Aircraft Trusts/Voting Trusts

Aircraft Trusts

Aircraft Trusts, which are also frequently referred to as “Owner Trusts” or “FAA Trusts,” are one of the methods by which the United States Federal Aviation Administration (FAA) permits non-United States citizens to register their aircraft (or keep their aircraft registered) on the United States aircraft registry with an “N” Registration tail number.

"N" Registration

For our non-citizen and international clients who wish to “N” Register their aircraft with the FAA, or keep the existing N-Registration, we offer the option of creating an Aircraft Trust. An Aircraft Trust allows our non-citizen and international clients the ability to keep their aircraft N-Registered in the United States, while giving them unlimited use and sole operational control of the aircraft pursuant to a duly recorded Operating Agreement.

United States “N” Registration provides clients with the safety and security of knowing that their Aircraft is, and will be, fully protected by the laws of the United States. Aircraft registered in the United States are protected against the potential political instability of foreign regimes. In addition, the registration fees charged by the United States FAA are extremely reasonable, with very few bureaucratic issues or logistical problems. Due to the rigorous maintenance standards of the United States, aircraft registered in the US on the FAA Registry often retain a higher value than aircraft registered in other jurisdictions.

United States Statutes and Regulations

United States statutes and regulations provide that a person may not “N” Register an Aircraft on the FAA Registry in the United States unless the aircraft is (a) owned by a citizen of the United States (including US “citizen corporations”); (b) owned by a lawfully admitted permanent resident of the United States; or, (c) owned by a non-citizen corporation when the corporation is organized under the laws of the United States, and the aircraft is based in, and primarily used in, the United States. See 49 U.S.C. 44102, 44103, and 14 CFR § 47.3 of the FAR.  As such, any corporation which owns the Aircraft must be either a U.S. “citizen” corporation, or, if it is a foreign-owned, it has to qualify to do business in the US as well as use the aircraft primarily in the US.

Pursuant to 49 USC 40102(a)(15) citizen of the United States” means: (A) an individual who is a citizen of the United States; (B) a partnership each of whose partners is an individual who is a citizen of the United States; or (C) a corporation or association organized under the laws of the United States or a State, the District of Columbia, or a territory or possession of the United States, of which the president and at least two-thirds of the board of directors and other managing officers are citizens of the United States, which is under the actual control of citizens of the United States, and in which at least 75 percent of the voting interest is owned or controlled by persons that are citizens of the United States.

Aircraft Trust Requirements

We assist our international clients by placing title to the aircraft with Aircraft Trustee Services, Inc., a U.S. citizen corporation, qualified under the provisions of 49 USC 40102(a)(15), which acts as Owner Trustee of the aircraft. Aircraft Trustee Services, Inc. complies with all FAA regulations, including those found in 14 CFR 47.7(c) which requires that an applicant for aircraft registration under 49 USC 44102 that holds legal title to an aircraft in trust must comply with the following requirements:

(1) Each trustee must be either a U.S. citizen or a resident alien.

(2) The applicant must submit with the Aircraft Registration Application –

(i) A copy of each document legally affecting a relationship under the trust;

(ii) If each beneficiary under the trust, including each person whose security interest in the aircraft is incorporated in the trust, is either a U.S. citizen or a resident alien, an affidavit by the applicant to that effect; and

(iii) If any beneficiary under the trust, including any person whose security interest in the aircraft is incorporated in the trust, is not a U.S. citizen or resident alien, an affidavit from each trustee stating that the trustee is not aware of any reason, situation, or relationship (involving beneficiaries or other persons who are not U.S. citizens or resident aliens) as a result of which those persons together would have more than 25 percent of the aggregate power to influence or limit the exercise of the trustee’s authority.

(3) If persons who are neither U.S. citizens nor resident aliens have the power to direct or remove a trustee, either directly or indirectly through the control of another person, the trust instrument must provide that those persons together may not have more than 25 percent of the aggregate power to direct or remove a trustee. Nothing in this paragraph prevents those persons from having more than 25 percent of the beneficial interest in the trust.

