These luxuries are not only static investments, but also provide thrilling experiences and leisure opportunities. Take yachts for example. Relaxing with family members in the sun on a sea vacation or getting together with several friends for a party on a yacht are undoubtedly one of life great pleasures. In California and Florida, Monaco, Greece and France, as well as Hong Kong and Singapore, a little white sail on the backdrop of a bright blue sea and brilliant sky is not a rare sight. Yachts are a popular pastime among the local elites for relaxation and even for business opportunities and public and private purposes. As one of the most luxurious item in the luxury sector, private yachts by themselves are enough to showcase the noble status and extraordinary taste of their owners. In today China, yachts are gradually attracting attention and favor. But for most Chinese people, this is still an unreachable. At present, only a few people have the wealth to realize this dream, but enjoyment is the sole issue when considering purchasing a yacht. The issues of investment and wealth management are also worthy of careful consideration.
In China, there are already some professional yacht associations and clubs that help yacht owners in day-to-day management, including docking, servicing, maintenance and repair. Meanwhile, they also form a bridge for communications between individual yacht owners, and between yacht owners and related government departments. Providing industry information, holding exhibitions and unveiling industry publications, they facilitate communication and understanding, strengthen exchanges and cooperation, and play a role in promoting the development of China's yacht industry. At the same time, some inland areas in China also have plenty of lake resources and adequate navigational conditions. They, together with the lakeside scenery, give China yachting industry tremendous growth and investment potential compared with other countries and regions only with coastlines. Those living near inland water areas and having the ability to purchase private yachts can experience the charm of yachts at home. But it is undeniable that yacht purchase, delivery, registration and final water sailing are not a simple process in the Chinese market. Yacht owners must go through multiple approval processes with maritime authorities and classification societies investing considerable amounts of money, time and effort. On one hand, this is because China's yacht is still in its infancy but also this is because China still imposes relatively strict management and controlling systems on the high-end luxury products, including yachts.
In this case, using offshore trusts to own and manage this special kind of luxury product has become the choice of many High New Worth Chinese. First, they can set up companies in offshore jurisdictions and then purchase yachts under the name this company. Thus, although the yacht is owned by the offshore company, it doesn affect the actual possession and control by the individual. This can also save time and money during the yacht registration and simplify the application stages. Of course, more importantly, registering a yacht under the name of an offshore company and establishing a trust can help you reduce or remove personal property tax levy and other tax pressure that may arise in the future, and even allow you to benefit from tax exemption on inheritance rights to the shares of offshore companies owning the yachts registered in offshore jurisdictions. Furthermore, establishing an offshore trust can allow clients to include their other important assets under the management scope of the trust, reducing applicable taxes on this property. Even within the framework of an offshore trust, under which management of movable properties including yachts is more flexible, the other assets of Chinese clients, especially real estate, may face legal limitations and strict control of the country of residence. Therefore, the whole process and program cannot be accomplished overnight.
In fact, many potential Chinese consumers of yachts are willing to bear a higher economic cost in order to simplify the control of their yacht: purchasing, registering and using a yacht under the domestic Chinese system. Of course, this path should also entail estate planning in order to reduce tax pressures and avoid potential inheritance disputes.First of all, consider which entity should be the purchaser of the yacht. This not only involves attribution of ownership, but also will decide the tax rate and inheritance, as yachts should be registered as special assets.Second, regardless of the nature of the ownership, the yacht will only be one part of the assets of its owner or actual user. If professional teams understand the various Chinese (and international) rules and regulations, a complete set of property disposal solutions, which maximize the benefits of estate planning, can be crafted.Additinally, in the still immature yachting industry in China, there has been some positive recent news. For example, costal provinces Hainan, Guangdong and Shandong have all introduced policies to promote the development of the provincial yacht industry. For example, yacht making and other travel equipment manufacturing industries will be included in the country encouraged industry directory. China has been pushing forward construction of yacht berths and has relaxed registration of foreign yachts, which has simplified yacht ownership in China.Therefore, I believe that the development of the private yacht industry has a promising future in China, and with the accumulation of personal wealth, estate planning and wealth management will also attract greater attention from the elite.
In practice, we have encountered numerous family heritage disputes, all of which were caused by the sudden death of the property owners due to illness, leaving problems over how to allocate and dispose of the huge legacy. The main problems are the properties such as yachts, real estate and arts owned by the deceased individuals. At first sight, owning a yacht under an individual name meets the needs and desires of high net worth individuals, but without complete and proper estate planning, such an arrangement becomes a time bomb. Heritage battles are often time-consuming, often lasing several years. Even if different heirs eventually reach a consensus after conquering difficulties, the health and happiness of the family is harmed. This could not have been what an ancestor would have wanted to happen.However, this reality should be a warning to Chinese people who are accumulating or have accumulated wealth rapidly that close attention must be paid to estate planning and wealth management. Apart from the traditional types of assets, wealth including aircraft, yachts, luxury cars and collections should also have property structure planning under the help of experienced professionals based on their own business development, family and future plans. The moves can help meet the demand of asset preservation, tax reduction and stable inheritance.
