Planning Strategies for Your Boat That Are Not Sunk
Planning Strategies for Your Boat That Are Not Sunk
As summer approaches and open waters beckon, it is important to consider a unique aspect of
estate planning that can often be overlooked - your boats and watercraft. These vessels bring
you joy and unforgettable memories, but they also warrant special attention when it comes to
safeguarding your legacy as part of your comprehensive estate plan.
There are several estate planning strategies that can be tailored specifically to handling boats
and other vessels or personal watercraft. By implementing these strategies, you can ensure a
seamless transition of ownership, mitigate potential tax burdens, avoid family squabbles, and
pave the way for future generations to enjoy the pleasures of being out on the open water.
One planning strategy is to use a trust structure for boat ownership. Setting up a trust can be an
effective strategy to maintain control over your boat while simplifying the transfer process. A
revocable living trust allows you to retain enjoyment during your lifetime while designating
beneficiaries who will inherit the boat upon your passing. This approach helps bypass probate,
ensuring a smoother transition plan for managing and distributing the boat after your passing
and potentially minimizing costs. It is important to note, however, that holding a boat in a trust
may not be ideal from a liability perspective. In case of accidents or damages that result in injury
or death, trial lawyers may try to pursue damages beyond liability insurance coverage limits
based solely on the fact that the boat is owned by a trust. Additionally, transferring the boat to a
trust could potentially incur state or local taxes at the transfer and may increase insurance
premiums.
Another planning strategy involves using gifting and lifetime transfers. If you wish to pass on
your boat during your lifetime, gifting or lifetime transfers can be viable options. By transferring
ownership of a boat to family members or loved ones, you can experience firsthand the joy of
gifting it while also potentially reducing estate taxes by removing the boat from your taxable
estate. The downsides to this approach are that you may need to file a gift tax return, the boat
may become subject to the gift recipient's creditors, and you will not have any further control
over the boat once the gift is completed.
A third planning strategy that is becoming more popular with boat owners is the use of a limited
liability company (LLC). Establishing an LLC can offer significant benefits when it comes to
managing and transferring boat ownership. By placing a boat into an LLC, you could use a trust
to own a membership interest in the LLC. This approach may provide personal liability
protection by separating the boat's ownership from your personal accounts and property.
However, it is essential to understand not only how changing ownership will impact insurance
premiums but also any other legal and financial considerations specific to your jurisdiction. For
example, securing adequate insurance coverage is essential to protect your boat and ensure a
smooth transition in the event of an unexpected loss.
Whichever planning strategy you employ, it is crucial that you work closely with a qualified
estate planning professional who can tailor these strategies to your specific needs and goals. By
proactively addressing the complexities of boat ownership in your estate plan, you can sail
through life's adventures with peace of mind.
MEREDITH | PC
4325 Windsor Centre Trail
Suite 400
Flower Mound Texas 75028
214-513-1013
This newsletter is for informational purposes only and is not intended to be construed as written advice about a Federal tax matter. Readers should consult with their own professional Counselors to evaluate or pursue tax, accounting, financial, or legal planning strategies.
You have received this newsletter because I believe you will find its content valuable. Please feel free to Contact Me if you have any questions about this or any matters relating to estate planning.
