Planning for dues inflation and inheritance

[kellygreenjenny]

Hi all- we just purchased 200 points, that we very much look forward to using. We will be looking to retire in 12ish years. I am curious if anyone does anything (like an investment account or trust or something) to establish money in anticipation of dues inflation over the life of the contract, so it doesn't become burdensome in retirement, as well as to set aside the funds for some.number of years of dues payment for child/children that will inherit (so they don't have to sell if they are early career or lower income)?
We are in our early 50s with a grade school daughter and don't want DVC to be a burden to her if she is young when she inherits. I'm just wondering what others have thought of and experienced on this topic?

Thanks

 

[thanxfornoticin]

Budgeting for dues in the future? Absolutely.

As for what our kids do with DVC? If all goes well, they'll get a nice inheritance, perhaps including DVC contracts. At that point they can decide what they wish to do with it, and there should be enough inheritance to cover the dues if they keep the DVC contracts for their own use. I don't see a need for a special account, since all the money will go to them anyway. I have no idea of what situation the kids will be in when we go - they might want DVC, they might not. Our contracts might be expired by then! I might be more concerned regarding the potential legal fees for probate in Florida of the DVC contracts if they wish to keep them. I've read where that can get a little expensive, but don't have first-hand knowledge.

 

[zavandor]

Honestly, I don't worry much about it.

DVC is the only timeshare that sells easily and rents for a profit. Sure this can change, but unless people stop going to WDW, this will still be true.

So if you find yourself struggling to pay for dues, just skip one year and rent the points. That could easily cover two years of dues, so you can go every other year and never pay dues.

The hard truth is that DVC dues are just a fraction of the expenses of going to WDW. For me, coming from Europe, Flight costs are a huge cost and then ever increasing tickets and food. I plan to use my contracts to expiration, well into retirement, but if I'll find it to become a burden, it'll be easy to sell or even give it away.
I love plan A, but it's nice to have a plan B.

 

[Sandisw]

For estate planning, we have written it that the 10 years worth of dues needs be bet set aside when we pass, before any other assets are distributed, unless all three of our children decide to sell sooner.

Once the 10 years pass, then they have to figure it out themselves on what to do.

For dues, while living, since we are retired, fortunate that we have enough cushion in our budget to account for an average increase.

 

[AstroBlasters]

1) I’d plan for 6% annual dues increase over the desired time horizon

2) Consider bucketing the money in 1-5, 5-10 , and 10 year+ buckets and invest more aggressively in the longer time horizons to help keep up with inflation. If you can earn 5%+ with no risk, lock it in!

3) Consider term life insurance as a way to build up a pool for the estate that would transfer tax free in most cases if you qualify.

 

[Unclelude]

Lots and lots of Disney gift cards!

I've had similar pondering. I'm not sure what we will do either- I kinda like what Sandi did... scrape off the top of the pot.

We still have the contracts only in our names ... probably a bigger concern to get those in a trust, or the kids on the deed ( if old enough).

Good Luck!

PS although the gift cards were a joke, they are on sale right now at BJs 5.5% off before cc perks!

 

[walt34]

I put an amount equal to the sum of the dues for the remainder of the contract into an ETF for two reasons:
I hope the ETF will rise enough to cover the annual dues increase (it's a bit more complicated because of tax).
This is a hedge against exchange rate changes, as I don't earn my money in US dollars.

 

[DL1WDW2]

Honestly, I don't worry much about it.

DVC is the only timeshare that sells easily and rents for a profit. Sure this can change, but unless people stop going to WDW, this will still be true.

So if you find yourself struggling to pay for dues, just skip one year and rent the points. That could easily cover two years of dues, so you can go every other year and never pay dues.

The hard truth is that DVC dues are just a fraction of the expenses of going to WDW. For me, coming from Europe, Flight costs are a huge cost and then ever increasing tickets and food. I plan to use my contracts to expiration, well into retirement, but if I'll find it to become a burden, it'll be easy to sell or even give it away.
I love plan A, but it's nice to have a plan B.

It was easy to sell DVC or rent your points, Not anymore … I think this should be investigated in todays marketplace… Have you checked the really long Resale postings on dvcmarkets lately. lately?
Not selling very fast and lots of competition .
Those long listings really worry me.

