Annual expenses - how does a partnership split the costs?

[yachtjim]

Lots of answers so far, I appreciate it. Now that we have some opinions based on an unbiased viewpoint let me fill you in on how I feel, and the intent of this agreement.

$7500 and they didn't throw in new spark plugs? I have never owned a plane so if this is normal excuse me!

These repairs are ownership costs, not wear items. If I were to join a partnership they should be split 50/50. At least $30 should be 'billed' per hr to build up a reserve for a new engine. Maybe more if you're closer to Tbo.

Experimentals sound more appealing everyday.

This is all we ever verbally talked about. And it was in writing in one email.

"2. Splitting expenses (split fixed expenses and upgrades 50/50, split
variable expenses based on usage). The only variable expense I can
even think of is oil changes."

Of course people have brought up other legit variable expenses that I had not thought about prior to owning a plane (tires and brakes).

I am 100% onboard with paying for my share of the variable expenses, and feel it is appropriate. I am not onboard with fixing a 18 year old exhaust shroud for $1000 that finally got to the end of its life and having to pay for basically the whole thing because I flew more this year.

If he was flying the plane regularly as was the intent when we entered this agreement there would be nothing to talk about right now. Since he has not flown it I can understand him having a hard time with paying for maintenance. But most of these things should have been found at the pre-buy. We got screwed, but what can you do... I agreed to buy 50% of the plane and pay for 50% of the expenses. The agreement really is as simple as that.

We had a plan in place to account for usage on the plane at the time of its sale. So we'd be 50/50 up until it was sold. At that point we would factor in our hours to either pay out of pocket to pay off the loan, or to split up the proceeds if it happened after the loan was paid off. The email sent described it as follows - we would split whatever surplus or whatever was owed at after a sale. 25% of the surplus or amount owed would have a ratio applied to it equal to the ratio of how many hours we each put on it. The plan was to sell it while the engine still had some life in it, at perhaps 1600 hours.

This whole thing was supposed to be simple and straight forward. We talked about using the AOPA agreement too. It was just way too complicated for such a simple thing. Like having to re-fuel the plane after each flight. What happens when the next guy wants to take up 4 people and some luggage for a 1 hour hop. Do you sit there and burn off fuel for 2 hours to get the T/O weight down?

A few posts up somebody mentioned renting the plane from the partnership. What is the point of that? Why have all the risk of owning a plane, and potential big bills like I just had if you are going to rent the plane anyway? A rental is great in that you have no responsibility when things break. The downside is that it costs more once you hit a breakeven point. our plane is not a rental. it is ours. If things break we can't hand it back to the FBO. the risk is that things will break and we need to fix them.

So here we are.

 

[Mafoo]

Since he has not flown it I can understand him having a hard time with paying for maintenance.

Why? If it was just him owning the plane, and he never flew it, he might be replacing an engine. You never know.

 

[Mafoo]

It would be interesting to know...

If a plane flys 200 hours a year, or the same plane flys 0 hours a year, and you take it in to get an anual, how often is the 0 time plane going to cost you more money?

 

[wabower]

Any own/op cost sharing should assume some minimum amount of usage by each owner, otherwise there's no reason to buy a plane. In your case, the obvious question for your partner is "would you have bought half the plane if you knew you would only fly 10 hours?" For the analyses I prepare for clients, the default minimum is 50 hours/yr.

This is all we ever verbally talked about. And it was in writing in one email.

"2. Splitting expenses (split fixed expenses and upgrades 50/50, split
variable expenses based on usage). The only variable expense I can
even think of is oil changes."

Of course people have brought up other legit variable expenses that I had not thought about prior to owning a plane (tires and brakes).

I am 100% onboard with paying for my share of the variable expenses, and feel it is appropriate. I am not onboard with fixing a 18 year old exhaust shroud for $1000 that finally got to the end of its life and having to pay for basically the whole thing because I flew more this year.

If he was flying the plane regularly as was the intent when we entered this agreement there would be nothing to talk about right now. Since he has not flown it I can understand him having a hard time with paying for maintenance. But most of these things should have been found at the pre-buy. We got screwed, but what can you do... I agreed to buy 50% of the plane and pay for 50% of the expenses. The agreement really is as simple as that.

