Passing on ownership when you die

[StoneCrab]

Estate planning

I've been having discussions with the US Center about how to pass on the ownership of a documented vessel upon the owners death.

Many States have a provision on car titles for this. For instance you could name one of your children as a successor, avoiding probate, but they aren't named on the title as the owner until you die.

Apparently you can document the boat with the name of a trust that you set up. That is another level of complexity, but the trust can manage other assets at the same time...at a cost.

What do you do?

[tomfl]

I never ask for legal advice on the internet.

[fcftampa]

I've gotten some of the best advice off of the internet; legal or not. It bother's me every time I see this.

[RaymondR]

Don't know about US registration but the primary document for the transfer of an Australian registered vessel is the Bill of Sale. This suggests that if the US system is the same the simplest way to accomplish the transfer may be to have an un-dated but signed Bill of Sale lodged with your will in a safe place. Need to be careful of rax implications though.

[Sojourner]

Originally Posted by RaymondR

Need to be careful of rax implications though.

That's why you put a very very veerrryyyy 'fair' value on that bill of sale

[nightowle]

Joint tenancy/right of survivorship

[taxwizz]

Sell before you croak.

[taxwizz]

Originally Posted by RaymondR

Need to be careful of rax implications though.

In Canada we have PST, GST, HST.
But I have never heard of the RAX tax.
How does it work?

[StoneCrab]

Originally Posted by nightowle

Joint tenancy/right of survivorship

Does that work when registering the boat with the Fed's Documentation service? For real estate, they have these deeds pre-printed for Joint Tenancy or Tenancy in Common etc but I'm not finding anything relating to boats. USCG tells me to contact an attorney but those with dry feet don't know marine law. I was hoping to find examples or talk to other owners who figured this out.

I had most of my Dad's side of the family pass in one year. I'd like to eliminate the estate drama by the smart application of beneficiary designations and titling options that allow the passing of ownership upon death.

The estate tax threshold is very high right now, so taxes aren't really a consideration. What is even more expensive is if your family needs to hire an attorney and open an estate to distribute your assets. That will cost more than any government tax. If I am successful by being thorough with the designations of beneficiaries and titling, no estate will be necessary. A death certificate and a transfer form should do it in most cases.

Getting the documentation on the boat correct will be important since there is a good chance that the boat will be in a foreign port at the time of my death. Taking ownership or even selling the boat will be easier if the title succession is recognized by the US documentation service.

[billgewater]

Imagine that you still own the boat and enter the twilight zone of dementia or an old folks home for ten years. When you do drop off, the boat would probably be worth nothing due to lack of maintenance. If you have some one intended for the boat I would consider giving or gifting it ASAP. That way you may actually enjoy it in your fading years.

[Capt Jerry]

I hear people talk about "avoiding probate" but I wonder how many of those folks really understand the probate process. As a probate attorney I can tell you there are some advantages of going trough probate. One of which is shutting off creditors' claims. In addition I have seen people spend more money to avoid probate than it would have cost to go through probate. A simple probate (without bickering among the heirs) is about $1500 to $2000. This rate is based on the hourly work necessary. However some states allow attorneys to charge a percentage of the estate this is typically 3 to 8%. So there are some facts to help you make your decision.

[RaymondR]

Originally Posted by taxwizz

In Canada we have PST, GST, HST.
But I have never heard of the RAX tax.
How does it work?

Simple really.

Most tax departments are very medieval in outlook when it comes to extracting your hard earned wealth from you, hence the reference to the rack.

[roverhi]

We have a trust and the boat is in the trust with State registration. Think every one should have a trust and everything in the trust from experience both with and without a trust.

[Nicholson58]

A documented vessel can be held by a trust or LLC. The terms of the LLC can easily establish multiple owners named in the LLC along with terms of succession. This is what I learned cruising the CG documentation site and rules along with dealing with our family cottage after Mom’s passing. I am not an expert at all.

The folks at the USCG documentation center are quite helpful. Talk to them. Then talk to a licensed, professional someone who can help you legally set this up.

The question does come to mind, does anyone seriously want to inherit your boat?

[Brewgyver]

Originally Posted by Nicholson58

(snip)

The question does come to mind, does anyone seriously want to inherit your boat?

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.