Check the Airworthiness of your Estate Plan for Your Aircraft
Have you done estate planning for your aircraft? How is your aircraft registered? Is your aircraft registered with the FAA in the name of an individual? Is your aircraft registered in an LLC in which an individual is the sole member and the sole manager?
Consider what will happen to the aircraft registration upon the death of the individual. Does the LLC’s operating agreement or state law address how the LLC continues and who will have the authority to manage the LLC upon the death of the individual? If the title is unclear, your heirs may not be able to operate the aircraft and your estate may not be able to sell the aircraft until a court clears the title.
Your Estate Planning Trust
Placing the aircraft in the same trust which holds your investments, vacation home, and other assets sounds like a good plan. However, be aware that for FAA purposes the trustee of the trust must meet the FAA’s definition of US citizen, that specific FAA-required language may need to be included in the trust agreement and that a copy of the trust will need to be provided to the FAA and that the trust may become publicly available. Consider creating a separate trust (commonly called an owner trust in aviation) for your aircraft.
No TOD as an Estate Plan for Your Aircraft
At this time, the FAA does not allow you to make a “transfer on death” (TOD) designation for your aircraft.
Transfer of Aircraft under a Will
If the aircraft is to be transferred pursuant to a will upon the death of an individual, the FAA examiner’s guidelines require that a certified copy of the death certificate and a copy of the individuals’ will be filed with the FAA. The copy of a will filed with the FAA may become publicly available.
Have an Estate Plan for Your Aircraft
After you have discussed the plan for your plane with your estate planner, talk with your aviation counsel and your tax advisor before implementing the plan. Your estate planner and tax advisor may not be aware of some of the FAA regulations and FAA interpretations that, if not followed, can invalidate an aircraft’s registration, exposing you to FAA civil penalties, and potentially invalidating the insurance coverage for the aircraft.
Jetstream Aviation Law will be happy to work with your estate planner to provide legal assistance on aviation matters in connection with your estate planning.
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.