To comply with these regulations, when you hire the professionals at Aircraft Legal, title for the clients’ aircraft are held by Aircraft Trustee Services, Inc., solely as Owner Trustee of a trust created specifically for the non-citizen clients, who are the named Trustors/beneficiaries of the trust. Simultaneously, Aircraft Trustee Services, Inc. signs Operating Agreements with the Trustors (or persons or entities designated by the Trustors). Through this method, our clients retain full and sole operational control of the aircraft pursuant to executed and FAA-recorded operating agreements. The Trust Agreements are each specifically approved by the FAA, and following the closing, our clients are free to fly.

Importing Foreign-Registered Aircraft: N-Registration Process

In some instances, our clients have purchased a foreign-registered aircraft, and need to import the aircraft into the United States for N-Registration. Included as part of our services in establishing an Aircraft Trust, we also assist our clients with the importation process. In order to import an aircraft the client must obtain an original, signed, export airworthiness approval from the de-registering country. In addition, the US and the de-registering country must have agreement in place (usually by treaty) that covers the acceptance of the export airworthiness certificate from the exporting country. This export airworthiness certificate will need to be officially translated into English for the FAA. Clients will additionally need to reserve the N-number which they intend to use by paying a small fee to the FAA, or one can be provided to the client by Aircraft Legal.

Next, the importing client will need to contract with a FAA Designated Airworthiness Representative (DAR), who will oversee the de-registration, airworthiness, and registration process. Once the relevant documents are properly received by Aircraft Legal, our office will assist the client in filing the Bill of Sale, the original, translated, De-registration from the foreign country, along with the Aircraft Registration Application, and the Declaration of International Operations. At that time, the FAA will issue a temporary international Certificate of Registration, commonly referred to as a “flight wire” or “flight time wire”. Our office will then provide the flight time wire to the DAR, who thereafter issues the United States Certificate of Airworthiness.

On some infrequent occasions, if the aircraft has been de-registered from a foreign country’s registry for too long, it becomes necessary to submit a “Whereabouts Statement” to the FAA. This “Whereabouts Statement” is a sworn declaration confirming the exact physical location for the aircraft at issue since the date of de-registration.

Compliance with U.S. Department of Commerce: Export Documentation

Finally, as part of our Aircraft Trust services, we assist our non-citizen clients with the filing of export documentation, as required by the United States Department of Commerce. Current regulations require that a customs export (not an FAA Certificate of Export) be filed for all aircraft beneficially owned by a non-citizen, that are held in an Owner Trust. Although this regulation contains some limited exceptions, such as circumstances where the aircraft is primarily based in the United States, as a general rule, an export filing will be required. This export filing must made before the aircraft leaves the United States for the first time. As part of our fee for creating an Aircraft Trust, we assist our clients in completing the necessary documentation and will provide you with the name of the export agent we have used in the past. We will coordinate the closing and your first international flight with the export agent to ensure that you remain in compliance with applicable U.S. laws.

Aircraft Trust and Legal Services Provided Before Closing

Drafting, Review, and/or Negotiation of the Aircraft Purchase Agreement

Drafting and Recording of the Trust Agreement between client and Aircraft Trustee Services, Inc.

Drafting and Recording of the Affidavit of Citizenship of Owner Trustee

Drafting of Aircraft Operating Agreement/Lease Agreement

FSDO Notice letter if required by 14 CFR § 91.23(c)(3)

Investigation of Federal Know Your Customer (KYC) compliance

Drafting and Recording of Declaration of International Operations (if necessary for Flight Wire)

Drafting and Recording of Aircraft Registration Application on the FAA Registry

Delaware Statutory Trust (DST) Filing fees

Drafting and submission of Export Documents (if required)

Assistance with importing foreign-registered aircraft to enable N-Registration (if necessary)

Aircraft Trustee Services, Inc. fees for trustee services for year of formation

Oversight of closing and processing of documents as necessary with the FAA

All FedEx/courier charges arising from closing

International Registry filings (separate charges may apply)

