More and
more aircraft buyers are registering aircraft in Limited Liability Corporations
(LLC). There are several benefits and
reasons to utilize an LLC versus individual/personal ownership. LLC ownership
may give you some level of liability protection in the event an incident occurs
with the aircraft and you’re not the pilot in command (i.e. you let a partner,
friend, instructor, etc. use the aircraft and had an incident, your personal
liability may be limited). Another
benefit is to have your spouse be a Member with signature authorization in the
event of your death, eliminating probate issues/taxes. Creating a new tax
entity ease of accounting purposes, especially if used 100% for business can be
beneficial. With some aircraft lenders,
an aircraft loan would not show up on your credit bureau(s) as it is booked in
their systems as a commercial loan versus a consumer loan (helps keeps your credit
scores up, you would still need to indicate loan to potential creditors as a “contingent
liability” however).
If you are obtaining aircraft financing for the airplane, the lender will require copies of the LLC Operating
Agreement, Articles of Organization, Certificate of Formation date stamped by
the Secretary of State where incorporated and an E.I.N. number (you can use
your social security number if it’s a single member LLC, otherwise you’ll need
to contact www.IRS.gov for an EIN#). On
newly created and/or first time aircraft registration using an LLC, the FAA
requires an LLC Statement in Support document that states date and state LLC
formed, who the member(s) are, how managed, confirmation of ownership
percentage, and verification of United States citizenship (FAA will not allow
an aircraft to be registered in an LLC unless 75%+ of members/ownership are of
U.S. citizenship).
For advice
in your particular situation, consult your attorney.
