Passing on ownership when you die

[Sailing4Jesus]

SIR,

With no intentions whatsoever to be funny, however, if you are DEAD then it will be too late to do anything. Best advise I can offer you is to come to an agreement with your children or whomever you plan to give your yacht to now. Though I am an American I live in Spain, and in Spain, one can avoid heavy taxation by passing on his property to his children before the grim reaper knocks on your heart. In addition, if you do not mind my warning you, what you do with your yacht is in no way as important as to What Shall You Do With The Man Called JESUS. NOTE: Matthew 27:22 KIJ 22:Pilate said to them, “What then shall I do with Jesus who is called Christ?” What you do with your earthly possessions have little importance, However, What you do with Christ Jesus will have great and eternal consequences.
Signed, Evangelist Chauncey M. "BUDDY" Freeman Senior Chief, United States Navy, Retired

[Shrew]

In the US, documentation simply dictates that the Federal Government issues a title on the property (and some other minor things, like the paperwork to travel internationally).

How does this really have anything to do with the transfer of ownership? How do you transfer ownership when a bank holds the Deed? or the state issues the title on a vehicle?

Get an attorney, have a will drafted which includes the transfer of assets and the beneficiaries. Have the will notarized. Let the beneficiary worry about the paperwork from there.

In the history of the US, you will not be the first person with a vessel documented with the US to die.

[Tom_F]

If the question is passing title when you die, then in the US that will vary from state to state. The USCG will document the new ownership, but that’s all they do. Who inherits what is a state law matter.

If you want to transfer title before you die as an estate planning manner, that is a different question. You have several options, including setting up a family trust or an LLC as previously suggested. As long as the entity meets the citizenship requirements to be an owner of a documented vessel the USCG will then document the vessel as appropriate. Of course, setting up a trust or LLC is also a state law matter and not something governed by Federal law.

[Tom_F]

I should also have mentioned that transferring ownership can have financial, tax and estate planning ramifications. You need to understand those before making a decision.

[Maka]

interesting

[StoneCrab]

Originally Posted by Tom_F

If the question is passing title when you die, then in the US that will vary from state to state. The USCG will document the new ownership, but that’s all they do. Who inherits what is a state law matter.

If you want to transfer title before you die as an estate planning manner, that is a different question. You have several options, including setting up a family trust or an LLC as previously suggested. As long as the entity meets the citizenship requirements to be an owner of a documented vessel the USCG will then document the vessel as appropriate. Of course, setting up a trust or LLC is also a state law matter and not something governed by Federal law.

The state vs federal issue seems to be key from what I am reading in your reply.

I do not have a state title to my boat. When I purchased it, the ownership was registered with the feds. Every year the documentation center sends me a form to confirm that ownership has not changed. When I send that back with the fee, I get the official documentation which is carried on board. As a federally documented boat, I do not have to buy state stickers, have a state registration number on the side of my boat or pay any state taxes.

Setting up a state based solution which is honored by the USCG may be the way to go, but I need to be certain that without state based ownership, the federal documentation will not be a problem. As several of you pointed out, if the ownership is held by a trust or LLC, that really wouldn't change anything from the USCG standpoint. The documentation could remain in the name of the trust, while the articles of the trust or corporation could direct the change in beneficiary.

The first time I spoke to the USCG, they suggested a trust but also told me to consult an attorney.

My goal isn't to transfer ownership now, but have a provision for transfer upon proof of death. As I mentioned in my earlier post, Indiana has a provision for this on the car title. I am looking for a way to do this with a boat.

I am a bit sensitive about leaving it to my heirs to sort out the paperwork. Having had several relatives die recently and being asked to be the executor, I can tell you that the task of sorting it all out is not as simple as it would seem.

As a contrast, when it became obvious that my dad only had a few weeks left to live, he gave my brother power of attorney and we adjusted beneficiaries, and titles before he passed. We could ask him for clarification on issues we didn't understand, and it gave us something meaningful to do before his passing. The contrast between having it done before death and what happens when it is left until after death was quite striking.

I am hoping to have it sorted to the degree that is possible before I pass. I can't say that anyone in my family or my friends really discuss this topic, so my knowledge is fairly limited, but I am appreciating the input here. It gives me new threads to pull as I close in on a decision as to how to proceed.

I agree that many have "passed" this way before me with documented vessels, which is why I am asking my question on this forum. I am now curious if this is just one of those things that is commonly left out of consideration.

[cherylchecheryl]

For those following the thread who may be unfamilar with what StoneCrab is discussing, it is called "transfer on death". You may have encountered the concept before when/if you were asked to list any beneficiaries on your IRA, for example.

