TSA to be informed on every flight ?
Join Date: May 2001
Location: UK
Posts: 4,631
Likes: 0
Received 0 Likes
on
0 Posts
That's a tautology
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.
Join Date: Jan 2006
Location: Florida
Posts: 123
Likes: 0
Received 0 Likes
on
0 Posts
My wife is nervous about this . . .
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
"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
Join Date: Jun 2003
Location: EuroGA.org
Posts: 13,787
Likes: 0
Received 0 Likes
on
0 Posts
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.
- 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.
Join Date: Jan 2004
Location: London
Age: 52
Posts: 585
Likes: 0
Received 0 Likes
on
0 Posts
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.
Many of these aircraft are worth 10's of millions of $. I can't see that this situation would exist if it was risky.
Join Date: Sep 2002
Location: Savannah GA & Portsmouth UK
Posts: 1,784
Likes: 0
Received 0 Likes
on
0 Posts
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.
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.
Join Date: Jun 2003
Location: EuroGA.org
Posts: 13,787
Likes: 0
Received 0 Likes
on
0 Posts
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.
- 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.
Join Date: Mar 2003
Location: Livin de island life
Posts: 479
Likes: 0
Received 0 Likes
on
0 Posts
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.
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.
Join Date: May 2001
Location: UK
Posts: 4,631
Likes: 0
Received 0 Likes
on
0 Posts
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.
