Trusts / Airplane Purchase

Felix:

First off, why a trust?
 
vontresc said:
Resident Aliens cannot own an N-number plane.
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Resident aliens (with a 'green-card') can, nonresident aliens ( with a temporary visa such as H1, O1 etc.) cannot.
 
Felix:

I am interested in what "benefits" you hope to derive from holding an aircraft in a trust or, for that matter, in an LLC. Many people (and I am not accusing you of this) presume that, if the aircraft is owned in a corporate form (Inc., LLC, LP, whatever), that they are protected from liability; but, in a typical owner-flown aircraft context, this just isn't so.

You should talk with a tax professional (and not someone whose living is made by creating such constructs), and ask him/her about possible tax advantages for aircraft ownership. Then decide what you want to do.
 
weilke said:
Resident aliens (with a 'green-card') can, nonresident aliens ( with a temporary visa such as H1, O1 etc.) cannot.
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Non-residents can with a corporation, but they need to file paperwork about use of the plane outside the US every 6 months.
 
SCCutler said:
Felix:

I am interested in what "benefits" you hope to derive from holding an aircraft in a trust or, for that matter, in an LLC. Many people (and I am not accusing you of this) presume that, if the aircraft is owned in a corporate form (Inc., LLC, LP, whatever), that they are protected from liability; but, in a typical owner-flown aircraft context, this just isn't so.

You should talk with a tax professional (and not someone whose living is made by creating such constructs), and ask him/her about possible tax advantages for aircraft ownership. Then decide what you want to do.
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Trusts are a great way to hold an asset.

1. It can hide the ownership of the asset - reducing frivolous claims and lawsuits and making someone less of a target. It makes ownership as anonymous as you want.

2. Transfer of the asset becomes trivial. All one has to do is change the name(s) of the beneficiaries of the trust and likely the the trustee(s ).

3. It helps deal with transitions and empowers people to actually manage the asset in the case where the beneficiary(s) dies. Instead of being held up in probate or other nonsense the asset can be cared for properly, used or disposed of as one wishes. Whereas in the case of being held privately one would not legally (in some cases) be able to do those things without a lot of undue delay and interference.

Those are just some things that I have heard...
 
Since the early '90's the primary emphasis of my consulting business has evolved into buyer representation for aircraft (primarily turbo-props and jets) for all types of owners, and working in conjunction with many of the leading aviation law firms in the country. Of several hundred transactions, only one has been registered as a trust, for a group of Mexican nationals that wanted to retain the N-number registry for resale purposes.

Whatever the alleged benefits are, they evidently haven't been discovered and/or endorsed by the big boys in the airplane game. Many prospective owners have expressed interest in using a trust for some of the of the reasons stated on this thread (and others) but after investigating the +/- issues more carefully, they change their mind. YMMV.
 
The reason I asked the question is, there are a great many myths floating around about holding aircraft in various constructs, and few of them have any beneficial effect, other than making money for the purveyors of the "services." Among these, one frequently hears of incorporating in Delaware or Nevada.... almost always, useless as tits on a boar hog, just the opportunity to (1) file an extra set of annual tax and reporting documents; (2) pay fees and costs to another state; and (3) explain to your home jurisdiction that, notwithstanding the corporate ownership in another state, your aircraft is not, in fact, a business asset and should not be subject to the local business property tax.

As for "hiding" the participants, that survives about five minutes in a litigation context.l
 
SCCutler said:
The reason I asked the question is, there are a great many myths floating around about holding aircraft in various constructs, and few of them have any beneficial effect, other than making money for the purveyors of the "services." Among these, one frequently hears of incorporating in Delaware or Nevada.... almost always, useless as tits on a boar hog, just the opportunity to (1) file an extra set of annual tax and reporting documents; (2) pay fees and costs to another state; and (3) explain to your home jurisdiction that, notwithstanding the corporate ownership in another state, your aircraft is not, in fact, a business asset and should not be subject to the local business property tax.

As for "hiding" the participants, that survives about five minutes in a litigation context.l
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+1. Just to add a "4)," don't forget paying the lawyer to draw it all up for you. ;) :)

9.9 times out of 10, if you are flying the plane, the better option is to just make sure you have a good insurance policy from a reputable company.

That's not to say there aren't times where a corporate entity isn't appropriate. Just that they're usually a PITA and not really useful, particularly as a liability shield, if you yourself are the one who crashes the plane.
 
wabower said:
Whatever the alleged benefits are, they evidently haven't been discovered and/or endorsed by the big boys in the airplane game. Many prospective owners have expressed interest in using a trust for some of the of the reasons stated on this thread (and others) but after investigating the +/- issues more carefully, they change their mind. YMMV.
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Yet, quite often if I look up the tail number on some nice bizjet that comes through to clear customs, they seem to be owned by the same guy : Wells Fargo NA SLC trustee. I figured he just has an exquisite taste in aircraft with the different BBJs and G5s he seems to own :wink2:
 
weilke said:
Yet, quite often if I look up the tail number on some nice bizjet that comes through to clear customs, they seem to be owned by the same guy : Wells Fargo NA SLC trustee. I figured he just has an exquisite taste in aircraft with the different BBJs and G5s he seems to own :wink2:
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Nah, Wells Fargo is just one of those nasty banks we bailed out and now they are using that money to buy bizjets. :rofl:
 
Obi Heed Kenobi said:
+1. Just to add a "4)," don't forget paying the lawyer to draw it all up for you. ;) :)

9.9 times out of 10, if you are flying the plane, the better option is to just make sure you have a good insurance policy from a reputable company.

That's not to say there aren't times where a corporate entity isn't appropriate. Just that they're usually a PITA and not really useful, particularly as a liability shield, if you yourself are the one who crashes the plane.
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I agree with you that if you're flying the plane, no corporate or other organizational entity will help you in any way.

However, if you ever anticipate letting anyone else fly (buddy, co-worker pilot who just needs to do a quick trip...), then anything from an LLC on up will provide tremendous protection in the event the smelly-stuff hits the fan.
 
JeffDG said:
However, if you ever anticipate letting anyone else fly (buddy, co-worker pilot who just needs to do a quick trip...), then anything from an LLC on up will provide tremendous protection in the event the smelly-stuff hits the fan.
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Until the assailant can show that your shoddy maintenance practices, e.g. letting the prop go past the manufacturers TBO or leaving some hoses past the recommended interval could have potentially maybe = certainly caused the plane to plunge from the sky.
 
JeffDG said:
I agree with you that if you're flying the plane, no corporate or other organizational entity will help you in any way.

However, if you ever anticipate letting anyone else fly (buddy, co-worker pilot who just needs to do a quick trip...), then anything from an LLC on up will provide tremendous protection in the event the smelly-stuff hits the fan.
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Absolutely. If you co-own something, a corporate entity is a tremendous advantage.
 
JeffDG said:
I'm not talking about co-owning...I'm talking about the 100% owner letting his buddy take the plane out for a $100 burger run.
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That, too. Although I could make a case for "negligent entrustment."

Never sell short my ability to pull BS out of thin air. The class in that is called "Torts I." :)
 
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