How Does Marriage and Divorce Affect a Yacht?

When purchasing a yacht, most buyers take into consideration how the vessel will fare in rough seas or stormy conditions; as any experienced boater knows, weather conditions on the water can turn volatile in the blink of an eye. Responsible owners understand the risk of inclement weather and take extra precautions to make sure their boat is outfitted with everything needed to protect themselves in case the conditions take a turn for the worse.

What yacht buyers often fail to consider, however, is how to protect themselves and their vessel in case things turn stormy in other areas of their lives, particularly their marriages. 

While no one likes to consider the possibility of their marriage ending, too often yacht owners do not realise their spouse has legal rights to the boat until faced with the reality of a divorce. Most people mistakenly believe that as long as the yacht is titled only in one spouse’s name or in the name of a separate entity, the other spouse has no right to the boat in the event of divorce.

However, even if a yacht is titled solely in one spouse’s name or in the name of an LLC, there are a number of reasons the vessel may still be considered a marital asset subject to division in the divorce proceedings, including the timing of the purchase of the yacht, the source of the funds used for the purchase, and the source of the funds used to maintain the vessel during the marriage. This could result in the former spouses having to share ownership of the boat after divorce, or one spouse having to come up with the money to purchase the other spouse’s interest in the boat in order to maintain possession of the boat.   

While the specific marital rights to the yacht will depend on facts of the case and the laws of the state or country where a divorce takes place, any yacht owner who is currently married or plans to get married while owning the boat should consider whether they want to protect their interest from potential claims by the other spouse in the future. This applies to yacht crew as well. Some yacht owners have a great, long standing relationship with the captain of the yacht and failing to properly protect the yacht could lead to the loss of cherished crew members. 

The most common way of doing this is through a written agreement between the spouses known as a prenuptial agreement (if signed before marriage) or a postnuptial agreement (if signed during the marriage). These agreements can be tailored to each couple’s particular circumstances but are typically used to clearly outline that the ownership rights to the yacht belong to one spouse only and to specify that the yacht should be considered that spouse’s separate property not subject to division in the event of divorce.

In addition, the agreement can be used to outline each spouse’s financial responsibilities related to the yacht, such as maintenance and upkeep costs during the marriage. This agreement can also be used to keep a yacht operating whether for private use or charter so that a divorce proceeding does not cause the vessel to be docked or forced to be sold during what could be a multiple year divorce process. 

No one enters into a marriage anticipating a divorce (or at least, no one should!) and the topic of finances and ownership rights to assets can be highly sensitive, even in the healthiest of relationships. However, when handled properly, a prenuptial or postnuptial agreement should be treated like an insurance policy that offers certain financial protections for the yacht owner as well as the ability to keep good crew in the unlikely event a divorce occurs. In the best case scenario, the married couple puts the signed agreement in a drawer never to be needed again. In the worst case scenario, the yacht owner can rest assured knowing that his or her ownership rights to the boat will be protected against any claims by the other spouse in a divorce. 

As with any adventure on the water, boaters typically hope for nothing but calm, clear conditions but should plan to protect themselves and their vessel in case unexpected storms arise. These protections should be handled from the onset of the marriage and not held off until the wind starts a blowin. 

Jessie Pulitzer is an attorney at Robert Allen Law whose practice includes maritime and commercial litigation, superyacht transactions, corporate law matters, and immigration issues. For further information related to this article, please contact jpulitzer@robertallenlaw.com or (305) 372-3300.  The information offered in this article is summary in nature and should not be considered a legal opinion or legal advice in any manner.