“Should my boat be in an LLC or a trust?” is one of the most common questions in marina estate planning, and it’s usually the wrong question — because the two structures aren’t competing for the same job. An LLC is a liability and co-ownership tool: it keeps a boat-related claim aimed at the company instead of your house. A revocable living trust is an estate tool: it moves the boat to your heirs without a probate court, and keeps someone at the helm of your affairs if you’re incapacitated. One protects you from the boat; the other protects the boat’s handoff.
This guide compares them honestly — what each one actually does, what each one can’t do, the tax myths neither one fixes, and the combination (LLC owns the boat, trust owns the LLC) that many owners end up with.
- Liability shield
- LLC
- the trust doesn't have one
- Probate avoidance
- Trust
- or the LLC interest held in trust
- 2026 estate-tax exclusion
- $15M
- per person, per the IRS
- Use-tax savings
- $0
- from either structure
Two tools, two different jobs
An LLC is a state-chartered company. When it owns the boat, boat-related claims — a guest hurt on the swim platform, a hired captain’s mistake, a fuel-dock incident — are, in principle, claims against the LLC and its assets rather than everything you own. It’s also the natural container for co-ownership: membership percentages, an operating agreement, and buyout terms, as covered in our national boat LLC guide.
A revocable living trust is a legal arrangement, usually drafted by an estate-planning attorney, in which you (the grantor) transfer assets to a trustee — typically yourself — to hold for your beneficiaries. Because you can amend or revoke it at any time, you keep full control while you’re alive. The payoff comes later: as the CFPB puts it, one reason to set up a revocable living trust is to avoid the probate process after death — a public proceeding that can be expensive and lengthy. A successor trustee also steps in if you become incapacitated, without a court appointing anyone.
For income tax, both structures are invisible for most owners: the IRS treats a single-member LLC as a disregarded entity (its activities go on your own return), and a revocable trust as a grantor trust — “the grantor is treated as the owner of the assets, the trust is disregarded as a separate tax entity, and all income is taxed to the grantor.” Income tax is a wash. The differences live elsewhere.
Side by side
| LLC | Revocable living trust | |
|---|---|---|
| Primary job | Liability separation, co-ownership, privacy | Probate avoidance, incapacity planning, inheritance |
| Liability shield | Yes — if the LLC is properly maintained (and never for your own conduct at the helm) | No — you keep the power to revoke, so creditors can generally still reach trust assets |
| Probate | The LLC interest itself still passes through your estate unless it’s held in a trust or covered by a transfer plan | The boat (or the LLC interest) passes to beneficiaries without a court proceeding |
| Incapacity | An operating agreement can name a manager, but your membership interest is still stuck | Built for it — a successor trustee takes over management without court involvement |
| Sales/use tax | No change — use tax follows the boat’s slip | No change — same |
| Income tax | Single-member LLC is disregarded; boat stays on your return | Grantor trust; boat stays on your return |
| Co-ownership | Excellent — percentages, operating agreement, buyouts | Awkward — trusts aren’t built for unrelated co-owners |
| USCG documentation | Eligible — a member-managed LLC certifies that all members are U.S. citizens (USCG Form CG-1258); a manager-managed LLC is tested through its managers and officers | Eligible — 46 CFR 67.36 requires each trustee and each beneficiary with an enforceable interest to be a citizen |
| Ongoing cost | State annual report or tax (WY $60 min, FL $138.75, DE $400) plus registered agent | Typically no state filing or annual fee; attorney drafting cost up front |
| Privacy | The LLC’s name on registration and documentation | Title typically shows the trustee’s name — often yours |
What the LLC does that a trust can’t
The LLC’s case rests on the thing a revocable trust structurally cannot offer: separation.
- Liability. A claim arising from the boat — someone else operating it, a guest injured aboard, dock damage — is aimed first at the LLC and its assets. (It never shields your own negligence when you’re driving, and insurance stays the first line of defense.)
- Co-ownership. Two couples splitting a trawler get membership percentages, an expense-sharing agreement, and a buyout mechanism. Try writing that into a living trust and you’ll find out why nobody does.
- Privacy. State registries and the USCG documentation database are public. An LLC puts the company’s name there; a trust typically puts the trustee’s name — which is usually yours.
- Judgment insulation the other direction. In holding-company states like Wyoming, a personal creditor’s remedy against your LLC interest is generally limited to a charging order — part of why Wyoming is the default home for holding companies.
What the trust does that an LLC can’t
Flip it around, and the trust owns two jobs the LLC has no answer for:
- Probate. When you die owning an LLC interest personally, that interest is part of your probate estate like any other asset — the LLC wrapper doesn’t move it to your heirs. Assets held in (or payable to) your revocable living trust pass under the trust’s terms without a court proceeding, which is the CFPB’s headline reason these trusts exist. For a boat that may need to be insured, maintained, and possibly sold during a months-long probate, that difference is practical, not theoretical.
- Incapacity. If you’re incapacitated, a successor trustee manages trust assets immediately. An LLC’s operating agreement can name a manager for operations, but your membership interest — the ownership itself — has no automatic pilot without a trust or a durable power of attorney.
And two honest deflations of trust-sales pitches:
- Estate tax is rarely the reason. The federal estate-tax filing threshold is $15,000,000 per person for deaths in 2026 (up from $13,990,000 in 2025), per the IRS. Most boat owners’ estates never approach it. If yours does, or your state levies its own estate tax, you need an estate-planning attorney for reasons far beyond the boat.
