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Old 05-08-2023, 02:26 PM   #1
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L.l.c.?

I have two questions that maybe our legal members could expound on:

1. I see some boats listed for sale as "Held in an L.L.C." besides the avoidance of State Sales Tax and the separation of the boat from your other assets, What are the advantages and disadvantages of having your boat in an L.L.C.?

2. If You go to the effort to obtain a "Captain's License " and something goes wrong, or someone gets injured aboard Your boat or by your boat, are You held to a higher standard as a Captain than just a regular boat owner as far as liability?

Thanks for any input on these two questions.
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Old 05-08-2023, 02:47 PM   #2
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1) LLC’s only advantage is avoiding sales tax. You might receive some liability protection in some strange ways but if you are operating the boat tHe LLC will not give you any protection. The negative to a buying an LLC boat is that you get any past liabilities that are associated with the LLC. Such as a past accident where the claim has not yet materialized.

2). A captain’s license will not hold you to a higher standard. Operating for hire does in some ways increase the standard.

Thes are very general questions and as such you will receive very general answers. I wold seek professional advice before uising any advice here for making a decision.
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Old 05-08-2023, 02:57 PM   #3
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I suspect our attorney members won’t want to answer these questions, but since I am just a dumb, retired engineer, I will give it a shot.

Yes, an LLC can avoid taxes. You transfer the LLC to anew owner when you sell. The boat is just an asset of the LLC, so since its ownership doesn’t change, no taxes are due. The only disadvantages I can see is the paper work to set it up and it might put off some potential buyers- it would me.

A captain’s license can cause additional liability. I have read on this forum that you can be held to a higher standard if you have a captain’s license in case of a accident-you are presumed to be more qualified.

Unless you plan to charter your boat with you as the captain or operate other boats for hire, I wouldn’t do it.

David
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Old 05-08-2023, 03:28 PM   #4
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I'm of equal qualification as David but will offer my $0.02.... worth what you paid for the advice.
I would be asking your insurance agent about insuring a boat held in an LLC as well as the Capt license question.

Only insurance difference I could think of is the inability to bundle boat with vehicle & home insurance for the small discount. The other might be who is covered by the LLC insurance policy... is it only LLC officers, employees? What about family, friends, etc. If you have a personal home/ auto umbrella policy it likely won't cover the LLC boat.

I have heard both sides of the Capt argument... many repeat the "held to a higher std" but have also heard and read that's a myth and that responsibility in case of an accident will be apportioned based on the circumstances and what each party did or didn't do that contributed to the accident. Also important is what evasive actions were taken as ultimately both parties are responsible to avoid an accident even if other party is doing something incorrect.
I would think any good lawyer could argue that having knowledge and training should not transfer responsibility for others ignorance or inappropriate actions.

I have not heard of any credible situation where a Capt was held "more" responsible than other party and would have been better off without the training & certification.

Wouldn't the same argument hold true for those boaters having taken multiple / advanced USCG or USPS courses or holding advanced grades designations vs an uneducated, inexperienced operator?
I have not heard of a CDL licensed driver being held to any higher std when involved in a vehicular accident. They are held to a stricter blood alcohol limit whether driving for pay or in their own vehicle, but that seems a different case. I do know a licensed Capt has time limits for alcohol consumption but honestly don't know if that applies to recreational boating or only "for hire" activities.
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Old 05-08-2023, 03:56 PM   #5
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Can't speak on #1. But on #2 your license only comes into play when operating under authority of the license, in other words, for hire. On your own pleasure craft or as a guest on some one else's, the license is irrelevant. In a civil suite, the other guys lawyer might bring it up, but your lawyer should be able to shoot it down based on the above. Keep in mind that in almost all marine accident cases both operators are held liable. Sometimes equally. Being licensed does not change that, but it has led some to believe they were being held to higher standard. It's not like car crashes where almost always only one driver is charged, even though there may have been violations on both sides.
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Old 05-08-2023, 04:08 PM   #6
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I'm of equal qualification as David but will offer my $0.02.... worth what you paid for the advice.
I would be asking your insurance agent about insuring a boat held in an LLC as well as the Capt license question.

Only insurance difference I could think of is the inability to bundle boat with vehicle & home insurance for the small discount. The other might be who is covered by the LLC insurance policy... is it only LLC officers, employees? What about family, friends, etc. If you have a personal home/ auto umbrella policy it likely won't cover the LLC boat.

I have heard both sides of the Capt argument... many repeat the "held to a higher std" but have also heard and read that's a myth and that responsibility in case of an accident will be apportioned based on the circumstances and what each party did or didn't do that contributed to the accident. Also important is what evasive actions were taken as ultimately both parties are responsible to avoid an accident even if other party is doing something incorrect.
I would think any good lawyer could argue that having knowledge and training should not transfer responsibility for others ignorance or inappropriate actions.

