TSA to be informed on every flight ?

[Pace]

Had an odd one from a friend today does anyone have any details?

I was told that every flight made by an N reg aircraft will require the TSA to be informed of such a flight?

I am sure this cannot on face value be correct?

Pace

[julian_storey]

60% of all aircraft in the world are on the 'N' reg.

Trying to keep track of every movement made by 60% of the world's aircraft would be a virtually impossible feat.

[Keygrip]

Pace, "friend" may have misconstrued the TSA threat that every aircraft fitted for six pax or more (I think) will have to submit passenger manifests, crew criminal background/security checks etc before every flight.

Not sure if it's six pax, or six seats - would need to look again. AOPA USA onto it in a big way.

Could be that a Seneca would require passenger manifests and security cards etc. for every flight, yes.

[BackPacker]

What's next? Sky marshals on every flight?

Disguised of course so you don't recognize them in your PA-28...

And of course, the sky marshal will get its own definition, not being a passenger, so that they can legally accompany PPL students on solo flights.

[IO540]

There is a proposal kicking about for notification above 12500lb (5700kg). This is being resisted because it catches a lot of stuff like King Airs.

Presumably it would apply to USA only. It would be totally mad to do it worldwide.

There are big concerns (see the US AOPA newsletters, etc) that if the 12500+ regime did come in, it could get extended to all the stuff below too. That would be a real problem.

It's all a bit meaningless since I am sure that anything 12500+ will be filing a flight plan anyway, and all the agencies see those real-time anyway (as they do in the UK). I suppose such a notification would be just another website to hit, but collecting the required passenger details for a domestic flight would be pretty intrusive.

The GAR form is a big enough hassle sometimes, collecting passport numbers etc.

[Pace]

10540

I think there are also proposals for every flight to be through a security checkpoint and huge restrctions on what you can carry on your own private aircraft incase you want to blow yourself up or slit your own throat :)

The 12500 ib figure would not effect some jets like the CJ1 but would effect my old 2s that I fly.

Pace

[BroomstickPilot]

Pace,

I don't know whether this is relevant to your question.

Back in 2001, I was considering my return to private flying after a break of many years.

At that time, I was considering doing the FAA PPL (instead of renewing my UK PPL) and then coming back to the UK and buying into an 'N Reg' group.

I mentioned this idea to an instructor at one of the clubs. This person told me that if I owned a US registered aircraft in the UK, I would only be permitted to fly it for six months in any year. This was plainly a lie.

Later, I learned that many UK flying instructors resent people going abroard for their training and resent people owning US registered aircraft in the UK. These people will tell you any old rubbish just to put you off.

Broomstick.

[IO540]

I mentioned this idea to an instructor at one of the clubs. This person told me that if I owned a US registered aircraft in the UK, I would only be permitted to fly it for six months in any year. This was plainly a lie.

Later, I learned that many UK flying instructors resent people going abroard for their training and resent people owning US registered aircraft in the UK. These people will tell you any old rubbish just to put you off.

Welcome to UK GA, BP :)

The one thing which never changes is the amount of disinformation and where it comes from.

Unfortunately many people "in the business" haven't got a clue so they probably actually believe it themselves, because they heard it in the pub.

[fernytickles]

It is an utterly crazy and poorly thought proposal by the TSA -

TSA: TSA Proposes Large Aircraft Security Program (http://www.tsa.gov/press/releases/2008/1009.shtm)

To give you an example, everyone carried on an aircraft with MTOW of 12,500lbs or more must go through a full background check and the TSA must be notified. This is the same, regardless of whether you are carrying the same old folk on the same old routes for a Part 91 operator, or if you are NetJets or if you are any of the B17 operators who sell rides in their aircraft.

Imagine if the TSA gets their way, what next? The UK version of the TSA has a brainwave, decides thats a jolly good idea, and they should follow suite? The hassle the passengers and crew face daily with liquids & gels & nail clippers & removing shoes will be nothing in comparison to this. A line must be drawn between what is sensible necessity and ill-thought out overkill.

