Asset Protection Strategies for Boat Owners
Posted: Monday, March 14, 2011
by Anita Dunham-Potter
Have you ever wondered why so many private yachts and pleasure boats—in marinas and waterways all over the world—have "Delaware" as their domicile? You’re about to find out why and discover the smart way to buy and own a pleasure craft whether its use is strictly personal or for charter or other business purposes.
The smart way is to form a Delaware Corporation or Delaware LLC and purchase the pleasure craft in that company's name. Buying your boat that way separates the activities and operations of owning the boat from your personal assets, protecting them against any contingencies or liability risk that may arise from those activities.
WHY INCORPORATE?
1. Real Life
The waterways are more crowded every year. Collisions and other accidents involving pleasure craft are at an all-time high. Unless you form a corporation or LLC, an accident involving one of your boats could put your personal assets at risk. In the likely event that your insurance doesn’t cover all the expenses and damages the accident victims may seek, their heirs and insurance company will go after your personal assets—bank accounts, cars, real estate and more.
The only wise and prudent course is to protect your personal assets by forming a Delaware corporation or LLC today!
2. Benefits of Incorporating in Delaware
• Limited liability
• Asset protection
• Homesteading & Insurance
• Delaware Family Limited Partnerships
• Delaware Corporations and Limited Liability Companies
• International Corporations
• Delaware Trusts
• International Trusts
• Offsets inadequate insurance
• Pass-through taxation (with S-Corp and LLC)
• Business deductions for losses and expenses
• Enhanced credibility with existing and potential customers
• Investor attraction
3. Strategy
Following are strategies implemented by our customers to protect their assets through Harvard Business Services, Inc., depending on whether they own one boat or multiple boats.
OWNERS OF ONE BOAT:
We often hear boat owners say, "I sail my own boat, so how can incorporating protect me from liability?" These boat owners mistakenly believe that if they are behind the wheel they are liable no matter what, which is simply not true if they take the right precautions.
Here are a few tips from boat owner/operators faced with the same situation:
• If you are involved in a boating accident that wasn't your fault, it may help to be incorporated or formed as an LLC in Delaware. A Delaware corporation or Delaware LLC will provide another layer of protection that complicates the plaintiff’s lawyer’s task. This extra layer of protection may cause the lawyers to reconsider suing you personally, or may be an inducement for them to attempt to reach a settlement.
• As a homeowner, you will want to investigate your state's "Homestead Laws." While these laws vary greatly from state to state, they may afford you a barrier of protection from losing your home, even if you lose everything else and can't pay for it. In some states, you have to qualify first, so be sure to follow up with your state's specific laws.
• If you own any other real estate - a farm, a beach house, a cottage in the woods, an apartment building or whatever - it is wise to place each piece of real estate under its own separate Delaware LLC, NOW! Include your spouse and children in the LLC as non-voting members. You'll need to file a quit-claim deed to transfer the ownership. If the property has a loan against it, you may need the permission of the lender to transfer the title.
• Consider setting up a family trust if you have numerous assets to protect. You'll need a good trust lawyer, which adds to the cost, but it is the best form of protection there is.
• Even if you don’t have sizable assets, consider forming a company to shelter what you have in any case. The cost is minimal and the precaution may save you from declaring personal bankruptcy.
OWNERS OF MORE THAN ONE BOAT:
At great risk to their future financial wellbeing, most boat owners who own more than one boat hold the title to those vessels in their own names. If an accident occurs, in an effort to recover damages the victim or victims will go after not just the one boat, but all the boats as well as the other personal assets of the owner.
Author: Ted Jones,
https://www.delawareinc.com/special/details.cfm?id=1002 & menu_item=d2
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