Additional Services Provided Upon Request

Changes/Amendments to Trust Agreement

Additional Aircraft Added to Existing Trust

Changes to Operating Agreement

Additional Non-Exclusive Operating Agreements

Review and/or Drafting of Security Agreements

Review and/or Drafting of Sublease Agreements

Obtaining Apostilles of documents

Notary Services

Assisting clients in obtaining Customs Decals

Assisting clients in obtaining FCC Radio Licenses

General legal consultations

Prompt forwarding of any correspondence pertaining to the aircraft (i.e. flyover fees, hanger fees)

De-registration of the aircraft

Bills of Sale upon sale of the aircraft

Qualifications and Experience

Aircraft Legal is wholly owned by Vincent E. Schindeler, P.A., a Florida law firm in good standing since 1994.  Vincent Schindeler is President of Vincent E. Schindeler, P.A., and is an experience, licensed, Florida attorney in good standing, practicing since 1994.  In addition to being admitted to the Florida Bar, Mr. Schindeler is additionally admitted to practice in the United States District Court for the Southern District of Florida, and the United States District Court for the Northern District of Florida.

Throughout his years of legal practice, Mr. Schindeler has always had an interest in and worked on aviation-related matters.  In 2015, Mr. Schindeler increased his focus on aviation matters such that the firm now predominantly practices in aircraft transactions.  Mr. Schindeler’s vast experience and knowledge has enabled him to assist hundreds of clients with their aviation purchases, leases, and sales.  Mr. Schindeler is a proud member of the National Business Aviation Association (NBAA), the nation’s premier organization for business aviation.

In addition to his experience in aviation matters, Mr. Schindeler has litigated hundreds of civil cases and is honored to be a member of the Million Dollar Advocates Forum.  Membership in the Million Dollar Advocates Forum is limited to those select attorneys who have won million and multi-million dollar verdicts and settlements.

10 THINGS-TO-KNOW ABOUT AIRCRAFT TRUSTS

  1. N Registration by Non-Citizens.  The FAA Provides 2 Options for Registration:

The FAA allows non-citizens to qualify for N-Registration of their aircraft using two primary methods:

          a. Aircraft Trust Agreement a/k/a Owner Trust.  Aircraft Trustee Services, Inc. holds legal title to the aircraft in its name, solely as trustee of a trust created for specifically for the client, who is the named grantor/beneficiary of the trust.  At the same time, Aircraft Trustee Services, Inc. signs an operating agreement with the trust beneficiary (or his/her designated person/entity).  Our clients retain full operational control of the aircraft pursuant to executed and FAA recorded operating agreements. 

          b. Voting Trust Agreement.  We form a U.S. “nominee corporation” in Delaware.  The common stock shares are then held by a Voting Trustee who is a U.S. citizen.  The Directors and Officers of the corporation are likewise U.S. citizens.  The Voting Trustee issues Certificates of Beneficial Stock Ownership to the actual (non-citizen) owners of the Delaware corporation, thereby designating the owner as the “true” owner of the stock.  By following this structure, Federal Aviation Regulations are complied with, and the nominee company thus qualifies as a “U.S. Citizen.”   Like the Aircraft Trust/Owner Trust, the Delaware corporation simultaneously signs an Operating Agreement with the Beneficial Owner.  The Beneficial Owner retains full operational control of the aircraft.

    2. U.S. Citizenship Required.

A foreign person may not “N” Register an Aircraft in the United States unless he/she/it is a permanent resident, or there is a permanent place of business in the United States – See 49 U.S.C. 44102, 44103, and 14 CFR § 47.8 of the FAR’s.  A corporation owning the Aircraft must be either a U.S. “citizen” corporation, or, if it is a foreign corporation, it has to “qualify to do business” in the U.S.

By establishing an Aircraft Trust or Voting Trust, a non-citizen can qualify for N-Registration of his/her aircraft.

    3. Non-Citizen Clients Retain Full Operational Control of the Aircraft.

At the same time that the Aircraft Trust is established, Aircraft Trustee Services, Inc. will  turn over full operational control of the aircraft to the client.  The parties will execute an Operating Agreement, transferring operational control to the client.  Said Operating Agreement will be recorded with the FAA along with the Trust Agreement.  Need to change Operators?  No problem.  Just let us know and we will promptly draft a new Operating Agreement for filing with the FAA.

