The Boat Trust: Why Every Sailor Needs to Plan
You live in Annapolis, therefore, either you own a boat or you know someone who does, even if just a small canoe for raiding the neighbor’s crab traps.
Sailing into Annapolis Harbor, from the Naval Academy.
That means you probably have a good idea of the resources required to maintain even a modest vessel. Any sailboat, yacht, or questionably improvised craft that keeps you from treading water requires careful attention in your budget.
Regardless of size, an estate plan considers the boat – like it does every other asset – as an investment, one of time, money, and sentiment.
Neglect any one of the three values and the asset won’t be properly cared for, whether it’s a family pet, a cherished collection, or a family firearm. And while the first two values present little challenge to calculate financially, the bond between owner and boat built up through hours taming the wind and waves is one that is frankly without price — though, importantly, not without cost.
Nature presents its bill in rust and rot, and if you don’t pay for them, then your ship certainly will. Again, you know this — but does your successor?
Remember, the captain doesn’t always go down with the ship; once you’ve sailed off into the sunset, there will still be a boat to care for.
“The hardest thing is deciding who to give it to, if you want to keep it in the family,” one friend told me. “I mean, you can’t saw the boat in half.”
So he planned. Together, we set up a Boat Trust to fund upkeep when he’s no longer here to do it himself. The trustee has two special instructions.
“I told him to check with the other family member once a year to ask if they both wanted to keep it. If they do, the trust stays alive for another year. If either of them wanted out, the boat had to sell through a broker with the other getting a right of first offer. Then I told him to paint a stripe down the middle to remind them that each only owns half.”
The Boat Trust is an invaluable way of steering an heir who is unfamiliar with the craft, or sailing in general. Through the trust stipulations and accompanying documents, you provide special instructions about the boat’s history and care.
You detail every knot on the deck, every bump the hull has ever taken, and every receipt received for maintenance so the heir knows about the slight starboard list and how soon the fiberglass will need attention — and how much that will cost.
“The cost to care for the boat depends on size,” explained another friend.
“But it isn’t so much size as the complexity of the systems that start appearing on a boat once you get above a certain size. On a simple boat with an outboard motor, it’s tough for annual expenses to exceed 2 percent of the boat’s value. Once you get to something with either an inboard motor or an inboard-outboard system, you need to save about 10 percent of the cost of the boat for annual maintenance. You may not spend that every year, but you will definitely spend at least 5 percent.”
He estimates marina fees at $3,000 a year to $5,000 a year for a 35-foot boat, more if you have a bigger boat. “Everything is by the foot,” he said, “whether it’s winterizing or marina or almost anything else.”
Echoing a concern of the oenophiles who advised our post on the Wine Trust, the unwary heir is as much a planning challenge as the unfamiliar heir, though not an insurmountable one.
“A parent’s child in the Midwest who suddenly learns they’ve inherited a boat on the East Coast may need to sell it in a hurry and, like anything else, sometimes you can sell a boat in a hurry and sometimes you can’t.”
“These boats aren’t something sitting in your front yard,” he continued, “so there is a possibility that an heir living somewhere like Minnesota or Arizona might not know that Mom and Dad bought one. Or if they do, they might not know where it is.”
Whether within or in addition to the terms of the Boat Trust, he advised that every owner “provide information about where the boat is stored, where it was bought, who was the seller, who was the boat broker, and so on. That background could help an heir offload the boat if they discover they can’t keep it.”
That’s all for today. Stop by on Friday to learn about the advantages allowed by a specialized Pet Trust for your horse. Remember the Boat Trust if you find out that you’re going to need a bigger boat this holiday season.
As always, good luck and good hunting.
The Gun Trust: Estate Planning with the National Firearms Act
The Fisher Law Office is renowned for its experience in estate planning, probate administration, asset protection, and business development. Annapolis attorney Randall D. Fisher has practiced for over 20 years, maintains the highest peer review rating for ethics (AV Preeminent) by Martindale-Hubbell, and is a sucker for long walks on the fairways.
Find out how to reach Randy via TheFisherLawOffice.com or find him at Facebook.com/FisherLawOffice, on Twitter @thefisherlawoffice, or at LinkedIn.com/in/FisherLawOffice.
Images: CC licensed for commercial use. Sources jeffweese, das farbamt, rachaelvorhees, and Webb Zahn neither approve nor endorse the content of this blog and the Fisher Law Office.
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