 

[AnnaKristoff2013]

We are in our early 50s with a grade school daughter and don't want DVC to be a burden to her if she is young when she inherits. I'm just wondering what others have thought of and experienced on this topic?

In general I think that planning on having your kids (especially if they are young) inherit any timeshare, (even DVC) is a bad idea, and the executor of your estate should have instructions about how to dispose of the timeshare. Timeshares are a liability, not an asset. DVC may be a fun liability, but it’s still a liability. Barring an unforeseen/quick end, my wife and I plan on getting rid of our timeshares before death, not leaving them to our kids.

I think one thing that most people don’t consider is just how much end of life care might make any other “inheritance” worthless. End of life care is extraordinarily expensive and only keeps getting more expensive. Even if you have a million plus now that you think you are leaving to your kids along with that timeshare, that money may quickly get burned up in your last few years.

 

[Genie+]

We did not set up anything specifically for future dues or the inflation.

We’ve run over the options with our college age kids and also have it noted in file. They also have older cousins knowledgable in DVC that can possibly help.

We have 50 BWV and 150 VGF. Their options include selling both, selling one, renting one to a pay year of dues, renting both multiple years to pay 3rd year vacation, etc. Renting rules could be further defined in the future limiting the ways they could go about that, so I added some contingency plans there too.

 

[DisneyMimiUSMC]

We have enough points that my kids can take two weeks of vacation (if used at OKW or SS) and rent out another week to cover a chunk of the dues. I'll just make sure they understand the best way to utilize the points before I croak.

 

[Brian Noble]

as well as to set aside the funds for some.number of years of dues payment for child/children that will inherit (so they don't have to sell if they are early career or lower income)?

Personally, I do not assume my kids will want any of my timeshares--whether that is DVC or anything else. Owning DVC represents a commitment to semi-annual vacations at a Disney resort. I am not sure my kids will (a) be in a financial position to afford a relatively expensive vacation every other year and (b) enjoy Disney enough as a destination to make that commitment vs. other vacation priorities.

The dues are not the only things they are going to need to afford. They also need park tickets, transportation to Orlando, dining costs, etc. None of that is cheap, nor is it getting cheaper. Even if they could easily pay for all of that, they might want to spend their money on something else---either a different vacation, or home renovations, season tickets to the local NFL team, a boat, or whatever.

 

[CarolynFH]

We may or may not outlive our BWV ownership, so we added one of our kids to the deeds so that if we do expire first, ownership won't have to go through probate. She knows that if she doesn't want to use it, she can sell it for whatever it's worth at that time or rent the points until the BWV condo association expires.

 

[Spinster Travel]

For those who have listed your contracts in your Will, are you just including it in your Real Estate gifts or Tangible assets list with the names of those who you wish to recieve your contracts? I'm in the process of revising my affairs and am giving some thoughts to several scenarios.

 

[DisneyMimiUSMC]

We plan on having money set aside to cover the dues for the long term. We have three kids and one is on the spectrum, so I want to make sure that she doesn't have to worry about paying dues on top of tickets, travel etc. Our contracts are in a trust, so hopefully that will make things easier for them.

 

[cvjw]

DVC dues are relatively cheap compared to the actual costs of a disney vacation. Neither of my kids will want any DVC points. They had much rather vacation other places. We are selling all but one DVC contract. We are only keeping it for studio stays before our cruises.

 

[bakerr6]

You can create a trust where the trust is the owner of the contract. We plan to have a portion of our assets remain in the trust past when our contracts expire.

Our kids can take income and regular maintenance distributions, but are limited in dissolving the trust. This will allow the trust to cover the yearly fees while still paying income to my kids.

We set it up this way for simplicity and to keep our assets sheltered from our kid's spouses. I work in wealth management and have seen too many legacies pillaged through divorce.

 

[Cfabar1]

All good points about the cost of Disney!

I think people forget what an expensive vacation it is, even after DVC.

I don't know how people who don't have DVC and Annual Passes make it work.... Especially if they are staying deluxe. I love Disney, but not that much.