Shared Ownership

[pawl]

Hi, looking for a bit of knowledge based advice here. I have decided to buy a boat in conjunction with an old and trusted friend, we will have half shares. At our age there is always the possibility that one of us may die during the period of ownership. We have decided that if one of us were to pass on, the other would want to sell up at that point. Problem is that neither of us would want to take on sole responsibility for the costs and upkeep whilst probate could take up to a year. Does anyone know what the situation is when selling a boat where one of the owners is deceased?

 

[Minerva]

I would be quite suprised if you would be able to easilywind up the boat post death but before probate.

Would an alternative be to have one years' worth of boat running expenses always kept in a joint account?

 

[philipdawsonladds]

The sale cannot be finalised until the executor obtains probate.

 

[Tranona]

I don't believe that is the case with a boat - it is just the same as any other chattel. The executor has the power to sell the assets provided the sale is accounted for properly. That is not the same as property which does have to wait for probate.

If you have any doubts best to speak to your solicitor(s) as it may be sensible to reflect your agreement about the boat into your wills.

 

[westernman]

Note that there is a difference in between Joint Owners and Shared Ownership.

With Joint Owners, if one person dies, then the other is the only owner.
In the case of Shared Ownership, then that person's share go to their heirs.

You probably want to be Joint Owners of all 64/64 shares rather than owning 32/64 shares each.

 

[benjenbav]

If you each own 50% of the boat, one of two shares or 32 of 64 shares then when the first of you to die dies the survivor will still own the same and the estate of the deceased will own the deceased’s share.

The survivor could sell their share but might find it difficult to find a buyer.

The survivor and the deceased’s estate acting together could sell the boat but, as suggested, this may only be possible when the executor or administrator of the estate is confirmed in office by a grant of probate or letters of administration.

Theoretically an executor can act from the point of death but prior to a grant of probate few are willing so to do and fewer still are willing to buy material items from them until such time as they can prove they can give a good receipt for money paid (i.e. when a grant of probate has been made).

There are workarounds but you will have to judge for yourself whether they add more cost and complexity or achieve unwanted results.

For instance the original buyers could own the shares jointly in equity on the basis that, on the first death, ownership accrues to the survivor. This, of course, is frequently how married couples own property but unlikely to produce the outcome that the boat buying friends want.

Another workaround would be for the boat to be owned by a limited company in which the buyers each owned shares. On the first death, the company could sell the boat and eventually account to the shareholders (survivor and deceased’s estate) for the proceeds. The downside here is more administration, more costs and, perhaps, more tax. It’s something that might be feasible on a >£1m boat; less likely to be so on a <£100k boat and certainly would need specialist advice.

 

[pawl]

I don't believe that is the case with a boat - it is just the same as any other chattel. The executor has the power to sell the assets provided the sale is accounted for properly. That is not the same as property which does have to wait for probate.

If you have any doubts best to speak to your solicitor(s) as it may be sensible to reflect your agreement about the boat into your wills.

hi, that's a good point and we will look into it.

 

[pawl]

Note that there is a difference in between Joint Owners and Shared Ownership.

With Joint Owners, if one person dies, then the other is the only owner.
In the case of Shared Ownership, then that person's share go to their heirs.

You probably want to be Joint Owners of all 64/64 shares rather than owning 32/64 shares each.

I'm aware of the distinction between the two types of ownership, and certainly that would enable any sale to take place but would it ensure that our respective families got the cash?

 

[westernman]

If you each own 50% of the boat, one of two shares or 32 of 64 shares then when the first of you to die dies the survivor will still own the same and the estate of the deceased will own the deceased’s share.

The survivor could sell their share but might find it difficult to find a buyer.

The survivor and the deceased’s estate acting together could sell the boat but, as suggested, this may only be possible when the executor or administrator of the estate is confirmed in office by a grant of probate or letters of administration.

Theoretically an executor can act from the point of death but prior to a grant of probate few are willing so to do and fewer still are willing to buy material items from them until such time as they can prove they can give a good receipt for money paid (i.e. when a grant of probate has been made).

There are workarounds but you will have to judge for yourself whether they add more cost and complexity or achieve unwanted results.

For instance the original buyers could own the shares jointly in equity on the basis that, on the first death, ownership accrues to the survivor. This, of course, is frequently how married couples own property but unlikely to produce the outcome that the boat buying friends want.

Another workaround would be for the boat to be owned by a limited company in which the buyers each owned shares. On the first death, the company could sell the boat and eventually account to the shareholders (survivor and deceased’s estate) for the proceeds. The downside here is more administration, more costs and, perhaps, more tax. It’s something that might be feasible on a >£1m boat; less likely to be so on a <£100k boat and certainly would need specialist advice.

The "workaround" is simple. Joint Ownership where you jointly own 64/64 shares. You do not own half the boat. You jointly own all of it. When the other person passes away, you own all of it. It is not part of the dead person's estate.