I have not heard of any credible situation where a Capt was held "more" responsible than other party and would have been better off without the training & certification.

Wouldn't the same argument hold true for those boaters having taken multiple / advanced USCG or USPS courses or holding advanced grades designations vs an uneducated, inexperienced operator?
I have not heard of a CDL licensed driver being held to any higher std when involved in a vehicular accident. They are held to a stricter blood alcohol limit whether driving for pay or in their own vehicle, but that seems a different case. I do know a licensed Capt has time limits for alcohol consumption but honestly don't know if that applies to recreational boating or only "for hire" activities.

Correct. I added "as a guest on some one else's" in my previous post as some one on here said that was the case. Ridiculous. That would be like a licensed driver riding as passenger on a bus being held responsible for the bus driver hitting someone. Ain't gonna happen. You have no duty or ability to act to prevent the collision and would be in big doo-doo if you tried.

The alcohol time limit is 8 hours before getting underway as I recall. That's commercial operation only, but is a good idea for pleasure boat too. Just like driving your car, there's no time limit prior, you just can't be under the influence when underway.
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Old 05-08-2023, 04:50 PM   #7
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I suspect our attorney members won’t want to answer these questions, but since I am just a dumb, retired engineer, I will give it a shot.

Yes, an LLC can avoid taxes. You transfer the LLC to anew owner when you sell. The boat is just an asset of the LLC, so since its ownership doesn’t change, no taxes are due. The only disadvantages I can see is the paper work to set it up and it might put off some potential buyers- it would me.

A captain’s license can cause additional liability. I have read on this forum that you can be held to a higher standard if you have a captain’s license in case of a accident-you are presumed to be more qualified.

Unless you plan to charter your boat with you as the captain or operate other boats for hire, I wouldn’t do it.

David
If an LLC puts you off you can just buy the boat directly so it’s an option not a requirement.

The other advantage of an LLC not mentioned is it can provide privacy to the owner when you set it up with an agent listed not the owner.
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Old 05-08-2023, 07:23 PM   #8
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I have followed "is a USCG licensed individual held to a higher standard?" and the only answer I can offer is..... it depends.

The USCG holds an administrative control over captain's licenses. It doesn't have to be a legal issue for them to act.

If you are present for an egregious maritime act and could have intervened...they may come after you on an administrative level.

Proving "neglect" in many cases where you are not the operator or operation of your vessel isn't in question....then they will be hard pressed to do much.

But in all the yes they can, no they can't articles/discussions I have read....I have to lean is yes they can but it is rare and a longshot on their part unless you confess.

On the simple level.... no...you are generally not held to a higher standard against standards that are necessary when executing your license.

As far as CDLs...that's different as you give up a regular driver's license from what I have been told and issued a CDL. I don't know for sure but every time that discussion comes up it seems like CDL ARE held to a different standard....sorta following that if you ger a BUI...it can result in the loss of your driver's license.
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Old 05-08-2023, 07:35 PM   #9
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Quote:
Originally Posted by jgwinks View Post
Correct. I added "as a guest on some one else's" in my previous post as some one on here said that was the case. Ridiculous. That would be like a licensed driver riding as passenger on a bus being held responsible for the bus driver hitting someone. Ain't gonna happen. You have no duty or ability to act to prevent the collision and would be in big doo-doo if you tried.

The alcohol time limit is 8 hours before getting underway as I recall. That's commercial operation only, but is a good idea for pleasure boat too. Just like driving your car, there's no time limit prior, you just can't be under the influence when underway.
For OUPV I believe the rule is 0.04 BAC...not even a time limit.
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Old 05-09-2023, 12:04 AM   #10
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Another advantage I've heard about with an LLC is that your slip/moorage can stay with the boat upon transfer. This often happens anyway, but the marina has to approve the new owner. If the moorage contract is with the LLC, in theory a new owner of the LLC won't need to re-apply for the slip.

That said, I remember reading in my contract with the San Diego Mooring Company some language meant to circumvent that protection so YMMV.
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Old 05-09-2023, 08:03 AM   #11
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It's so sad that our society thinks that being stupid or incompetent will get you in less trouble, therefore it's better to be stupid and incompetent.


My own feeling is:


1) The training and knowledge required to get a license will go a long way to keep you out of trouble in the first place.


2) If you do get in trouble, a well trained mariner is more likely to take the right mitigating actions. Knowing and doing the right things is your best defense.


So unless you did something specific and stupid, you will carry less culpability, not more.
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Old 05-09-2023, 09:38 AM   #12
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You see a lot of people who insist that having a license means you will be held to a higher standard, even when you are not operating under the authority of that license. I have done a lot of searching on this question. I have never -- NEVER! -- found even one, single case of this happening to anyone. I have heard people claim that their brother's cousin knows a guy who was held to a higher standard. But never any first-hand, real world, documented cases of it happening.