We had a plan in place to account for usage on the plane at the time of its sale. So we'd be 50/50 up until it was sold. At that point we would factor in our hours to either pay out of pocket to pay off the loan, or to split up the proceeds if it happened after the loan was paid off. The email sent described it as follows - we would split whatever surplus or whatever was owed at after a sale. 25% of the surplus or amount owed would have a ratio applied to it equal to the ratio of how many hours we each put on it. The plan was to sell it while the engine still had some life in it, at perhaps 1600 hours.

This whole thing was supposed to be simple and straight forward. We talked about using the AOPA agreement too. It was just way too complicated for such a simple thing. Like having to re-fuel the plane after each flight. What happens when the next guy wants to take up 4 people and some luggage for a 1 hour hop. Do you sit there and burn off fuel for 2 hours to get the T/O weight down?

So here we are.

 

[Mafoo]

Any own/op cost sharing should assume some minimum amount of usage by each owner, otherwise there's no reason to buy a plane.

Just as a side note here, I am going in with the oposite assumption.

Our share has 6 people in it, and each pays $2400 a year + $20 an hour dry. One of the reasons I am ok with 6 people, is statistics show that far more times then not, some members just never fly.

If I thought all 6 were going to fly as much as I know I am, I would not be in this share.

 

[yachtjim]

Any own/op cost sharing should assume some minimum amount of usage by each owner, otherwise there's no reason to buy a plane. In your case, the obvious question for your partner is "would you have bought half the plane if you knew you would only fly 10 hours?" For the analyses I prepare for clients, the default minimum is 50 hours/yr.

I have asked him this, why does he want it. He wants to start working towards his ppl at some point. We both started our ppl training together when we bought it. He stopped and has not restarted.

Sounds like you may work on agreements like this for a living. Would you have a reasonable solution for us? Or should I just hold him to the original agreement?

 

[wabower]

Doesn't matter who flies or doesn't, only that they understand that their decision to buy should assumed they would fly. If they don't, they shouldn't complain about later disproportionate use because they elected not to do so.

And on a side note, you don't know how much you will fly either, only how much you think you will fly based on your somewhat optimistic estimates (IMO) prior to purchasing the plane. If you read the flight logs on most planes, the new guys fly more than the old guys. Then the new guys become the old guys and they don't fly as much and the newer guys fly more.

Just as a side note here, I am going in with the oposite assumption.

Our share has 6 people in it, and each pays $2400 a year + $20 an hour dry. One of the reasons I am ok with 6 people, is statistics show that far more times then not, some members just never fly.

If I thought all 6 were going to fly as much as I know I am, I would not be in this share.

 

[Jaybird180]

Each of the owner must split the cost of the inspection, an pro-rate the repairs, neither must subsidize the other s flying.

In this regard, I agree with Tom. It's an old argument: what's included in an inspection? Is it $1,500 to take a look + (X) cost to repair what was found broken.

Essentially your partner is claiming 'you broke it'. How did the two of you agree to handle that question? IOW - I something breaks while I'm flying the plane, who pays?

4. Brakes are a good example of wear items that will eventually be replaced due to use. They don't wear out while sitting in the hangar (unlike a battery that can easily do so) so there's little argument that they wore out from use. How often do you think they will wear out? Should brake costs be allocated to the year in which they were installed, or over the period of years they are expected to last? They're clearly operating costs vs. ownership costs, but how thin do you want to slice each element of these costs?

I don't think it equitable to just split brakes on hourly usage. Each pilot uses brakes differently and also brakes are not used while in cruise. If you're heavy on the brakes and you remain in the pattern in a short field you'll use more than I will while I'm flying more XC hours.

I was answering the OPS question.

I would never wait until I was holding the bill before trying to set up rules.

Day 1, set up a LLC to own the aircraft.
Day 2 each pilot rents at the price that will cover the annual, and repairs.

No help in their situation. What's done is done. Now they're trying to save the partership and the friendship. I tough proposition that will come down to their conflict resolution skills and the value placed on money vs friendships.

 

[Steve Foley]

$7500 and they didn't throw in new spark plugs? I have never owned a plane so if this is normal excuse me!

Airplanes do not use $0.99 spark plugs from autozone. A quick search shows $39 to $139 for each plug. There are eight in a 4 cylinder plane.

To the OP, I would hold him to the original agreement, mostly because the repairs were not due to the 130 hours you put on the plane.

 

[Mafoo]

Sounds like you may work on agreements like this for a living. Would you have a reasonable solution for us? Or should I just hold him to the original agreement?

Sorry to keep poking my head in, but...

Why would you not hold him to the original agreement? He made a bad investment. Sounds like you did too.