    4. Aircraft Purchase Agreements. We Can Help You.

To maintain consistency throughout the documents and to protect your investment, it is good practice to have an established relationship with our company before signing the Aircraft Purchase Agreement.  Having negotiated countless agreements before, we can advise you as to the advantages and disadvantages of the particular agreement.  Because Aircraft Trustee Services, Inc. is owned and managed by an attorney, we can also assist you with negotiation and drafting, usually at no additional charge.

    5. Assignment of Rights to the Trust When Aircraft Purchase Agreement is Already Signed.

Frequently, clients call us after they have already signed an Aircraft Purchase Agreement.  In the vast majority of these cases, the Seller will not object to the assignment of the Agreement to the Aircraft Trust.  Assignment of your rights to the Trust is very easy, and results in consistency throughout the documents.

    6. Registration with the International Registry is Strongly Recommended.

Here at Aircraft Trustee Services, Inc., we strongly recommend that you register the purchase of your Aircraft on the International Registry.  The International Registry is frequently referred to as the registry created by the Capetown Treaty.  Failure to register the purchase of your aircraft could result in loss of legal title to the aircraft, even though you paid the Seller.  For example, loss of title could occur in the event that: (1) the Seller fraudulently conveys the Aircraft to another purchaser after selling the Aircraft to you; (2) the Seller becomes insolvent, and Seller’s creditors seek relief against Seller; or, (3) a Lessee of the Aircraft fraudulently conveys title to a third-party purchaser.

These are only a few possible examples where loss of title could occur, and is not an exhaustive list.  Other situations could occur whereby title is lost because the transaction was not recorded on the International Registry.  There is an extra fee for International Registry registration.  However the possible consequences of not filing are tremendous.

    7. Tax Neutral Structure.

Aircraft Trusts are tax neutral.  Any income that may be generated will pass down to the actual owner.  However, usually, the Trust does not conduct any business.  Operational control is given to the true owner, and all income and expenses regarding the aircraft are normally incurred by the true owner, not the Trust.

    8. N Registration Is Valid for 3-Years and Is Easily Renewed.

Once the Aircraft Trust is established, the aircraft N Registration is valid for 3 years.  After the 3 year period expires, the FAA automatically sends a renewal notice to Aircraft Trustee Services, Inc.  The Registration can then be renewed for another 3 years upon payment of a $5.00 fee.

    9. Aircraft Trusts with Aircraft Trustee Services, Inc. are Secure

The Trust documents very specifically outline the rights and obligations of each party.  At no time can Aircraft Trustee Services, Inc. sell or transfer your interest in the Aircraft without your explicit consent.   In addition, because Aircraft Trustee Services is wholly attorney owned, the owner is subject to the regulatory authority of the Bar.   For further assurances, Aircraft Trustee Services, Inc. maintains officer and director insurance.

    10. Selling Your Aircraft Is Easy.

When you choose to sell your aircraft, the process couldn’t be easier.  To transfer the title to a new owner, we simply need to terminate the existing Operating Agreement, and execute a Bill of Sale.

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Frequently Asked Questions on Aircraft Trusts

An aircraft trust is a legal arrangement in which an independent trustee holds the legal title to an aircraft on behalf of the owner. The Trust Agreement is filed with the United States FAA, and the trustee is shown as holding the legal title to the aircraft.

The vast majority of our clients place their aircraft into a trust so that they can meet the FAA’s citizenship requirements and qualify for N Registration of their aircraft in the United States.

However, an aircraft trust can be useful for other reasons as well, such as:


Privacy: Aircraft owners may want to keep their ownership information private. Once the aircraft is placed into a trust, the trustee is listed as the owner on the FAA website, thereby making it more difficult for the public to find out the name of the true owner.


Liability protection: An aircraft trust can provide additional liability protection for the owner, as the trustee holds the legal title to the aircraft.Tax advantages: Depending on the jurisdiction, an aircraft trust can provide tax advantages for the owner.

When using an aircraft trust, the Trustor, or true owner of the aircraft transfers the legal title to the trustee, who then holds the title on behalf of the owner. The owner retains beneficial ownership of the aircraft and can continue to use and operate it as they wish, pursuant to a duly filed Operating Agreement.

