Nobody wants to contemplate their own demise, but the tax man benefits from a failure to do so, so let’s face the unpalatable reality that, unlike some Vikings and Egyptians, we are not going to be able to take our boats into the afterlife.
Some of us will actually be fortunate enough (like the late and deeply missed former harbour master at Chichester) to pass away on the helm, which will then leave our significant other halves to deal with the problem of what to do with the boat.
There is no reason at all why this should not be dealt with either by making a Will or prudently by dealing with the ownership of the vessel in advance, following discussions with members of the family.
Like any other jointly owned object, if a husband and wife co-own a boat then ownership of it will automatically transfer absolutely to the surviving owner upon the first to die. Where a vessel is Part I Registered, multiple owners can therefore choose whether the vessel is to be jointly owned (in which case the rule of survivorship will apply) or for each co-owner to own their own shares in the vessel.
If the vessel is owned by shares (normally in the case of two owners, each holding 32 of the 64 shares into which vessels are traditionally divided) then there is no such deemed transfer of ownership by survivorship, and so the individual’s shares in the vessel transfer to their estate upon death, and are dealt with either as legacies under the specific provisions of the Will (ie the shares are transferred to a named beneficiary) or they fall into the residue of the estate, which normally involves the shares being sold (normally to the remaining shareholder(s)) so that the proceeds are then divided amongst the beneficiaries.
This can therefore involve complications where the boat is owned by a syndicate or as otherwise in multiple ownership. Normally syndicate agreements will provide a procedure for a valuation of “departing” part owner’s shares, and it is certainly sensible to ensure that some arrangement exists as the commercial open market value of such shares is often considerably less than any estate would normally countenance. This can leave bitter outcomes, so again a bit of forethought will save a lot of unhappiness.
Other owners (particularly where there are particularly tax repercussions) choose to transfer ownership of the vessel to members of the family long before their anticipated demise, relying upon those family members to allow them unrestricted use. This has got obvious risks if there is a family fall out, or you do not reach the fabled seventh year so allowing the transfer to fall out of tax. Alternatively, some people create trusts which confer some degree of protection, but still require the evidence of disposal and arm’s length transactions to achieve tax benefits.
Essentially, the choice is up to the individual, and maybe we would all sensibly choose to sell up and go sailing on other people’s boats once we get to our allotted 3 score and 10, but I know many people who have had the best cruising experiences in their 80s, and in truth the joy of ownership, biddling with a boat, and all that comes with it, may be the best way of extending the quality of life, but think on these things.
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