If he is a really close friend, or there is something in his life that makes you feel like you wish to help him, then that's another issue.

But he made a choice to buy a plane he has now chosen to never use. Why is that your fault, or something you feel you should take responsibility for?

If Wayne can help you come to a new agreement your both comfortable with, then that's awesome. However until that happens, your partner needs to deal with the agreement he has already made.

 

[EppyGA]

Search the user's other threads.

It was pre-buy'd by the shop that did the previous owner's MX (red flag number one), and they were told it was a great airplane, then a year later a "new inspector" at that same shop is "over zealous" and squawks a huge pile of stuff (red flag number two), much of which isn't even an airworthiness issue (yellow card foul), the new owners didn't ask the shop to button it up, get a ferry permit, and take it elsewhere (10 yard penalty, 1st down!), and now have a $7500 bill (touchdown, shop team!), and are now arguing over how to divide it (where this thread starts).

At least that's how I read all of it. Getting fleeced is bad enough, now they're going to have to argue out who spends the most time bent over... LOL. Ouch.

You need to keep your sports metaphors straight.

 

[N801BH]

The good news is........... That thorough annual has put the plane is decent shape and unless you, or him damages it, your next several annuals should be inexpansive and predictable....

The bad news is you both should have sat down and hashed this costing deal out before the plane was purchased....

The real good news is , if both of you can move forward without bad vibes between you then this partnership will probabaly work out good. IMHO.

 

[Mafoo]

And on a side note, you don't know how much you will fly either, only how much you think you will fly based on your somewhat optimistic estimates (IMO) prior to purchasing the plane. If you read the flight logs on most planes, the new guys fly more than the old guys. Then the new guys become the old guys and they don't fly as much and the newer guys fly more.

Yea. The only difference in my case, is the only real reason I am learning to fly, is the same reason I learned to drive. I want to go places.

It's a means to an end. And end my wife and I do almost every weekend (go some place).

If I was flying for the joy of flight, I can see how the newness would wear off over time. The only thing that will reduce my hours, is economic.

Anyway, don't really want to derail the thread. So I will shut up now

 

[EppyGA]

I am in an unequal partnership, we have 5 owners, each contributed what they could afford to purchase the aircraft. we have a 45% owner, two 20% owners, and a 15% owner. We charge an hourly rate for the airplane that estimates our annual expenses, usually we are a bit short at the end of the year. We then each pitch in our share of the shortage to make up the difference.

I have to admit I think your partner has a bit of a point.
if you divide the $7500 by the 140 hours you have flown the annual has cost about $53/hour. If you had been paying normal rental rates for the plane you would have paid almost enough to pay for the annual at a $60/hr Dry rate. Your partner on the other had would have to pay almost $750/hr dry to pay for the annual. If you just split it 50/50 your partner is essentially subsidizing your flying.
I do think you should have planned for about a $2400 per year annual and should split that amount 50/50. Anything above that should be split based on hours of usage. This lowers the hourly cost to about $36/hr. Then you should agree on an amount per hour to set aside for future maintenance, that is essentially what I am recommending doing but your doing after you have flown the hours and know what the actual costs are.

Hopefully that isn't too convoluted thinking but maybe it will give you some ideas on how to approach it.

Brian

Should the other partner thus not expect to be able to fly the airplane at any time he so chooses? If he's only willing to pay xx% of the costs, this time, then he should only expect the plane to be available for his/her use xx% of the time. Not trying to be difficult, just another way to look at it.

 

[EppyGA]

At this point I would ask him what he wants for his piece and go find a new partner and be ready with a good partnership document for the new partner.

 

[Mafoo]

Should the other partner thus not expect to be able to fly the airplane at any time he so chooses? If he's only willing to pay xx% of the costs, this time, then he should only expect the plane to be available for his/her use xx% of the time. Not trying to be difficult, just another way to look at it.

No.

His point, and a very valid one, is if they had set the share up from the start at $1200 each annually, and $36 an hour dry for the maintenance fund, they wouldn't be talking about anything. They would have just diped into the fund and been done with it.

Good logic. However $36 an hour is high. It should be closer to whatever the cost to fly is (~$20), and then if they come up short, pay the difference 50/50. This is what I would do if I was in Jims case.

Figure out what the maintenance should be. Let's say $20 an hour to fly.
Figure out what the anual expense should be. I think this is low, but let's go with $1,500.

Set that up going forward as the agreement (with whatever accurate numbers would be), and then go back and see where they would be today, if that was the agreement at the beginning.

