Question for those who own or operate a 91 plane.

In the almost three years I've owned my Saratoga, I've had it registered in my name. More and more I've been hearing from other owners that's a bad idea and to reregister it to a corporation. My fiance offered to register it to her company, but I figure it would be just as easy to incorporate an LLC for no purpose other than to register the airplane to.

So for all of you, is it as simple as incorporating the LLC then filing the change of registration with the Federales? Anything aviation-specific I should be aware of?

Thanks.

 

It's a touchy subject. Google "flight department company" and you'll find a ton of articles on the subject. Setup a consultation with one of the law firms who specialize in that area.

The more I learn about aviation law, the more I realize it's almost pointless trying to read an FAR yourself an attempt to determine the meaning. A PPL should come with a law degree.

 

Typically it's very easy...

Local business license (pay fee)
State LCC Paperwork (pay fee)
Transfer ownership (and maybe pay tax on the value).

However...if you want it to actually protect you, you may need do some other things to ensure that it looks like a legit business: Business documents, business plan, annual shareholders (owners meeting), separate bank account (and credit card if you use one), loan documents, etc.

The state will happily take your fees and give you an LLC, but if a plaintiff's attorney can show that the LLC was not really operated strictly like a business then he can pierce the veil at trail and get at your personal assets. You may or may not need a reasonable business plan with a reasonable chance to make money...depends on the state.

Bottom line, see a lawyer.

 

Paying a lawyer to plug all the holes can be costly and ineffective in the end.

Sometimes the best defense is to buy good insurance from a respectable company with a two million dollar limit. If you get sued the insurance company lawyers will come out of their cave with fangs out on your behalf.



Skyhigh

 

Going to echo this, we have our partnership listed as an LLC and although there is some pain with it everything seems to work out.

 

First off thank you for all the replies. I spoke with my agent this morning concerning the insurance, no probelm there. I also touched base with a friend of a friend, an aviation attorney out in California. Things out there legally are night and day from here, but at least it gives me something to go off of.

I'll give you the quick rundown and see if this makes legal sense to you all.

We own a house in Colorado. Free and clear, no loan on it. When we/family aren't using it, we lease it to one of those Colorado vacation house rental places which sublets it weekly to whoever. We do make some money off of it.
We're going to incorporate that under the LLC since it brings in money. That's our "business". The only assets therefore attached to the LLC will be the house and the airplane.

Skyhigh, I currently have $5 million liability on it and $200k hull. I don't plan on hitting anything worth more than $5 million (or rather, nothing at all :p ), but better safe than sorry.

 

I've had airplanes in LLC and with my name on the registration. It wasn't much bother to have a Delaware LLC set up, but as stated, when your vacation rental burns and kills 50 school children in it, I suspect your best savior will be really solid insurance, and not the registration issue.

But, I recommend the LLC for other reasons. You can sell shares of your entity to others without sales tax, and with a bit of clever slight of hand, maybe to outright transfers.

 

I have an LLC for my plane. An LLC and "incorporating" are two different things that do the same thing in different ways with different rules. When I first set up my LLC I had the Company Corporation do it for me. I figured for the reasonable fee they could do it easier that I would. After it was up and running though I got rid of them. In VA where mine is, all you have to do is contact the state corporation commision and change the name on file who gets mail for your LLC. I did it all online.

I WOULD NOT put it in with a paid for vacation home. If someone sues over the plane they could take the home if they are under the same LLC. I would set it up all by itself. Also to my knowledge you don't have to make money to have an LLC. A lot of hobiest have LLCs and S corporations and have never made a dime. This isn't legal advice, just my opinion.

MAKE very sure that the plane money and your money are separate. Whether it is a gift from you to the LLC or a loan. If they can show that funds are co-mingled then they can go after it all. It is easy enough to cover these bases though in your LLC.

And like was said earlier, there is nothing better than good insurance!

 

No, no, and no some more. Create separate LLCs for the rental home and the airplane. As I said to you in my PM, your state may allow for LLCs that do nothing but be a "holding company." Therefore, the LLC doesn't do anything except "own" the airplane. Do not let this LLC own any more money than is absolutely necessary.

To keep it even cleaner and more separate, the LLC pays for things like insurance premiums, jet fuel, maintenance, etc. This means establishing a checking account.

The whole point of these LLCs is to keep things (read liabilities) separate so that someone who is suing you cannot go after your personal assets, only what the LLC has or is worth.

When creating these LLCs, ask your lawyer if you can use his business address. Otherwise, telemarketers will comb over every new LLC and call you about the new credit card service they are touting for the day.

Finally, after this LLC is created, you may want to file a application with the IRS to report your tax return as an S corp.

 

Thank you both for the replies.

This is what primarily worries me. Plane needs gas. I pay for it with credit card attached to airplane (and the LLC). Obviously the credit card needs to be paid off, so I pay it off from my personal account. Would that not leave a trail that, potentially, someone could use to tie my/our finances to the airplane.

Thank you guys in particular for the LLC discussions with the house and plane. I'm having to dig deep to remember anything from that aviation law class I took in college.