Beware the Timeshare Trap

Steve Merrell |

Building wealth requires constant vigilance. It’s not just about investing well. It’s about avoiding the financial mistakes that undermine so many well-meaning, but misguided people. One of these mistakes is getting caught in the timeshare trap. While timeshares may seem attractive at the outset, over time they can become real wealth traps.

Some timeshare owners may bristle when I call their beloved vacation destination a wealth trap. Some may think that their timeshare is different or their situation is unique.  They may think they are getting a luxury vacation at a bargain price. If that is how you see your timeshare, more power to you. However, if you are thinking about buying a timeshare or if you are booked to spend three nights at a luxury private resort on Maui with no obligation except attending a special presentation by the resort developer, please read on. It may save you a lot of money.

Stepping into the timeshare trap is easy to do. You take a nice vacation and have a wonderful time. When you hear the pitch, the automatic emotional response is something like, “Wouldn’t it be lovely for my family to experience this every year. Think of the memories we would make!” Before you know it, you are signing on the dotted line. It almost Pavlovian.

Unfortunately, that isn’t how it often turns out. For a look at the other side of timeshare ownership I encourage you browse the timeshare listings on eBay. Hundreds of timeshares are listed for sale, many for as little as one dollar. All the listings, even those for some very high-end resort names, are available for a fraction of their original selling price. Would the selling price be so discounted if the owners were happy? It is a question definitely worth considering.

Maintenance fee inflation is a significant problem for many timeshare owners. Between 2012 and 2019, the American Resort Development Association (ARDA), reported that the average annual maintenance fee grew from $660 to $1,000—an average annual growth rate of more than 6 percent! If that rate continues, your maintenance fee will double in about 12 years. What may seem like a relatively small fee today can grow to become a serious burden over time.

Maintenance fees are relentless. Timeshare owners soon discover that the old saying about death and taxes also applies to timeshare maintenance fees—only more so.  Death will relieve you of some taxes, but it will not relieve your estate or your heirs from timeshare maintenance fees. As soon as you buy a timeshare (or inherit one), you are obligated to pay maintenance fees and any other assessment levied by the board of directors. This obligation continues as long as you own the timeshare, whether you use the timeshare or not.

Dying with a timeshare in your estate will complicate things for your heirs. Leaving your timeshare to your heirs means you also bequeath to them the obligation to pay the annual maintenance fees. An heir can disclaim the inheritance, but the estate is still liable for the maintenance fees. Since the executor of an estate is responsible to pay all claims on an estate before a final distribution of the assets, settling the estate may be drawn out until the disclaimed timeshare can be sold or given away. With this in mind, if you have a timeshare in your estate, you may want to have a conversation with your heirs regarding how the timeshare might complicate their lives.

What is the solution? The best strategy is to stay clear of timeshares. If you already own a timeshare, you have three choices: 1) try to sell it using a broker or a website like; 2) try to rent it; or 3) contact the owner services department of your timeshare to see if they will buy it back. If these options fail, you may benefit from engaging a timeshare cancellation firm. But be careful! There are plenty of timeshare exit scammers that promise a lot more than they deliver. With timeshares, it seems like the scammers get you coming AND going.



Steven C. Merrell  MBA, CFP®, AIF® is a Partner at Monterey Private Wealth, Inc., a Wealth Management Firm in Monterey.   He welcomes questions that you may have concerning investments, taxes, retirement, or estate planning.  Send your questions to: Steve Merrell, 2340 Garden Road Suite 202, Monterey, CA  93940 or email them to