It is often said that the happiest two days in a boat owner’s life will be the day they buy their boat and the day they sell it. If that is the case, there have been a lot of happy days over the last two years with record-breaking boat sales. New flexible workplace environments certainly haven’t hurt boat sales either. Some of us have even been a firsthand witness to friends and coworkers taking work calls from the deck of their new boat instead of their home office. With that said, whether you are a newbie to being out on the water or if you consider yourself an “Old Salt” the boating phenomena begs the estate planning question “How should my vessel be titled?” As is the common answer to most legal questions, the answer is: “It depends!” For the purposes of this newsletter, the need to appropriately title a vessel applies to most recreational boats, jet skis, rigid inflatables, and sail boats. In most instances, there is no need to title a canoe or kayak and commercial vessels are in a separate titling category altogether best discussed with your business planning attorney and accountant.
Transfer Through Probate
For people with will based plans, or no plan at all, options for tiling a vessel are pretty straightforward. The most common option is to title the vessel in your name individually. At your death, the vessel will pass to the beneficiaries identified under your will. If you have no will, then the vessel passes to your state-designated heirs under the laws of intestacy. In Virginia, the process to transfer the title of your vessel is handled with the Department of Wildlife Resources (DWR). This is the same agency many of us are familiar with from purchasing a hunting or fishing license.
The first step to transfer the title of a decedent’s vessel involves the personal representative (also known as executor) qualifying with the clerk of the circuit court. If the decedent died without a will (commonly referred to as dying intestate) then an administrator will have to qualify with the clerk of the circuit court. The role of a personal representative and administrator are similar as they are both responsible for initiating and navigating the probate process. The initial act of qualification and starting the probate process with the court is what grants the personal representative/administrator the authority to transfer the decedent’s assets/vessel to beneficiaries. Most people abhor the process of probate and for simplicity’s sake just assume it will be like any day in court. However, it will take much longer and cost much more than expected.
Transfer Outside of Probate
A vessel may also be owned by more than one person with a few subtle variations. If a couple were to own a vessel jointly with right of survivorship, then it will pass to the survivor at the first owner’s death (without the need for probate). If two people own a vessel as tenants in common, then at one of the owner’s deaths, it’s likely someone will have to qualify as the administrator or personal representative to change the title through the probate process.
Thankfully DWR has a transfer option that can avoid probate so long as certain criteria are met. If no one is required to qualify as the personal representative or administrator (typically because the decedent’s assets total less than $50,000) and all of the decedent’s debts have been paid in full (or the proceeds from the sale of the vessel will be used against these debts), then the personal representative or administrator can use DWR FORM BRT-003 to transfer the vessel title. The use of this form avoids the probate process but must be signed by all beneficiaries identified under the will or by the beneficiaries established under the laws of intestacy if the decedent died intestate.
Titling In a Trust
Another option is to title a vessel in the name of a Revocable Living Trust (RLT). In most instances this is advisable for clients who already have an RLT in place, but there are exceptions. When evaluating whether to title a vessel in the name of a trust, it’s best to always discuss your options with your estate planning attorney. Older vessels of lower value are often kept in joint ownership/individual ownership. Newer vessels, and particularly those of higher value (typically over $50,000), are often titled in the name of an RLT. Titling the vessel in the name of a trust can avoid probate at the owner’s death and keeps estate details private. If you are purchasing a vessel directly from a dealer or broker, they will most likely be completing your titling paperwork. The vessel dealers and brokers can be a huge help when titling your vessel in the name of your RLT, should that be appropriate for your situation.
In conclusion, your decision on titling your vessel is not nearly as exciting as picking your boat color or the size of engine(s), but it is important for long term planning and probate avoidance. If you are one of the millions of people who have recently purchased a vessel, I wish you the best and hope you enjoy your time on the water with family and friends! If you have specific questions or concerns regarding how to title your vessel, or other assets for that matter, please contact your JGB attorney to schedule a document review.
In Other News:
2022 Trust Guard Enrollment
TrustGuard™ enrollment for 2022 is now open. TrustGuard™ is our proprietary JGB, processdriven program, designed for our clients who are serious about protecting their investment in their Trust-based Estate Plan with an annual review.
A subscription to TrustGuard™ includes an annual review of your estate plan and trust funding assistance for the enrollment year, along with any required changes to your plan, as well as access to our exclusive TrustGuard™ quarterly newsletter and event. Enrollment invitations were sent out for all our enrolled TrustGuard™ clients, as well as our clients who executed their documents in 2021.
Enrollment for the 2022 TrustGuard™ period ends on February 28, 2022. Eligible JGB clients who do not reenroll during the enrollment period will not have another opportunity to become members of TrustGuard™.
Participation in TrustGuard™ is entirely voluntary. The TrustGuard™ enrollment subscription is billed at an annual flat rate. Clients who pay their enrollment in full prior to February 1, 2022 will receive a $100 discount off of the price of full enrollment. If you executed your trust documents in 2021 and are interested in becoming a TrustGuard™ client, please contact our office for a TrustGuard™ Enrollment Form.
New Partner Announcement
Johnson, Gasink & Baxter, LLP is proud to announce the promotion of Michael A. Hendricks to the position of Partner with the firm, effective January 1, 2022.
Mike practices out of the firm’s Williamsburg headquarters, assisting clients with estate, trust, and business law issues across the Commonwealth.
Mike received his Juris Doctor from William & Mary Law School and earned a Bachelor of Science from the United States Military Academy and a Master of Arts from the University of Texas at El Paso.
Prior to joining the firm, he served nine years in the United States Army as an Air Defense Officer and worked in the medical technology space for a Fortune 500 company. Mike’s diverse experience, coupled with his years with Johnson, Gasink & Baxter, LLP, provide him with a unique set of skills that he uses in the service of his clients.
Congratulations Mike! We look forward to your contributions in the years to come.
Client Referral Giveaway
Keith & Joan Elliott were the lucky 2021 winners of a $500 gift card to The Jefferson. Congratulations!
We truly appreciate our ongoing relationship with our clients and want to thank all of our clients that have referred their family and friends to our firm. Keep your eyes open for the 2022 giveaway to be announced soon on our Facebook page.