NBAA, AOPA & EAA are all fighting this daft plan, and everyone is encouraged to go online to voice their protest against it. This is just one example...

AOPA Online: TSA Large Aircraft Security Program Member Action Center (http://www.aopa.org/advocacy/gasecurity/)

[Keygrip]

I would only be permitted to fly it for six months in any year. This was plainly a lie.

Broom/IO...to be fair it's not neccessarily a "lie".

I do know that when I got my first (I had two) FAA PPL "issued on the basis of" (From Colgne/Koln FSDO), the FAA inspector asked me, conversationally, "Why do you want this licence?".

"Because I can, it was a fun cross country from Manchester to get it, and I'd like to be able to fly N registered aircraft if I find one.", says I.

"Oh", says inspector, "I don't know where you would be able to find one, because any N registered aircraft, in order to remain on the US register, must spend a minimum of six months from every year in Federal airspace - unless it's an international carrier on a scheduled route".

I used to argue the six months ruling, too, until folks found the "get around" of having the aircraft owned by a "US Trust".

Nowadays, it's so commonplace for folks to have N registered aircraft that it's probably too late to do anything about it, so nobody really cares any more - despite the eforts of Customs & Excise and the DoT.

[IO540]

I think that inspector was wrong anyway. The 6 month rule applies to a specific scenario (something to do with U.S. corporate ownership; I am sure somebody will come up with the details) and does not apply to normal private ownership.

If the ownership passes away from a U.S. one, the aircraft CofA is void there and then - no 6 month rule. The U.S. trust does not solve this.

[Mike Cross]

Errrr..... What's a US Trust then if it's not a body corporate incorporated in the USA? If a US Trust owns the aircraft then it's US owned.

This (http://www.agcorp.com/far47.cfm) explains the situation fairly well.

[IO540]

You don't need a US trust.

The plane mere needs to be continuously owned by a US citizen(s) or by a US corporation.

In the case of the corporation there is a minimum figure on the % shareholding which needs to be by US citizens.

A trust is merely a device whereby the owner owns it on trust for the actual operator, and there is a document signed. You do the same if owned by a corporation.

But you don't need a formal trust document at all. If for example I had a son who was a US citizen, he could own my (N-reg) plane and I just happen to be flying it.

Thank you for that link Mike. It suggests that you can own (non US) an N-reg plane, outside the USA, for up to 6 months. This is complete news to me!!

[Fuji Abound]

What's a US Trust then if it's not a body corporate incorporated

A body corporate implies a legal structure owned by its shareholders or, as the Yanks prefer, its stockholders. We have managed to invent bodies that are incorporated but not owned by share or stock holders but we don’t refer to these as corporations. For example in the UK LLPs.

A trust on the other hand is not a body corporate in the normal sense and nor is it incorporated in the normal sense. There is no public central register of trusts in the UK or for that matter in the States. We are familiar with trusts used extensively for estate planning and it is no different State side with Credit Shelter Trusts. Inevitably trusts in their various incarnations provide a useful tool for sheltering assets without necessarily incurring some of the disadvantages of a corporation - hence their wide spread use.

Different animals for different purposes.

[Mike Cross]

The difference Shirley is that with a trust the Trust has legal title to the goods but the trust benificiaries have beneficial ownership, i.e. they have the right to use the asset but do not legallyown it.

If the a/c is owned by a US corporation that complies with the rules then the beneficial owner is not legally protected. Fine if you have a relationship of trust between yourself and the person who controls the US corporation, but if you don't have a relative or someone else you are willing to entrust with ownership of your asset who is a US citizen then a Trust is the vehicle to obtain the use of the asset and reduce the risk.

Trusts cost money to set up and run, they wouldn't exist if there was no need for them.

[Fuji Abound]

Mike

Trusts and trust law is complex. Not only are there trust lawyers and accountants, but trust lawyers and accountants who only deal with a particular element of trust law.