So he flew 10 hours. With the above number, he throws in his $1500 and his $200 for flying. Jim throws in his $1500 and his $2600 for flying.

That puts $5800 in the fund. The expense was $7200, so they are $1400 short (or $700 each).

So with the above numbers, Jim would pay $4800 of the cost, and his partner would pay $2400.

That's what I would do anyway.

 

[wabower]

The questions I posed earlier are those that I think you and your partner must address, and are obviously more difficult when staring down the barrel of a $7.5k annual. Looking back isn't as much fun as looking forward, but some retrospection may help you better understand/define the present problem.

Unless you took the plane out of town for extended periods or otherwise limited availability, he should have been able to use it as much as you did. The fact that he chose not to do so shouldn't increase your burden for flying it as originally intended. Nor did your use of the plane cause the myriad of problems that required repair.

As somebody else mentioned, almost all of the costs for this work were to repair stuff that should have been caught on the pre-buy and are therefore acquisition costs (albeit deferred) rather than normal year-to-year own/op costs.

If he gripes, just remind him that he saved a bunch of money by not paying for gas for all the flying he didn't do.

I have asked him this, why does he want it. He wants to start working towards his ppl at some point. We both started our ppl training together when we bought it. He stopped and has not restarted.

Sounds like you may work on agreements like this for a living. Would you have a reasonable solution for us? Or should I just hold him to the original agreement?

 

[yachtjim]

So moving forward we obviously need to figure out a plan. I like your idea of a minimum amount of hours. Let's use 50. Sounds like a reasonable amount. Between us that would be 100 minimum hours/yr. The total expense of a typical annual should be $2,000 or less, and hopefully we'll see some of those moving forward, especially doing it as owner assist. So if we each put in $20 per hour then this would cover the $2000 every year. This year I would have put in $2600 and him $1000 in this scenario.

This should cover all the maintenance for the year in a typical year. I think this is a great way to do it. All other expenses (insurance, tie down, detailing) should be split down the middle.

But this doesn't solve the problem of the $7500 bill be have. Like Wayne pointed out, this bill is not the result of me flying the plane. It is the result of bad advice and questionable tactics among the original service facility. Not my fault. My partner was in full agreement to use them. Just because he decided not to fly does not mean I am left holding the bag with our collective bad decision.

If we apply the hourly rate above to what has happened in the past year then I will basically need to put $800 more towards this annual, and he puts $800 less. This would be the result of applying our hourly usage reserve to the annual expense, then splitting the rest 50/50. I can live with this.

 

[Jaybird180]

As somebody else mentioned, almost all of the costs for this work were to repair stuff that should have been caught on the pre-buy and are therefore acquisition costs (albeit deferred) rather than normal year-to-year own/op costs.

I like this idea. Not sure the silent partner would agree and I think that's the rub.

 

[Kevin H.]

Honestly if there was a 50/50 split agreement between maintenance excluding variable costs like oil, tires, breaks.... Then your partner should pony up the 50% of the $7500.

Just because he stopped his PPL training and hasn't flown but 10 hours is no excuse to back out on what he owes. That's his fault Jim, not yours. You shouldn't be punished on this one because of his desire to not continue training. And that's exactly what I would explain to my partner if I was in your situation.

Sadly, in all actuality, this time around you may find yourself having to pay 92% of the cost of this annual leaving him with his 8% if he isn't willing to work anything out. After that I would seriously sit down and write out a detailed cost analysis with your partner on how much extra money per hour, is going to be placed toward overhauls or the cost of an engine and what not.

Let's say your annual costs $2000 a year. wicked high for a SEL if you ask me. About $1250 too much for the service you get with Savvy. Split 50/50 is $1000 over 12 months that's $83.33 a month that gets put away. I would almost double it myself to $150 to make sure not only is my part of the annual covered but also any pop up repairs that you'll be responsible for covering. Like you saw in this last annual.

This is where first-time buyers can really find themselves in quick-sand very very fast. A $30,000 loan over 15 years at 4.9% is 236 a month. If you're lucky to find a bank willing to fund you for such a low amount. That's probably cheaper than just about everyone's car payment on here. I know it's cheaper than mine by almost $100. Sounds like a sweet deal right? Not even close. After you add up annual cost, insurance, tie down fees, hangar fees, maintenance fees, an added pool for overhaul cost or engine replacement you're looking at more like $500 a month, when in actuality for a single owner that number is probably higher, all just to even say you own a plane. Well let's say you didn't do all that stuff and all you budgeted for was loan, insurance and annual. When that surprise $7500 annual comes or that wonderful TBO or TOH or POH, what happens? You've got a plane that isn't leaving the ground and probably isn't leaving the market unless you price it according which more than likely means short sale or repo depending on what you do.

