Do you already use an owner trust to register your aircraft with the FAA? Do you need an owner trust? This article will help identify if you still need to utilize an owner trust or if you need to begin utilizing an owner trust to register your aircraft with the United States FAA.
Aircraft must be Registered before they are Operated
You may not operate an aircraft that is eligible for registration unless the aircraft has been registered by its owner and is carrying aboard the aircraft registration.
Who Can Register an Aircraft
An aircraft is only eligible for registration with the FAA when the aircraft is:not registered under the laws of a foreign country, and is owned by:
- –a citizen of the United States;
- –an individual citizen of a foreign country lawfully admitted for permanent residence in the United States;
- –a corporation not a citizen of the United States when the corporation is organized and doing business under the laws of the United States or a State, and the aircraft is based and primarily used in the United States.
I address the “based and primarily used” option in a separate article.
The definition of Citizen of the United States is critically important and means one of the following:
(1) An individual who is a citizen of the United States or one of its possessions.
(2) A partnership each of whose partners is an individual who is a citizen of the United States.
(3) 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.
Resident alien means an individual citizen of a foreign country lawfully admitted for permanent residence in the United States as an immigrant in conformity with the regulations of the Department of Homeland Security (8 CFR Chapter 1).
The terms Citizen of the United States when applied to entities does not have the same meaning to the FAA as it does to you. You are missing the interpretation of these terms by the FAA if you only read the statutes and the regulations. See our blog page for additional articles with explanations of these definitions and more information on the FAA’s interpretations.
If you think you may not meet the requirements to register an aircraft in an entity, ask questions. The FAA may suspend or revoke a certificate of registration when the aircraft no longer meets the requirements. The flight department is usually not aware of the ownership details of the entities that own aircraft, but the flight department will have to answer to the boss if the FAA grounds the aircraft because it has an invalid registration. The Aircraft Registration Application, AC Form 8050-1, is a standard-looking government form, and what you may not realize is that when the owner signs and files the Registration Application with the FAA, the owner certifies that it meets the FAA’s requirements to register an aircraft. If there is an accident and the owner makes a claim on the insurance, the insurance may deny coverage if your aircraft was not validly registered.
An owner trust can be used to register your aircraft if you do not meet the requirements to register an aircraft in your own name. A voting trust may also be another option and I address voting trusts in a separate article.
Consider using one of the companies who regularly act as owner trustee to avoid delay in obtaining FAA determination that the trustee and the trust satisfy the regulatory requirements. There are regulatory requirements trustees must satisfy, such as each trustee meeting the FAA’s definition of U.S. citizen or resident alien. Required language must also be in each trust agreement. Changing the language of an existing trust requires time and input from the original trust counsel as well as aviation counsel. A copy of the trust must be submitted to the FAA as well as a copy of each document legally affecting a relationship under the trust. Prior to December 2020, it was not uncommon to obtain an opinion from the FAA with respect to an owner trust in a few days. On December 21, 2020, the FAA issued a letter modifying the processing time for FAA opinion issuance to at least 10 working days so advance planning is critical to avoid delays. Although you can request that your trust be kept confidential, the additional time and expense of trying to add the aircraft to an existing trust is usually not the most expedient way to register an aircraft.
Michelle M. Wade is a Partner with the aviation law firm of Jetstream Aviation Law, P.A. and counsel clients on the acquisition, financing and operation of corporate jets operated under Part 91 and Part 135 of the US Federal Aviation Regulations. Jetstream Aviation Law can be found at www.JetstreamLaw.com. Michelle Wade (firstname.lastname@example.org)