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Benefits of yacht ownership through offshore corporate structures

Benefits of yacht ownership through offshore corporate structures

Limit your liability

No right-thinking person exposes their entire net worth to unlimited liability if they can avoid it.

The yacht world has borrowed from the investing world the concept of ‘beneficial owner’. As in the investing world, corporate structures are used for a variety of reasons, but when you closely examine them, all corporations are made up of people who enjoy the benefits of ownership even though title may reside in another person.

This other person may be a natural person, or there may be additional levels of corporate involvement, but at the end of the day, there will be a real live human being in there somewhere. These individuals, either directly or indirectly, have the power to influence votes within the corporation or otherwise influence the transactions regarding held assets.

So if you drill down far enough, you will find human beings directing and operating any corporation.

While the wealth of the corporate entity in almost all cases is limited to the assets held in the corporation, the people managing and running it – whether the officers or directors or the owners of equity – all are protected. (It should be noted that all employees, managers and directors serve at the pleasure of the equity owners.)

The risk to the shareholders is limited to the assets of the corporation. If the corporation’s liabilities exceed its assets, or if the corporation is unable to pay its debts as they come due, in most cases the corporation is simply dissolved.

Properly set up and maintained corporate yacht structures, whether onshore or offshore, limit the liability of the beneficial owner to the value of the assets in the structure

Importantly, the beneficial owner’s other assets will be unavailable, which is to say, not available to satisfy judgements against the corporation. The limitation of one’s liability is a prudent legal objective.

Assuming it is almost always wise to create a corporate structure to protect assets, why would a natural person who is the beneficial owner of a yacht, form a corporation with a citizenship or domicile different from his own?

Why do so many American citizens create, for example, Cayman Islands corporations to hold their yachts? Or why do so many EU citizens create Isle of Man structures to hold theirs? In both cases, the corporate structures have nationalities and domiciles different from those of the beneficial owners.

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