We can bark orders all day long Jim, the decision is between you and your partner. Like I said if he agreed to the 50/50 split in the beginning don't let him leave you as the last one standing in a room full of dead popes. See that he pays his share. If he doesn't budge you might have to bite the bullet on this one and really sit down and work out an annual budget with him that makes sure a certain amount of money per month or per hour goes into a pool to cover all the known yearly costs.

 

[wabower]

I've concluded that "a fair deal" can be defined in numerous ways. Two of the most common are:

1. You cut the pie and I choose which slice I want.

2. You cut the pie and choose which slice I get. When I ***** you try to convince me that my piece was as big as yours, and that your piece just looked bigger because of the way the light was shining on it.

In this case, I'd simply reverse the deal and ask him how he would have proposed to split the costs if the flying hours were in his favor. I'd remind him of the nature of the expenditures and ask if he felt that they were due to his flying or some other reason.

I like this idea. Not sure the silent partner would agree and I think that's the rub.

 

[yachtjim]

Hi Guys, thanks for your help. We've both read this thread and made progress. We are going to roll back the clock and handle it as if there is a minimum charge of 50 hours per year, and the hourly charge for the plane is $20 to go toward mx and the annual. We are going to handle it like this moving forward too.

We are going to split evenly the fixed costs like tie down, insurance and detailing.

I think we have scheduling nailed down. Obviously it has not been an issue yet, but in case it ever is we have a plan in place. We have a scheduling system too on sharezen.com, but since he never uses the plane I never use the scheduling system.

Just need to work out an exit plan should a partner want to get out.

I will be so happy to get past this annual, and much better for it.

 

[Mike5250]

Pretty good partner after all if you were able to work that out. Its a good thread for other people to refer to before they get into a partnership!

A flying club I learned about in our area charges $350 +/- a month for fixed costs and it includes 2 hours flying time, which rolls over.

I figured the spark plugs were more expensive than for your car but just never imagined throwing in a used part when a lot of what you're paying for is diagnostics/labor...

 

[wabower]

If you're looking for the reason that most JOA's never get finished, the exit scenario is high on the list. So many possibilities so far away (in the minds of the co-owners) that they simply bog down and are never executed. Do what you can and execute the agreement. If you find more answers later it can always be amended, but having a finished product can be a huge advantage.

Hi Guys, thanks for your help. We've both read this thread and made progress. We are going to roll back the clock and handle it as if there is a minimum charge of 50 hours per year, and the hourly charge for the plane is $20 to go toward mx and the annual. We are going to handle it like this moving forward too.

We are going to split evenly the fixed costs like tie down, insurance and detailing.

I think we have scheduling nailed down. Obviously it has not been an issue yet, but in case it ever is we have a plan in place. We have a scheduling system too on sharezen.com, but since he never uses the plane I never use the scheduling system.

Just need to work out an exit plan should a partner want to get out.

I will be so happy to get past this annual, and much better for it.

 

[Jhernandez04]

Hi Guys, thanks for your help. We've both read this thread and made progress. We are going to roll back the clock and handle it as if there is a minimum charge of 50 hours per year, and the hourly charge for the plane is $20 to go toward mx and the annual. We are going to handle it like this moving forward too.

We are going to split evenly the fixed costs like tie down, insurance and detailing.

I think we have scheduling nailed down. Obviously it has not been an issue yet, but in case it ever is we have a plan in place. We have a scheduling system too on sharezen.com, but since he never uses the plane I never use the scheduling system.

Just need to work out an exit plan should a partner want to get out.

I will be so happy to get past this annual, and much better for it.

Glad to hear it!

 

[yachtjim]

As for an exit plan we decided to keep the surplus mx money with the plane up to $15K. Once it hits $15K (if ever) we'll distribute the excess annually.

If one partner wants to relocate the plane, if they move for example, then I came up with something simple for this. You have to be willing to sell the plane for whatever you offer to the other partner. So if I want to move, I can take the plane, but I'll have to buy the other half. I can say to my partner, I"ll buy it for $25K. He can either sell to me for that or he can force my hand to sell to him for that. Or he can say no altogether or renegotiate a higher price. If no agreement is met the plane will stay.

