is a set of documents that creates an entity that holds your personal and real property such as bank accounts, home, and cars, and when you die all those belongings go to the people you designate with one or two people as backups to make certain decisions. We only discuss “revocable” trusts here where you can sell or transfer the assets even after you put them into the trust.
If you or your family already has an existing trust, you would put your DVC contract in your trust. If you died with minor children, the trust would hold the assets for the minor children until they are older, including your DVC contract. How trusts function vary state by state. For example, in Michigan, their residents do not have to put their cars into the trust.
Chad and Alicia have not found any practical difference when logging onto the DVC member page even though their DVC contracts are held in trusts. Their own names are used on the welcome page and the trust name is not mentioned.
Buying DVC With an Existing Trust
Christy initially sought to buy her DVC contract while on a Disney cruise. She found that you cannot buy DVC instantly while on a cruise ship or if you are buying as a trust. There is additional paperwork that can only be done on land at the DVC office. Also, DVC needs to see a copy of certain pages of your trust documents to be able to title as your trust. Christy did not mind the delay because she wanted more time to consider and sign.
Chad remembers uploading his trust documents to a secure cloud link to give to DVC because he did not want to email the documents. He believes he paid for about an hour of his attorney’s time to prepare and provide the documentation needed. Then, on subsequent purchases of add-on contracts, DVC had all the paperwork which streamlined the process. Chad notes that DVC handles trust purchases often and know how to direct you in the process.
Chad shares an interesting story regarding buying as a trust when first purchasing DVC. He first began the process to purchase a resale DVC contract then tried to buy direct before the first contract closed. Unexpectedly, the direct contract purchase held up his initial resale contract purchase and all the contracts closed at the same time. He advises for new DVC buyers to start the direct sale process first, then if you get an offer accepted on resale it will not be delayed. Chad waited until he passed the ROFR process before he started the direct process and he found it was too long. This is because DVC wanted all Chad’s contracts to have the same member number and his guide explained it was for Chad’s own good. Chad has found that this was indeed for his own benefit that all his contracts are on the same member number and they work together nicely, although the waiting did drive him batty at the time.
Considerations When Naming Multiple People On Your DVC Contract
The simplest way to title a DVC contact is one person and one contract but that is not a reality for most people and it is important to look over all your options.
If someone is a single person they may want to use their DVC contract for estate planning purposes. In episode 077, frequent My DVC Points Community contributor Samantha discussed how she put her name as well as her mother’s name on her DVC contract as a quasi-estate plan as a single millennial who was coming up on her own.
It takes a high level of trust to add people to your DVC contract that you bought. From a legal standpoint, you always want to watch out when including others on your contracts or things you own. It could work out fine if, for example, it is your mom and dad, and you believe you know how everything is going to work out without any divorces or fighting over legal ownership of the DVC contract. Or it could work with a friend that you know you will not break up with or dispute point ownership. There are benefits to adding family members to your contract. In Samantha’s case, her mother got a blue card and can enjoy DVC discounts and annual pass rates without Samantha being present.
‘However, if you are adding people to your contract for convenience, you should consider what will happen with certain life events happen. If you add your parent to your contract and have siblings, there is a chance your sibling will say they inherited half of your DVC contract if your parent passes away. If you add someone to your DVC contract and file bankruptcy, the court will see their ownership interest in DVC, and there may be problems. Also, if you add someone on your contract and this person is somehow held liable in a court case, they would look for assets to pay for the judgment, and DVC is an asset for that person. It's a nice thought for your family member or friend to get a free blue card on your membership; however, if things go significantly south, any benefit may not justify the hassle. It is serious adding someone to your DVC contract because it is real property, just like a house.
Other people look at things differently and titling decisions are based on your life and your financial decisions. The panel is providing their experiences of what they did and why from their own personal values and opinions, from DVC members to DVC members.
Four Ways to Title as Individuals
When purchasing a DVC contract on the Florida properties as individuals in ownership, there are four options: (1) tenants in common, (2) joint tenancy, (3) joint tenancy with right of survivorship, or (4) tenancy by the entireties.
Tenants in Common
Tenants in common is the default in Florida if you submit a title and do not specify the type of title or percentage of ownership. If your DVC contract is owned as tenants in common with one other person and do not specify percentage, you own 50% and the other person owns 50%. If you pass away, your share of the contract would be probated and your 50% portion would be distributed to someone else. For tenants in common, you are able to state on the deed a different percentage such as 70% and 30%.