Inevitably any summation of trust legislation is bound to be an over simplification. Trusts may be assets settled by one individual for the benefit of others, without the effective passage of title, but equally the settlor might be a beneficiary, and the asset may or may not be irrevocably settled on persons other than the settlor, so in turn the beneficiaries or the settlor may retain all the benefits of owning the asset(s). Notwithstanding the settlor or the beneficiaries may be able to dissolve the trust at their whim and so enjoy the asset(s) which were only in trust for the time it suited them.

It is in consequence very easy to confuse ownership, control and similar terms. For example, in so far as the FAA is concerned they require that if an aircraft is owned by a corporation 75% of the voting rights are owned by US citizens. In theory the US citizen(s)’ exercise control over the asset, in the same way as the trustees in a trust with reservation of title. However, in both cases, the actual owners of the aircraft are quite entitled to “file” a charge over the asset and exercise a quick claim should the need arise. In consequence ownership and control maybe mere illusions.

I think trusts may therefore be used in this regard for rather different reasons and offer other advantages over corporations than title protection.

Everything costs money to set up and run if you do not have the skill to do it yourself. Costs fall between two stools – those that have to be paid to the authorities for the privilege (taxes, filing fees, etc) and those paid to the “professionals” providing the service. If money is an issue this might be an issue in the choice of the “best” vehicle. Inevitably the more you have, the less relevant either becomes, and the greater your options!

[englishal]

But you don't need a formal trust document at all. If for example I had a son who was a US citizen, he could own my (N-reg) plane and I just happen to be flying it.
My wife will own it for you if you like ;):)

[IO540]

Might take you up on that, Englishal :ok:

AIUI the only real difference between using a corporation (typically a Delaware one) and using a US citizen (as I do; this particular chap owns about 200 planes now) is that in theory the individual US citizen could run off with the plane since he owns it completely, whereas the corporate route gives the real owner 25% control so he can block certain drastic actions.

I haven't looked at my trust agreement lately but it contains a clause preventing the trustee from preventing me from enjoying the asset, so in reality he can't simply run off with it.

[Fuji Abound]

is that in theory the individual US citizen could run off with the plane


Not with a charge.

[Mike Cross]

Trusts and trust law is complex.
Agreed, I'm about to set one up and settle some cash in it.

the actual owners of the aircraft are quite entitled to “file” a charge over the asset

That's a tautology:-

I refer m'learned friend to FAR 47.5 (http://rgl.faa.gov/Regulatory_and_Guidance_Library/rgFAR.nsf/0/E2ADE39320280912862574E3006DF8B3?OpenDocument)

(b) An aircraft may be registered only by and in the legal name of its owner.

ergo, if the registration is valid "the actual owners of the aircraft " are the US entity, not you.

[Fuji Abound]

That's a tautology


It is, but you know what I meant.

I guess you will be well aware of who possesses the financed aircraft when the owner goes bust, rather like a house with 100% mortgage, your name might well be on the title deeds, but it might just as well not.


Agreed, I'm about to set one up and settle some cash in it.


Oh, good.

[EchoMike]

And she's nervous because she is a lawyer.

"AIUI the only real difference between using a corporation (typically a Delaware one) and using a US citizen (as I do; this particular chap owns about 200 planes now) is that in theory the individual etc."

So here's a guy who "owns" 200+ aircraft. Well OK, they're really all someone elses, and he's only the straw man.

Pilot of airplane #34 gets drunk/stoned/goes nuts and crashes his airplane into a hospital/nunnery/school/shopping mall, does a bazillion dollars in damage, luckily no one is killed.

Lawyers immediately do an asset search and determine that #34 doesn't actually own the airplane, the straw man does. And this same guy owns TWO HUNDRED other airplanes, the SOB is RICH, lets sue his *** off!!!! Pilot #34 is broke, but straw man isn't, away we go with the doctrine of deep pockets!

Straw man loses the case for whatever reason, all his assets are seized to pay for damages, and his assets include 200 airplanes which he LEGALLY OWNS . . . including yours!