As for buyouts those can happen anytime at market value to each other or a new partner.

 

[Mafoo]

Glad to hear it worked out for the both of you.

 

[Mafoo]

As for an exit plan we decided to keep the surplus mx money with the plane up to $15K. Once it hits $15K (if ever) we'll distribute the excess annually.

I don't know what kind of plane you have, but stoping at 15K seems low. At some point, your engine is going to be run out, and it will most likely cost you more then 15K.

 

[Jaybird180]

Glad to hear it worked out for the both of you.

Same here.

 

[yachtjim]

I have one of these 1964 Cherokee 180B

Quick google search shows the IO360 at about $17K. So we'll up that some.

 

[dell30rb]

If we apply the hourly rate above to what has happened in the past year then I will basically need to put $800 more towards this annual, and he puts $800 less. This would be the result of applying our hourly usage reserve to the annual expense, then splitting the rest 50/50. I can live with this.

I think you have it worked out. That sounds fair to me.

 

[Jaybird180]

I have one of these 1964 Cherokee 180B

Quick google search shows the IO360 at about $17K. So we'll up that some.

dont think that figure oncludes accessories, which according to PoA research should also be overhauled or replaced. figure 22k

 

[Mafoo]

I have one of these 1964 Cherokee 180B

Quick google search shows the IO360 at about $17K. So we'll up that some.

Cool.

Some shares will never take the funds out, and use it for long term items. Like paint the plane every 12 years, or replace upholstery every 10.

 

[yachtjim]

In the next 5 years if we put 1000 hours on it that would be $20K into the cookie jar based on our $20/hr put-in. But we'll also have $10,000 in expenses for annuals coming out as well. So we'll probably never get near the $15K. But I'll suggest we remove the redistribution.

 

[brcase]

In my last partnership we did the following:

- Fixed expenses split 50/50: Hangar, insurance, annual inspection fee (approx. $1,000)
- Hourly maintenance charge for each hour flown (about $40 / hr. today)
- Each paid for own fuel...left it full after each flight.
- Routine maintenance paid out of maintenance fund. Any shortfalls resulted in 50/50 capital call for the reserve fund.
- Upgrades split 50/50

Sit down with your partner and establish what's a fair hourly rate going forward. Kick in that amount for your hours, he kicks in the same for his, and you split the remainder 50/50 and move on.

Best answer I have seen in my opinion, probably mirrors what I was trying to say in my post, but stated better.

Brian

 

[denverpilot]

Any own/op cost sharing should assume some minimum amount of usage by each owner, otherwise there's no reason to buy a plane. In your case, the obvious question for your partner is "would you have bought half the plane if you knew you would only fly 10 hours?" For the analyses I prepare for clients, the default minimum is 50 hours/yr.

Another thought for co-owners is, "Would you want another co-owner just barely flying enough to be legal, and how much risk is involved in them not flying often? How much more likely are they to break the aircraft when they do?"

Starts to get into having to know how risk-averse they are and whether they realize their own limitations when flying that little.

 

[ChrisK]

I love your compromise. I think that deciding what your contract is going forward and applying it retroactively is an excellent way to do things, and I applaud you both being able to read this thread without getting too horribly upset.

I'm sorry about my comment that you should have worked it out ahead of time. Talk about stating the obvious... I think you did good though!

 

[Henning]

Lets leave the "would of's" and "could of's" out of it please. We were both buddy's, first time plane buyers, both in our training. So we jumped quickly at the prospect of this plane without hashing out the details formally. So here were are. I am just looking for opinions on which approach is more appropriate to split the annual. Thanks!

His method is the one I would use since it should have been bought priced for wear and tear on the components., although I would subtract the basic Annual from the repairs and split that in half with the repairs coming from the hourly fund that you both paid on the hours you flew. If you went beyond the fund, split the remainder.

 

[skyflea]

Sell the partnership. This will never work.

+1

half and half only works on your on cup of coffee

 

[ja_user]

In the next 5 years if we put 1000 hours on it that would be $20K into the cookie jar based on our $20/hr put-in. But we'll also have $10,000 in expenses for annuals coming out as well. So we'll probably never get near the $15K. But I'll suggest we remove the redistribution.

Make sure you address how/when you decide upgrades are done, and how they are paid for...

With only two people, it is easy for the guy flying to say "We need this", and the non-flying guy to say "We don't need that"... Especially if the thought is upgrades are split 50/50 (which they should be, since they increase the value of the plane)...