Joint tenancy is the same as tenants in common except all owners must own the same percentage. For example, if Chad owned with only one other person named Laura as joint tenants, Chad would own 50%. If Chad passed away but Laura was alive, Chad’s 50% would be probated and distributed through the terms of Chad’s estate plan if he has one. Chad’s stuff is his own, and Laura’s stuff is her own.
Joint Tenancy with Right of Survivorship
Joint tenancy with right of survivorship allows your DVC property interest to pass automatically to your co-owner when you pass away. If Chad owns with one other person named Laura and Chad passes away, Laura would now own 100% of the DVC contract by operation of law as the survivor. All Laura would have to do is show paperwork such as the death certificate.
Tenancy by the Entireties
Tenancy by the entireties is the same as joint tenancy with right of survivorship but is soley for married couples. In some states, tenancy by the entireties provides an additional level of protection where creditors of one spouse cannot come in and take 50% of the asset.
We again note our disclaimer upfront. We are here to just talk about some high-level stuff. And really this whole thing is a big ad for you to go hire an estate planning attorney and financial advisors that can guide you appropriately. Please hire somebody that can give you specific advice for your specific situation in your state because we are not giving specific advice. We are just giving some generalities.
Adding Adult Children to Your DVC Contract
Any time you are thinking of adding people to your contract you should speak to a tax advisor due to potential tax consequences.
Something that is seen a lot is when DVC owners’ children grow up and they want to add the adult children to the deed. The same issues discussed earlier regarding liability, bankruptcy, and other life events should be considered. The blue card is a nice benefit for a lot of people, but because this is a legal property that you're dealing with or a legal entity of trust, there are all kinds of ramifications you need to consider when adding a person. While the blue card benefit is nice, it probably does not outweigh all of the risks that you, can take. Some owners thinking of adding somebody for the blue card benefit should also consider that there are still passholder benefits and they can get their adult child a pass if they reside in the same house.
Purchasing Multiple DVC Contracts For Ease of Transfer
When purchasing direct points, Chad decided to break up his purchase of 225 points at Copper Creek into four separate contracts: three 50 point contracts and one 75 point contract. At the time, 25 direct points would get you the blue card. The direct benefits are grandfathered in if he gifts one contract to each of his children and they can enjoy their own blue card.
Alicia wishes the My DVC Points Community existed when she was purchasing her DVC contracts because she wishes she would have considered smaller contracts. Alicia has three children and has two contracts, one for 150 points and one for 175, which does not divide very well into three ways.
Chad had done a lot of research prior to purchasing but notes that the per contract fee to break up one purchase into multiple contracts was only $60 at the time he purchased. It is our understanding the per contract fee is now $600. However, when Chad purchased, there was an incentive to buy at least 220 points because it was a lower cost per point. All the math is for another podcast but it is advisable to potential DVC buyers to look at where they get the biggest developer credit and how many points can bring your average cost per point.
Another reason to break up your points into smaller contracts is for resale ease. Research shows that a majority of DVC purchasers will put their contract up for resale within 8 years of buying. Chad looked at the research and assumed he was not going to beat the average and would sell his DVC contract at some point, and smaller contracts sell faster than larger ones. For example, when Chad was recording the March show with Derek from DVC Rental Store, Derek had just listed a Polynesian resale contract and it sold at the full asking value within three minutes.
The panel discusses whether the higher $600 per contract fee is worth the cost. Alicia expects to hold her contracts until they expire and has no resale plans, but agrees multiple smaller contracts makes sense for most buyers. Christy has one child, so she does not personally find value in multiple contracts even if the price to break up a contract was lower. Vicky believes the $600 upfront cost justifies the ease on the backend to resell or distribute smaller contracts in the future when you are no longer here. Christy also notes that the cost to break up contracts into smaller ones will just go up from here, so the present-day price will make it worth your end goals in the future.
For advice to a DVC buyer today with multiples children, Chad mentions that blue card benefits now require a 100 point direct contract and would recommend purchasing multiple 100 point direct contracts. Also, a big 300 point deed will sit on the market longer. If you own several 100 points contracts and you have an emergency and need cash within three months – which is about the time it takes to sell and close a resale contract – you can liquidate faster and get more money per point that way. To Chad, multiple smaller contracts are a no-brainer for the flexibility.