 

[westernman]

I'm aware of the distinction between the two types of ownership, and certainly that would enable any sale to take place but would it ensure that our respective families got the cash?

No. If you both jointly own 64/64, then the surviving owner gets the boat.
The heir's of the dead owner get nothing. It is not ever part of the dead person's estate.

This is the same as owning a house with some one as Joint Tenants (in France it is called En Tontine and is the form of joint ownership I have used for many of my properties in France) vs Tenants in Common.

 

[pawl]

If you each own 50% of the boat, one of two shares or 32 of 64 shares then when the first of you to die dies the survivor will still own the same and the estate of the deceased will own the deceased’s share.

The survivor could sell their share but might find it difficult to find a buyer.

The survivor and the deceased’s estate acting together could sell the boat but, as suggested, this may only be possible when the executor or administrator of the estate is confirmed in office by a grant of probate or letters of administration.

Theoretically an executor can act from the point of death but prior to a grant of probate few are willing so to do and fewer still are willing to buy material items from them until such time as they can prove they can give a good receipt for money paid (i.e. when a grant of probate has been made).

There are workarounds but you will have to judge for yourself whether they add more cost and complexity or achieve unwanted results.

For instance the original buyers could own the shares jointly in equity on the basis that, on the first death, ownership accrues to the survivor. This, of course, is frequently how married couples own property but unlikely to produce the outcome that the boat buying friends want.

Another workaround would be for the boat to be owned by a limited company in which the buyers each owned shares. On the first death, the company could sell the boat and eventually account to the shareholders (survivor and deceased’s estate) for the proceeds. The downside here is more administration, more costs and, perhaps, more tax. It’s something that might be feasible on a >£1m boat; less likely to be so on a <£100k boat and certainly would need specialist advice.

No easy answer then, b****r!

 

[westernman]

No easy answer then, b****r!

Yes there is. See #9 and #10.

 

[DavidJ]

It’s a shame you can’t (or at least I’ve never heard of it) long term rent a boat between you with maintenance included. Then when one of you wants or has to pack it in then you both just walk away.
Also I don’t really see a problem with 50% ownership. When one party dies then the boat can be valued with half added to the estate and tax paid if appropriate. If the boat sells for more or less then adjustments can be made.…..or is that too simplistic

 

[westernman]

It’s a shame you can’t (or at least I’ve never heard of it) long term rent a boat between you with maintenance included. Then when one of you wants or has to pack it in then you both just walk away.

You can. For instance from these guys:-
Gestion de votre voilier avec SailEazy

 

[benjenbav]

The "workaround" is simple. Joint Ownership where you jointly own 64/64 shares. You do not own half the boat. You jointly own all of it. When the other person passes away, you own all of it. It is not part of the dead person's estate.

Speaking for myself I’m happy with jus accrescendi when I own assets jointly with my wife; decidedly not so when I own assets with business partners.

 

[benjenbav]

No easy answer then, b****r!

There are possible solutions but with their own issues of complexity, cost, undesirability of outcome.

Simplest thing may be for the survivor to invoice the deceased’s estate for a share of bills pending sale and accept that there will be a gap between death and sale and also between death and these bills being paid.

Or just steer clear.

 

[pawl]

No. If you both jointly own 64/64, then the surviving owner gets the boat.
The heir's of the dead owner get nothing. It is not ever part of the dead person's estate.

This is the same as owning a house with some one as Joint Tenants (in France it is called En Tontine and is the form of joint ownership I have used for many of my properties in France) vs Tenants in Common.

hi, yes I agree with what you say but it's not what we want. We need the value in the boat to go to our respective families.

 

[pawl]

I would be quite suprised if you would be able to easilywind up the boat post death but before probate.

Would an alternative be to have one years' worth of boat running expenses always kept in a joint account?

Looking like this may be the best or only way forward, thanks.

 

[Farmer Piles]

I can only write as to my experience. My father had a 16/64th share in a commercial crabber. He died in 2022 and his shares went to my mother in his will. I handled it all, the SSR were happy to transfer the ownership of the 16 shares to my mother on receipt - or emailed photos of - the death certificate, the will and my mother's driving licence for ID purposes. The SSR were so helpful. The MMO with regard to transferring the licence and the quota, were a pain in the arse.

 

[dunedin]

There are possible solutions but with their own issues of complexity, cost, undesirability of outcome.

Simplest thing may be for the survivor to invoice the deceased’s estate for a share of bills pending sale and accept that there will be a gap between death and sale and also between death and these bills being paid.

Or just steer clear.

I think that it will be very important to have a formal partnership agreement written up, agreed and copied to both families.

This should set out explicitly what costs are shared between the two partners (eg marina fees, insurance etc) and state explicitly these remain joint costs until the boat is sold. This would make such costs legitimate charges on the deceased’s estate. Without such a formal written agreement to refer to, sending an “invoice” for such costs would not be effective.