So, for anyone who is sure that a captain can be held to a higher standard of care, when operating entirely in a recreational capacity, I ask for a reference. A case number. A CG document. Any hard, verifiable evidence that it has EVER actually happened. I have asked for this many times. No one has ever provided any such evidence.


I know what MY conclusions are. I leave you to draw your own conclusions.
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Old 05-09-2023, 10:26 AM   #13
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This article parallels my understanding exactly of the "license standard" question. It is 12 years old but I haven't heard or read differently and both the USCG has cracked down harder and civil lawsuits more abundant since then in my experience.

It basically says "it depends"....

https://www.thelog.com/ask-the-attor...lity-standard/
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Old 05-09-2023, 01:43 PM   #14
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Originally Posted by denverd0n View Post
...
So, for anyone who is sure that a captain can be held to a higher standard of care, when operating entirely in a recreational capacity, I ask for a reference. A case number. A CG document. Any hard, verifiable evidence that it has EVER actually happened. I have asked for this many times. No one has ever provided any such evidence.
...
There was a poster on this forum, or Cruiser Forum, who was in court and the judge brought up the issue of a higher standard for someone holding a license. That is the only reference to an actual court case I have ever read.

I think it is more than fair to say that the chance of a higher standard being applied to a captain operating recreationally is pretty low. Flip side is that the chance of having an incident should be greatly minimized by using the knowledge that one has to get the license.

I don't ever see getting captain's credentials just due to the paperwork and cost since I will not be operating commercially. If it saved on insurance that is very likely to change my opinion.

Later,
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Old 05-09-2023, 03:43 PM   #15
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I held a merchant mariner's master's license (captain's license) for 35 years and get a significant discount on insurance. Before you race out to get your 6 pack license, understand that the insurance company is going to ask you for a copy of your first license (when you got it) and the commercial capacity that you used it. Having the license with out time and commercial use is probably as valuable as the online state boating safety course and certificate.

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Old 05-09-2023, 10:35 PM   #16
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I had my last 3 boats within an LLC, not just to limit liability, but also because
the boats were in charter as in a legit business. (looks better in case of an IRS audit)
I also have a recreational boat owned by the LLC, no downside and maybe easier to sell
later. (No sales tax)
As for licensed captain being held to a higher standard: Heard it many times, but never
seen it, probably an old wife's tale.
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Old 05-10-2023, 01:12 PM   #17
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Originally Posted by tiltrider1 View Post
1) LLC’s only advantage is avoiding sales tax. You might receive some liability protection in some strange ways but if you are operating the boat tHe LLC will not give you any protection.
If you are not operating the boat when an injury occurs, you will likely not have personal liability unless it is shown that you acted negligently in some way. For example, if you let an unqualified person take the helm that is sufficient negligence to create personal liability. Similarly, if the injury is not the fault of the driver, but instead results from equipment failure, you may have liability for failing to adequately maintain the boat. At the end of the day, you can count on plaintiff's lawyers to sue everyone, use discovery to figure out the best claims against each, then count on all of the insurers to contribute toward a global settlement, if only to avoid the expense and nuisance of litigation.
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Old 05-19-2023, 12:57 PM   #18
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My attorney who is also a friend told me not to get a captains license because it may cause me to be held to a higher standard in a trial with a jury.

I also have had all my boats owned by a corporation (Also my homes). The new buyer can buy the corporation or just the asset.
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Old 05-19-2023, 03:34 PM   #19
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My attorney who is also a friend told me not to get a captains license because it may cause me to be held to a higher standard in a trial with a jury.

I also have had all my boats owned by a corporation (Also my homes). The new buyer can buy the corporation or just the asset.
Said like you'd expect a lawyer to speak, but did he have any admiralty court experience? Experience not a license is the best bet for avoiding boat-related court appearances. My thinking is that Joe Average boater who has no military/commercial experience under a license and is looking to reduce his insurance premiums by obtaining a low-level license is not going to see much of a discount. I already had almost 20 years at sea as a naval officer when I first applied for trawler insurance and naturally got a discount for my experience - naval officers do not normally get USCG licenses. Two years later, I went to the USCG and obtained, after extensive testing, my unlimited tonnage master upon oceans license to use in my retirement, and the premium did not really change that much. This leads to my concluding that just maybe any premium discount Joe Average is going to get will have more to do with experience than with any nickel and dime level license. Get a license if you need it to work, not as a bragging right.
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Old 05-19-2023, 03:40 PM   #20
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than with any nickel and dime level license.
What is a nickel and dime level license?
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