ThreeLittleBirds

I am looking into destination clubs and was wondering what the standard policies are for transferring/cancelling your membership when you pass away? My wife and I are looking into HCC and it currently reads that it will transfer only once to one of my children over 25, but then it can never transfer again. It seems a large amount of money to invest if you know at some point it will simply disappear when one of my kids cannot transfer when they pass away. I would prefer that upon death, the membership would be sold and my estate would receive 80% of the initiation fee.

Just curious if this is standard or does it work differently for other DCs.

Thanks for your help.

Rob V

Hi Three Little Birds. Each DC has a varying stance on the legality of the membership and usage. For example, some DC's have various plans at different price points to achieve 1) individual membership, 2) family plans, and 3) anyone can use your plan. There are also varying legal entities that can "own" the membership depending on the DC. For example, some allow Trusts, LLC's, Partnerships, Corporations, etc. Others do not. It does not seem unreasonable to have unlimited rights of survivorship. Good Luck.

Rob

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Rob Vaka
Vice President, Investor Relations
Equity Estates

Kagehitokiri

welcome to the forum ThreeLittleBirds.

it varies, as Rob said - some clubs cannot be transferred at all, and some are perpetual.

LTTravel

I think that you are misunderstanding the statement. They are just saying that it can be transferred only once, not that it becomes worthless after being transferred once. Your child cannot transfer ownership but the estate will own it once he/she passes away. The estate can then return the membership and be reimbursed the 80%. You do not lose the value of the membership. It is just that once you transfer it to your child, your child cannot transfer it to his/her child, hence the membership is not perpetual, just one generation. You do not lose the value of your investment.

TarheelTraveler

Here is some additional info.:

Considering switching or switched clubs- why?

pwrshift

I believe, with some clubs, you can have you, your spouse/partner, and three children listed on the membership and that any of those 5 people (including yourself) can use the membership but at least one has to be there. If you pass on your executor can decide with discussion with your heirs if they want to continue on paying the dues and using the club or to return the membership fee (or part) to your estate. I assume if one heir wanted the membership he/she would have to pay off the other heirs equally. In addition, they might have to continue paying the dues until your anniversary date in order to get the membership fee back, but suspect they'd make allowances in the rules for compassionate reasons.

Kagehitokiri

some clubs allow designees, others allow anyone to use plan nights, etc.

caribbeansun

The transfer is upon your request or presumably your estate's request. In order for this scenario to play out you'd have to pass away AND your child - one would hope that this is a sufficiently long period of time as to make the point somewhat irrelevant ie. >50 years...

TarheelTraveler

For an HCC membership, I don't know that I'd care as much what happened after 50+ years, as I haven't sunk that much money into it, so a return of 80% of the deposit would be fine.

However, I would not be happy about putting in 400-500K, and in the meanwhile, membership costs have gone to several million with inflation/appreciation over that period, and my children or grandchildren getting zero out of it or some percentage of the initial deposit.

Isn't ER's membership pretty limited in that regard or do I have it wrong?

Kagehitokiri

summary from sherpa >
Club Membership: A Family Legacy ? - SherpaReport

although DHH does basically allow you to resell. you can charge any "fee" you want to the "buyer" you transfer your membership to.. Nick discussed that at least on TUG, dont remember if i copied it over here.

TarheelTraveler

Nice summary from Sherpa. So if I understand it right, it looks like most clubs let the membership get transferred, particularly at death, except ER generally prohibits a transfer even at death and UE and HCC limit it to one generation.

With ER, I read the description as you can't transfer it to heirs at all. Does the membership just end at that point? Does the Estate get any money back (i.e., a portion of the initial membership fee)? What about a transfer to a spouse after death?

3DH

IIRC, ER's policy is that your estate gets 80% of the paid initial fee back (or whatever is in the member's contract... new memberships at 75%, I assume), and any a qualified family member gets the option to buy back in at a 20% discount off the current rates. Don't quote me on that, but I believe that was their plan.

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TarheelTraveler

That is consistent with my past conversations. I had just completely forgotten (getting older I guess). That's a nice spread that I bet someone could monetize for ER. For example, if the obligation to the Estate is 371K (495 X .75), and current memberships are $5M thirty years later (believe it or not 495K at 8% price increases for 30 years is $5M (it's even 2.8M at 6%)), that is a huge spread, even if you present value it to some degree. If one or more family members buy memberships at 20%, they've got some additional members, albeit with a discount, but without much in the way of marketing or sales expenses. If they don't buy a membership, they retain all of the appreciation on the real estate beyond the 371K. Either way that is a good result. Simply genius.

3DH - Can the membership transfer to your spouse?

3DH

With ER, I believe so.

With LUSSO, absolutely (or to any other family member over 25) without any financial penalty.

(Don't know to which you are implying)

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"Boutique" is better! Another extremely satisfied LUSSO member!

TarheelTraveler

Sorry, I wasn't clear. I meant with ER (i.e., do you get into the 75% redemption of initial price and 20% discount when off current price when the member dies and leaves a surviving spouse or can you just leave it to the surviving spouse)?

Sherpa

Tarheel, the way ER works is that the spouse/partner automatically continues membership unless they choose to discotinue.

If they choose to discontinue or if both spuses/partners pass away the membership is deemed as resigned and comes under the ER resignation rules for refunds etc.

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www.SherpaReport.com

TarheelTraveler

Gotcha. Thanks, Sherpa. Great information you've put together.