Primer on incorporating a boat or yacht in Delaware

November 11, 2013

It's no secret that Delaware is a great place to incorporate a business. More than half of the publicly traded companies in the United States, including the majority of the firms in the Fortune 500, are currently enjoying the benefits of making the First State their legal home.

However, incorporating in Delaware isn't an option that is only available to major companies. Even small business owners and private citizens may be able to benefit from establishing an independent legal entity in the state. Any individual who owns a boat or yacht, for example, may want to create a Delaware corporation to hold the vessel.

This ensures that potential legal liabilities will be consolidated within the corporate entity, which means that, in the event of catastrophic accident involving a personal injury or damage to property, the craft's owner – as well as his or her family and personal assets – will be insulated from most risks.

Is insurance enough to protect ship owners from liability?

If a boat is not owned through a corporation, any claims arising from its activities may be held against its owner. Some individuals may feel comfortable with this risk because they believe that their personal insurance policies will protect them. This may not be the case, as there can be exceptions built into the "fine print" of these policies, which could leave a person exposed to liabilities.

The aftermath of an accident is not the time to find out that your insurance coverage isn't as comprehensive as you believed. Reviewing the policy with an experienced attorney may help clear up confusion, but creating a corporate entity adds another layer of protection that could prove to be critical in a contingency.

What are the other advantages of owning a vessel through a Delaware corporation?

Today, some of the world's largest yachts are owned by corporations based in Delaware. Affluent families and individuals understand that the benefits of owning a vessel through an independent legal entity, rather than under their own name, can extend beyond protecting personal assets liability. Other advantages associated with this practice include:

Potential tax benefits: Depending on the financial and tax situation facing an individual yacht or boat owner, it may be possible he or she will be able to enjoy tax advantages as a result of creating a corporate entity in Delaware to take legal responsibility for the craft.

Confidentiality: When a vessel is owned through a corporation, it is possible for the person who owns or leases the ship to maintain his or her privacy.

Interested parties can turn to an experienced, local provider of incorporation services for assistance creating an entity to hold their boat or yacht in Delaware. Some owners, particularly those who live outside the state, may also be interested in retaining the services of a registered agent. This will help ensure that any service or process, annual renewal notifications or other important documents are received and, as necessary, forwarded or to responded to in a timely manner. In most cases, the company that files the incorporation documents for an organization can also serve as its registered agent.

Additional information: Registering a boat or yacht in Delaware

Under state law, all motor-powered vessels that are to be used, docked or otherwise stowed in Delaware for more than 60 consecutive days must be registered with the state Division of Fish and Wildlife Enforcement

To obtain a Delaware Boat Registration Certificate, the following documents are required:

  • A completed boat registration application
  • A notarized bill of sale and the old registration (if the boat is registered in Delaware or another state)*
  • The original title (if the boat is titled in another state)
  • Manufacturer's certificate of origin (if the boat is new).

* – For vessels registered in Delaware, if both the buyer and seller appear in person, with picture IDs, a notarized bill of sale is not required to transfer the registration.

More information about fees and processes related to boat registration is available on the Fish and Wildlife Enforcement website.