Are there many other assets that have the emotional draw of a yacht? Whether it be a longstanding childhood dream, the prize of many years of hard work or the desire for an oasis away from the prying world, these motivations connect an owner to their yacht in a way that happens with few other assets – bar, perhaps, the business or ventures that have often generated the funds required to buy these expensive pinnacles of wealth.

And here lies the rub. What can be missed when bringing a superyacht into an owner’s life is that while their complexity, financial commitment and propensity for risk is akin to the operation of a business, the level of strategic governance usually applied to running a business is rarely applied to superyacht ownership.

I’m not referring solely to the day-to-day operation of the yacht which, with an experienced captain and reliable yacht manager, should be perfectly manageable. It’s the bigger picture that often needs factoring into the decision-making process before getting into this mad, mad world of yacht ownership.

So what questions should a prospective owner be asking themselves?

The questions should not only be considered in terms of the operations of the yacht, but also the complexities of the world through which it will sail and the nuances of the family into which the yacht will arrive.

When it comes to the yacht’s operations and buying or building a yacht, the fundamental question is: ‘Am I asking the right question, of the right person, in the right place, at the right time?’

Prospective owners are busy people with a myriad of other things to focus on and sometimes do not equip themselves with enough initial knowledge to ask the right questions to challenge and hold the people they are dealing with to account in a way that will work for them personally.

Depending on the situation, an owner will be dealing with a wide range of advisers: a yacht broker, ownership structuring corporate service provider, specialist yacht lawyer, corporate lawyer, Flag state representative, specialist VAT and customs tax adviser, personal or family tax adviser, yacht charter broker, yacht manager, the captain, yacht crew employer and consultant, local tax agents and reporting representatives and yacht insurance broker. If embarking on a yacht build, the owner can add in the shipyard, a yacht build consultant or project manager and naval architect, among others.

That’s quite a list! And I list it to make the point that there’s a lot of information from a lot of people who may cover multiple jurisdictions.

Yachting is a bespoke business. Even with a production yacht, the way it’s going to be used and what the owner wants to get out of the experience will be unique to them. There really is no one size fits all and, therefore, owners need to ask themselves how they are going to get what they need out of these advisers and generate a feeling for whether they are being told what the adviser knows just because it’s what they know or that it’s actually the right answer for the owner. 

Nic Arnold, UK head of JTC Private Office

The ‘burden of wealth’ is a thing and is generating questions around how families interact with their wealth more than ever as the tide of newly generated capital starts to pass to the next generation.

Where to start? A prospective owner should ask themselves if they are buying a yacht capable of only being funded and used by them. Or is their dream to have something bigger that requires chartering to third parties to raise additional funds? Where do they want to enjoy their yacht and how much of the globe do they expect to visit with it?

These fundamental questions will drive the conversation on the yachting experience the owner will have before even getting to the question of yacht design and functionality. If the owner doesn’t know the answers, they should keep talking and researching, and if they think it will be a combination, they need to understand up front what this looks like as it will materially impact the complexity of their arrangements.

Another part of the complexity of owning a yacht is that it moves. This might seem obvious, but it means that an owner needs to look beyond the yacht as to how it will function in the various jurisdictions it will visit and consider the complexities of the world through which it will sail.

Whether choosing a home port, the location for maintenance and refits, cruising grounds or chartering locations, it’s important to ask the question: do I understand the status of my yacht and what this means in any given location?

The additional challenge is that rules and attitudes change and so asking these questions once doesn’t mean they don’t need to be asked again. Many of these questions will relate to taxation and the rules applied by the yacht’s Flag state. In particular with taxation, cross-referencing the answers received from multiple sources will help guard against working with outdated or incorrect information.

One might say that these considerations are relatively technical and manageable and can, to a certain extent, be delegated to trusted advisers within the family office or a family consultant with the right knowledge. However, questioning the impact of bringing a superyacht into family life speaks to the wider values and characteristics of the owner and their family, and one should consider the nuances of the family into which the yacht will arrive.

The ‘burden of wealth’ is a thing and is generating questions around how families interact with their wealth more than ever as the tide of newly generated capital starts to pass to the next generation.

Thinking through how the yacht will be used – and who will enjoy it – will help to make it a more sustainable asset within the family. Is the new owner assuming that it will be a popular central meeting place for family holidays and celebrations, whereas the immediate impression of the next generation is that it’s an outdated expression of planet-busting excess? Would bringing the whole family into the upfront decision-making on choosing the yacht enable everyone to come together in a middle ground? Or does the owner have no expectation of anyone using the yacht other than themselves, counter to the assumptions of the rest of the family? Yachts really can bring a family together or create cracks between them. 

As a possession of passion, a yacht can represent a heart-breaking asset on the death of a family principal. Does the next generation keep it, along with all the running costs, as a nod to their parent’s legacy? Or is the yacht sold immediately as they never connected to it in the way their parents did? Yachts are becoming assets considered up front in this way alongside the rest of the family’s succession and governance planning.

So, in summary, I haven’t thought to list the questions an owner should ask in order to challenge whether they should have a yacht or not. Deciding to buy a yacht isn’t a particularly logical decision in the first place. I merely seek to raise awareness of the questions that should be asked to ensure that bringing a yacht into an owner’s life is done with as much governance as possible and in a way that works for them personally as the owner. This way the old adage of the second-best day of an owner’s life being the one they got rid of their yacht can be a thing of the past.

This article first appeared in The Superyacht Report – Owner Focus. With our open-source policy, it is available to all until 21 November by following this link, so read and download the latest issue and any of our previous issues in our library.

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