Equine Syndication and how to own a $16 Million horse


I've recently started following a fun equine blog called "Three Days Three Ways."  There is one particular post on equine syndication that I thought would be interesting to discuss from a legal perspective.  The "Three Days Three Ways" post (find it here) interviewed a woman who owns some of the horses ridden by Phillip Dutton in eventing competitions all over the world.


{Photo source is my favorite Equine Photography Blog: Capture the Light Photo, which also offers once-in-a-lifetime equine photography workshops in Kentucky; the next one is November 1-3, the week before the Breeder's Cup.}
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Equine syndication is, in its most basic form, shared ownership of a horse: each investor pays for a certain percentage of ownership.  This is particularly popular with race horses because:
1. Top quality race horses are very expensive, and
2. Good race horses have the potential to win a lot of money, and to be economically valuable studs after racing.

(An article from 2006 reveals that $16 million was paid for a colt named Forestry!  It was a corporation, and not an individual buyer, who bought him.) 

Same photo source as noted above, photo taken at the Fasig Tipton sale in Lexington
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I've met people at parties or weddings who find out I love horses, and they tell me with a rather cocky affect:
"Oh, well I own a racehorse."
I had always been floored- how impressive, a racehorse!  So of course I would ask a million questions:
Stable? Age? Tracks where he races? Medical issues with young racing horses? Sire and Dam?

The conversation would quickly become uncomfortable- they knew I loved horses, but they didn't know I am a horse owner, rider, and near-expert in some horse issues- 
and as I soon learned, these people "owned" a racehorse, meaning, a 10% interest in the horse that they bought as an investment, for tax purposes, as a whim, as a favor, etc., and actually knew nothing about horses at all.

As amusing as I find such scenarios, I actually think syndicates are a great invention for supporting equestrian sport, otherwise it would be cost prohibitive for many of the riders and owners to purchase, maintain, and compete top level horses.

There are a number of business, legal, and tax implications in forming a syndicate- so even if you are not planning on sharing ownership of a $16 million horse, but just a $10,000 pleasure horse, and even if it is with someone you trust- be sure to visit an equine attorney to go through the agreement and to form a contract between the owners.
When people are economically and emotionally invested in animals, you need in writing what the owners will do if they disagree on a plan of action for the horse, such as whether to pay for colic surgery or not, or whether to sell the horse, and if so, for how much, among other issues.

Would you ever buy into a syndicate? If so, for what type of horse?