As StoneCrab notes, Indiana is one of the states that permits this. TOD lets beneficiaries receive assets at the time of the person's death without going through probate. I've done it for my house, bank accounts, brokerage accounts, and cars in Indiana. In our case, my husband and I are joint tenants with rights of surviorship and then our children are listed as beneficiaries. Had to fill out forms with each bank, Bureau of Motor Vehicles, Recorders Office, brokerage firm, etc. to do it.

[thinwater]

Sell it beforehand. It is VERY, VERY unlikely your family will actually want that boat. You have an attachment, but they do not.

[ramblinrod]

Originally Posted by Brewgyver

That is an excellent and very important question. When I drew up my first will, I asked the proposed beneficiary if they would want it, and made sure they understood the costs involved and the negative affects of deferred maintenance.

Of course, if your beneficiary changes their mind and just can't deal with the boat, they can always donate it to any one of a number of worthy groups, and skip the bother of trying to sell it.

Yes, and this cm get very tricky if you have multiple beneficiaries who value assets differently. Inheriting a boat means one inherits boat depreciation; whereas inheriting another asset such as a house or cottage, inherits the associated future value increase.

For this reason alone, other than for certain family heirlooms the beneficiaries may wish though actually assign very little monetary value to, it is often best to liquidate anything of monetary value before death, so it just adds to the estate to be disbursed as directed.,

[model 10]

[QUOTE=thinwater;2985148]Sell it beforehand. It is VERY, VERY unlikely your family will actually want that boat. You have an attachment, but they do not.


Captain Ron didn't work for you?

[Tom_F]

Originally Posted by StoneCrab

The state vs federal issue seems to be key from what I am reading in your reply.

I do not have a state title to my boat. When I purchased it, the ownership was registered with the feds. Every year the documentation center sends me a form to confirm that ownership has not changed.

You are confusing ownership and evidence of ownership. A state title and USCG documentation are evidence of ownership, not ownership. It sounds confusing, but ownership is a separate idea. For most of us in the US, when we bought our boats we had the option of titling it with a state or documenting it with the USCG. It doesn’t matter which one we picked, we are still the owners of our boats. When we die, who inherits our property is decided by state law - if you have a will, the state law determines the validity and interpretation of the will, of you do not have a will the laws of intestacy apply. Same with beneficiary designations for a 401k, insurance policy or IRA.

Whoever at the USCG suggested you contact a lawyer is right. Estate planning can be tricky and the fees you’ll pay to a lawyer are a good investment.

[jmschmidt]

Nice idea but is worthless in a court battle with angry left-out heirs. There is no such thing as valid unexecuted, undated, unnotarized bill-of sale that will be adjudicated as valid in any country on earth, especially in English Common Law countries like Australia, Canada or the USA.

Many ways to accomplish this, but not this way.

[silversailor]

Get an attorney, have a will drafted which includes the transfer of assets and the beneficiaries. Have the will notarized. Let the beneficiary worry about the paperwork from there.

The internet can provide lots of answers, both good and bad. The above is an example of a truly BAD answer. Follow these directions and I assure you that the only one to benefit will be the lawyer who now can charge substantial fees for your failure to plan properly. I know. I used to be one. Earlier in this conversation, someone recommended that everyone needs a trust. That’s generally true and can resolve lots of “what happens when I die” issues. I put my boat in an LLC. My trust is the sole member of the LLC. No worries. No legal fees after my death.

[StoneCrab]

Silversailor,. What does an LLC provide?

I understand that the point of a trust is to hold ownership and provide direction or limitations to the trustee under certain life or death triggers, but adding the trust to an LLC is a concept that I am not familiar with.

Would the LLC pay income taxes prior to my death? Would that be at the individual or corporate rate?

Did you convert ownership of your investments and IRA's to the LLC as well?

[jmschmidt]

Great response SilverSailor. Our system of laws and lawyers has devolved into a mess where the laws, lawyers, judges and courts that were intended to protect the people victimize them.

I am constantly amazed by those on this forum who actually hirer a lawyer to do an LLC, corporation or partnership. Every state has a website where you can download a usually one page form and pay $50 to maybe $200 by credit card to form one of these entities. Many state forms can be filled out online. Annual renewals are usually online by credit card.

I recommend Legal Zoom for nearly every type of legal document for anyone who really doesn't trust their own basic legal knowledge. Don't get sucked in by other online hawkers of legal stuff including documenting a vessel. And don't use some website called "FastEverything.com, for everything from passport renewal to living trusts.

It is also amazing how celebrities with all the money in the world to hire top legal talent either do no legal planning or get victimized by the lawyers and accountants they do hire. Prince and Michael Jackson to name a couple.

"Let's kill all the lawyers" is a line from William Shakespeare's Henry VI, Part 2, Act IV, Scene 2.





For other uses, see Let's kill all the lawyers (disambiguation).

"Let's kill all the lawyers" is a line from William Shakespeare's Henry VI, Part 2, Act IV, Scene 2.