You might want to look at the documentation and have a US attorney look at it as well. Your airplane which is in his name may very well be at risk because of the actions of someone else whose airplane is also in his name.

The reason I know this is that I thought seriously about setting up the exact same deal (US ownership of overseas based aircraft) and no attorney I spoke with (including my wife) was able to say there would be no problems for the rest of the "fleet" in case of a problem with one airplane. It is simply too risky.

We also explored doing an LLC for each airplane, but discovered that any good attorney can pierce the corporate veil in a heartbeat.

If you can find a good, legal, and bulletproof way of doing this, I'd be very interested in it - I'd love to be in this business, "hosting" airplanes, providing parts as needed, etc.

Best Regards,

Echo Mike

[IO540]

The short answer, I think, is that

- the man is insured (hopefully) and

- the asset value of all the other planes he owns will be severely limited by the contract which he signed which prevents him just grabbing them back. His Trustee in Bankrupcy has no power to override that contract.

There are some other details which would come into play if this happened.

In practice, this kind of thing has not yet caused a problem, anywhere in the world, and N-reg trust ownership is dead common.

You can worry but there is always something one can worry about - this is why schools don't do adventure outings for the kids, and we have to wear yellow jackets for a 20 yard walk from the plane.

And my neighbour has a keylock on the heavy electrically operated cover on his swimming pool in case his neighbour's 8 year old kid decided to climb over a 6ft fence, managed to lift the heavy slatted cover, climbed under it and drowned himself despite all the odds ;) He got legal advice on this and as you might expect no lawyer would confirm he is safe from litigation no matter what he does.

[julian_storey]

I'm no trust expert, but I do know that there are lots of very expensive 'N' reg. corporate aircraft in the UK which are 'owned' indirectly by UK entities (either companies and very switched on individuals).

Many of these aircraft are worth 10's of millions of $. I can't see that this situation would exist if it was risky.

[Mike Cross]

The point Shirley is that:-

A Trust has legal ownership of the asset, which it holds in trust for the beneficial owner. The beneficial owner has legal entitlement to the use of the asset and the trustee cannot wriggle out of that. A creditor of the trustee cannot readily seize the asset because it is held in trust.

Ownership by a US corporation puts the asset more at risk because a creditor of the corporation could sieze the asset. Not hard to imagine a situation where someone is in trouble with the IRS, who discovers that he owns a company that in turns has unencumbered title to a nice aeroplane that can be sold to defray the debt.

[IO540]

I have never done this myself, but the agents who arrange the more expensive corporate-structure trusts always say that the corporate route is "better" for higher value assets, presumably because

- the pilot does own a bit of the plane (25%) and can block certain corporate votes; in the UK I vaguely recall that a 25%+ shareholder can block a Special Resolution e.g. a winding up of the company

- the other shareholders (75% and normally several people) are not going to die all at the same time

I did some due diligence on this at the time and an old hand in the a/c insurance trade told me there has never been a problem with trusts but there could be if the trustee died. In that case you can continue flying etc but you might have problems (or face a delay) selling the plane. This seems to be the only risk.

[flyingfemme]

did some due diligence on this at the time and an old hand in the a/c insurance trade told me there has never been a problem with trusts but there could be if the trustee died. In that case you can continue flying etc but you might have problems (or face a delay) selling the plane. This seems to be the only risk.

The trustee does not have to be the only person who can sign documents on behalf of the trust.............if you can sign "your own" documents then you can execute a Bill of Sale.

There have been problems with individuals owning N reg aircraft "on behalf" where fallings out have led to documents being filed that were not mutually agreed..........

If you value your asset then a reputable trust is the only way.

[Fuji Abound]

I have said it before, but if you have provided the funds to purchase an aircraft on the N reg whether or not you vest the aircraft in a trust or a corporation or a trust corporation take a legal charge over the asset. It saves issues over just about all the questions and problems you invent and it is not complicated. You are jsut as much entitled to take a charge as any finance house - do not neglect this option because you are funding the purchase from your own back pocket.