How to Find Your Family's Actual Villas From Deed Research
And now we enter the geeky-fun part of the show. Chad uses one of his Copper Creek deeds to show that he has “an undivided 0.244% interest in Unit 2G Cooper Creek Villas and Cabins.” You can go to the county recorder’s records for your DVC resort and search by last name any owner of a property in the county for your public deed on record. BTW – If you ever wonder why you're getting calls from scummy telemarketing companies, it's because they can look you up in deed records. Links to the deed registrars of the 5 counties DVC is located are listed below the photos.
My kids enjoyed this little exercise in finding our own DVC villa at Copper Creek. It's nerdy and geeky, but fun come in and visit the villa you actually own per deed records.
If you look at the floor plans from the booklet, you can see how Disney Vacation Development declared units. They take a group of rooms or a group of villas and “declare” them as transitioning from private DVD ownership into available for public sale. Chad looked at the plans and found Unit 2G is a dedicated two-bedroom and a one-bedroom villa on the fifth floor at Wilderness Lodge at the end of the hall towards the Grand Villas, on the left side. This room overlooks the main Copper Creek pool, and the room numbers are 5133 and 5131. It was fun to walk by with his kids and tell them we own 0.244% of these rooms. It put physical reality to what they own. Now one of Chad’s life goals is to put in a room request and stay in this deeded villa. Here's how to find the room on Touring Plans.
Links for County Recorders to Search for Deeds and Verify DVC Ownership
- Orange County, Florida (Walt Disney World resorts)
- Indian River County, Florida (Vero Beach resort)
- Beaufort County, South Carolina (Hilton Head resort)
- Orange County, California (Grand Californian)
- Hawaii Bureau of Conveyances (Aulani)
In episode 091, Christy spoke to Chad about a friend she has that does not utilize her points often. For the past seven years, Christy will assist her friend to manager, book, and bank her points every year. Chad told Christy there is a better way to do this because Disney addressed this by making a program called Associate Members. You can add someone onto your account as an Associate Member and give that person administrative control of your points, without having them having any ownership. Using the Associate Member program is an excellent way to avoid some liability complications but have someone help or share in managing your DVC points.
Buying DVC as an Individual Then Transferring Into a Trust
What happens if you didn’t plan well and you didn’t have a trust set up, and you didn’t buy the appropriate amount of points to split between your children, what do you do now? You can either retitle the deeds you do have to change the ownership to a trust. The other option is you can sell the contract and buy another one. DVC has a process to retitle your deeds and go through a formal ROFR like process. You can pay DVC to retitle your deeds, or you can use a title company to do so. We referenced Karina Ottinger from TRSC, Inc, who specializes in DVC title work. You can reach her at 321-248-3822 or firstname.lastname@example.org. At the time of publication, her prices were extremely competitive at $200.
If you add a name to your title and you have any existing reservations booked, those reservations are safe. But if you remove a name or change the name on the title completely, you cannot close while having a pending reservation at that time, and again it takes about three months to close. We stress that you need to contact member services for their most current procedures.
Title insurance ensures that the person you are buying property from actually owns all of the property that they are selling to you, and there are no hidden claims to the property. If you are transferring your contract or adding a name, you’ve already been through the title process, and you already have insurance on that original title. If you already bought a title insurance policy when you first bought your contract and now you are just coming back in to move it into your trust, it may not make sense to pay for another title insurance policy. You might want to consider skipping it, but we are not going to tell you to skip it. Please talk with your own financial team to make that decision as we are not giving specific advice. Also, if you’re doing a more substantial estate plan where you are transferring all kinds of assets, like your house and other things, the attorney that is handling your estate plan can probably just handle retitling as part of their services.
Alicia did not have a trust established when she purchased her DVC contracts. She transferred her contracts into a trust after the purchase with the intent of them staying in the trust until deed expiration. Alicia admits this may not be the best way. However, as a family, they decided to hold the DVC membership in the trust until deed expiration. The trust documents allow the children or the trustees to use the DVC membership instead of disposing of it because the non-equal contracts cannot be divided equally per child.