- The step-up doesn’t care which structure you used. Property inherited from a decedent generally takes a basis equal to its fair market value at death under IRS Publication 551 — and that’s true whether your heirs receive the boat through a will, a revocable trust, or as an inherited LLC interest. Nobody should sell you a trust “for the step-up.”
The tax myth neither one fixes
Neither an LLC nor a trust changes a dollar of sales or use tax, because use tax attaches to where the boat is principally used and moored — not to the kind of name on the title. Florida taxes boats at 6% plus county surtax, capped at $18,000 per boat, per the Florida DOR’s GT-800005 brochure, and collects when the boat is registered. California applies use tax at the rate where the boat is moored, as our California boat LLC guide walks through in detail. The full state-by-state picture — caps, exemptions, and the handful of no-tax states — is in our boat sales tax by state reference.
If someone is pitching a trust or an out-of-state LLC as the way to skip that tax, read our Montana LLC guide first — it’s the honest breakdown of why the scheme fails and what it costs when it does.
The combo: LLC owns the boat, trust owns the LLC
For owners who want both jobs done, the standard structure isn’t either/or — it’s layered. The LLC holds the boat and does the liability, privacy, and co-ownership work. Your revocable living trust holds your membership interest in the LLC, so the ownership passes under the trust at death and a successor trustee can act if you can’t. The boat’s title, documentation, registration, and insurance all stay in the LLC’s name the whole time — nothing at the marina changes.
- 1
Form the LLC
Usually in the boat’s home state, or Wyoming for a pure holding structure. Buying new? Have the LLC take title from day one and you skip the transfer questions entirely.
- 2
Title or document the boat in the LLC's name
State title/registration, or USCG documentation for vessels of five net tons or more — subject to the citizenship rules below.
- 3
Set up the revocable living trust with your attorney
This is attorney work, and it should cover far more than the boat — your home, accounts, and the rest of the estate plan.
- 4
Assign your LLC membership interest to the trust
An assignment document plus an operating-agreement update naming the trust (or you-as-trustee) as the member. Confirm the operating agreement permits the transfer — multi-member agreements often require consent.
- 5
Tell your insurer and your lender
The named insured should match the titled owner (the LLC), and any lender needs to consent before ownership paperwork moves. Neither step is optional.
Moving a boat you already own
Transferring an existing boat into either structure is where unforced errors happen:
- Into an LLC. Some states treat the contribution kindly: California’s Regulation 1595, for example, says a transfer to a commencing LLC solely in exchange for the membership interest is not a sale — but the same transfer becomes taxable if you receive any consideration, including the LLC’s assumption of your boat loan. A financed boat contributed carelessly can trigger tax on the assumed debt.
- Into a trust. Many states treat re-titling a boat into your own revocable trust as a change of form rather than a taxable sale, because beneficial ownership doesn’t change — but the rules are state-specific and not universal, so confirm with your state’s tax and titling agencies before moving the title.
- Either way: get lender consent first, and update the insurance so the named insured matches the new owner before the transfer, not after.
What it costs
The LLC side has published, fixed numbers: Wyoming is $100 to form with a $60-minimum annual report (per the WY SOS fee schedule), Florida is $125 with a $138.75 annual report (per Sunbiz), and Delaware is $110 with a $400 annual tax (per the Delaware Division of Corporations) — plus a registered agent if you don’t have an in-state address. The trust side has no state filing fee and, in most states, no recurring state cost; what it costs is attorney drafting time, which varies enough by market and complexity that any number we printed here would be marketing, not data. Get a quote.
Where FilingDesk fits
FilingDesk forms the LLC half: Wyoming, Florida, and Delaware LLCs today — flat $99 plus the state fee (Wyoming $199, Delaware $209, Florida $224 all-in), with a human specialist reviewing every filing, EIN and operating agreement included, and the registered agent free for your first year, no upsells. The trust half belongs with an estate-planning attorney — that’s not a sales limitation, it’s the honest division of labor.
When you’re ready to form the LLC that will hold the boat, start here.
FilingDesk is not a law firm and does not provide legal or tax advice. Trusts and estate plans are attorney work, and titling, documentation, and use-tax outcomes depend on your state and your facts — talk to an estate-planning attorney and a tax professional about your specific situation.
Frequently asked questions
Does a revocable trust protect my boat from lawsuits like an LLC does?
Can a trust own a USCG-documented vessel?
Can my trust own my boat LLC?
Does putting my boat in a trust or an LLC avoid sales or use tax?
Do I need a trust to avoid estate taxes on my boat?
What does each structure cost to set up and run?
Sources
- 46 CFR Part 67 — Documentation of Vessels, incl. § 67.36 trust citizenship (eCFR)
- USCG National Vessel Documentation Center
- USCG Form CG-1258 — Application for Documentation (LLC & trust citizenship certifications)
- IRS — Estate tax (filing threshold $15,000,000 for deaths in 2026)
- IRS Publication 551 — Basis of Assets (inherited property takes FMV-at-death basis)
- IRS — Grantor trusts: grantor treated as owner, income taxed to the grantor (IRC § 676)
- IRS — Single-member LLCs are disregarded entities for income tax
- CFPB — What is a revocable living trust? (probate avoidance)
- CDTFA Regulation 1595 — transfers to a commencing LLC solely for a membership interest
- Florida Department of Revenue — Sales and Use Tax on Boats (GT-800005)
- WY SOS — Business Division Filing Fee Schedule
- FL Division of Corporations — LLC Fees ($125 total, $138.75 annual)
- DE Division of Corporations — LLC/LP/GP Franchise Tax Instructions ($400 annual tax per HB 400)
This guide is general information, not legal advice. FilingDesk is not a law firm.