The trustee’s role is to hold the legal title to the aircraft on behalf of the owner. They have no control over the aircraft or its operations, and their only responsibility is to act in accordance with the terms of the trust agreement.

An United States aircraft trust can be particularly useful for international clients, as it can provide various benefits, such as:
 
U.S. FAA Registration: For international clients who are not U.S. citizens, an aircraft trust will enable you to register your aircraft in the United States.
 
Security and Peace of Mind:  Having an aircraft registered in the United States allows our international clients peace of mind knowing that title to their aircraft will not be affect in the event of any political instability.
 
 
Compliance with local laws: An aircraft trust can help ensure compliance with United States laws and regulations.
 
Tax advantages: Depending on the jurisdiction, an aircraft trust can provide tax advantages for international clients.
While there are many advantages to using an aircraft trust, there may also be some downsides to consider, such as:
 
Cost: Establishing and maintaining an aircraft trust adds some expense to the ownership of an aircraft. However, at Aircraft Legal, our prices are very competitive and less than the cost of most trustee entities.
  
Complexity: Aircraft trusts can be complex legal arrangements, and it’s important to work with experienced professionals, like the professionals at Aircraft Legal, to ensure compliance with all applicable laws and regulations.

Lack of control: As the trustee holds the legal title to the aircraft, the owner may have less control over certain aspects of the aircraft’s operation, as required by FAA guidelines.

Choosing an aircraft trustee is an important decision, and it’s important to work with a reputable and experienced professional.  At Aircraft Legal, we have experience in the aviation industry and are familiar with the legal and regulatory requirements governing aircraft trusts.  Vincent Schindeler, President of Aircraft Legal, has been a licensed attorney in the State of Florida since 1994 and will personally handle all aspects of your aircraft trust.

The process for establishing an aircraft trust is fairly simple. Generally, it involves drafting and executing a trust agreement and operating agreement, transferring the legal title to the trustee, and ensuring compliance with all applicable laws and regulations.

Aircraft Trusts can be dissolved in many ways, including but not limited to, the sale of the aircraft, the termination of the trust agreement, or the mutual consent of the parties.

N-Registration – Aircraft Trusts / Voting Trusts

N-Registration of Aircraft

The N-Registration of non U.S citizen aircraft is provided for our international clients. For these clients, we create a Voting Trust or Aircraft Trust.

Criteria For N-Registration

A person may not “N” Register an Aircraft on the FAA Registry in the United States unless the aircraft is (a) owned by a citizen of the US, including US “citizen corporations”; (b) owned a lawfully admitted permanent resident of the US; or, (c) owned by a non-citizen corporation when the corporation is organized under the laws of the US and the aircraft is based in, and primarily used in the US. See 49 U.S.C. 44102, 44103, and 14 CFR § 47.3 of the FAR. Essentially, any corporation which owns the Aircraft must be either a U.S. “citizen” corporation, or, if it is a foreign corporation, it has to qualify to do business in the US as well as use the aircraft primarily in the US.

N-Registration Qualifications

To qualify our non-citizen clients, the common stock shares are issued to a Voting Trustee who is also a US citizen. This Voting Trustee issues Certificates of Beneficial Stock Ownership to the actual non-citizen owner of the Delaware corporation. Once these conditions are met, the Delaware corporation is considered to be a “citizen” by the FAA, and the Aircraft is allowed to be registered on the U.S. Registry. (See 14 CFR §47.8 and related subsections of the FAR’s). Of course, to remain registered with the FAA, the Aircraft must also be maintained to the manufacturer’s and U.S. standards.

We assist our foreign clients by establishing a US citizen corporation or a trustee corporation to hold title to the aircraft on their behalf, thereby enabling the aircraft to be “N” Registered with the FAA. At the same time, our clients retain full operational control of the aircraft pursuant to executed and FAA recorded operating agreements. The trusts and corporate structures that we establish are all specifically approved by the FAA, and following the closing, our clients are free to fly worldwide.

Included In the Price for Voting Trusts

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