She felt this was a fair approach. Alicia decided, as part of her estate planning, to hold the DVC contract in the trust, and hopefully, there are enough assets in the trust to prepay the dues for the kid’s use for the remaining 50 years. If not, the children have to continue to pay the dues to get the use of it. Alicia had done some research and found that in other families, some of the surviving family members fund the upkeep and some of them didn’t, but they all wanted to use the property. Alicia’s estate planning attorney wrote a clause in the trust that if there is not enough money to pay the dues, then the children have to pay the maintenance fees, and the ones that do not pay the dues cannot use their allotted points for the year. Alicia has some regrets with the point allocation of her contracts and recommends that with three children, if you can, you should do the smaller purchases more the way Chad did. Quickly closing the trust may have financial benefits. If your trust remains open for years, you have tax implications and recurring legal fees. Whereas, if you dispose of the property in the trust, distribute out to the individuals that are trustees or beneficiaries of the trust, you can close the trust and not have to worry about it or keep filing tax returns on behalf of the trust.
Christy notes that DVC has value in your trust estate but also other assets you have also have value. If you pass away and not all the children get their own DVC contract, there are other belongings of value that the children can choose, and it will still be an equal division of assets between all the children. Alicia encourages you to have a conversation with your children about what they think they want because it is fascinating. Of course, what they prefer may change in the future, but it was interesting to get the kids’ input. Also, life circumstances change where kids go to college, get married, and have their own family, or move to a place where it doesn’t make sense to visit Disney parks. So it is essential to leave children options, such as a clause that allows the children to agree to sell the DVC contracts. If the children don’t agree, it will eventually get worked out by having a hearing in court, but that is not the best-case scenario.
Titling, Member Numbers and Combining Points
There is one final point here to cover on the titling.
Combining Points at the 7-Month Window
If you want to combine points across multiple contracts, book your own vacations on the website at the seven-month window and avoid having to call member services for every booking change, you need to address three critical elements:
- Same Use Year
- Same Name on the Titles
- Same Member Number
We have said this before in multiple places, but they all have to be titled the same way to get on the same member number. A second trust would establish a second membership number. If you change the title on one contract, it is going to kick off a brand new member number.
Combining Points at the 11-Month Window
In order to combine points at the 11-month window, If all your contracts are the same resort, same use year, same title, and same member number, then you can book online at the eleventh-month mark.
- Same Resort
- Same Use Year
- Same Name on the Titles
- Same Member Number
All is not lost if you find yourself owning two contracts that differ. Member Services can transfer points and make arrangements. It requires a call to member services and transfers are one-way. Changes and modifications can be difficult to impossible, depending on the scenario.
Choosing an Estate Planning Attorney
When choosing an estate planning attorney, ask for referrals from people you already know and respect. There should be a reasonable but significant cost to prepare the trust. The price will depend on your location and the size of your estate assets because the more to transfer into the trust, the more work it takes. Do some research and ensure that your attorney specializes in estate planning law and estate administration and is an actual licensed attorney in the state where you live and not a paralegal in the back of a financial services office. You want someone who is set up correctly and not someone just pushing papers because they may not see the effect of the trust later. You want a full-service estate planning service beyond just drafting a will or a trust with off the shelf forms. Estate planning is pretty important, and not something you want to mess up. Any attorney may be able to write up a will or trust for you, but you would rather have someone that specializes in estate planning do so for you. Alicia notes that she is an attorney but did not do her own estate planning documents. Instead, she went to an attorney who specializes in this area of the law.
You should also ask whether you need to come back and update your will or trust periodically even if nothing has changed, or if you only come to consult again when there are life-changing events.
Christy notes that no tax advice is given here, but most states allow you to pass your DVC contract to your children without any tax consequence. You should consult with your accountant to determine if this is so in your state.
The panel’s official advice is to hire licensed and specialized professions when estate planning. The DVC member page FAQ and member services are always helpful. As you have seen the complexities here, you would not make a trust just for your DVC points; it is part of a broader estate planning strategy that covers all pertinent assets.
Today's episode was produced and engineered by Chad Pennycuff. Editing by Vicky Hxu and Chad Pennycuff. Show notes by Vicky Hxu. Facebook admins and moderators of the My DVC Points Community Group: Valerie Fairnington, Donna Bickert, Tamara Speidel, Caleb Allison, and Mary Anne Tracy.
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