FAA Owner Trust
TVPX Aircraft Registration Service LLC and its 100% owned subsidiaries, TVPX Aircraft Solutions Inc. and TVPX ARS Inc. provide trust services for US aircraft registration purposes.
TRUSTS FOR BUSINESS AVIATION
TVPX Trust Services provides customized FAA owner trust services for aircraft owners, including those individuals and businesses that do not qualify as US citizens for FAA registration purposes under the FAA’s complex citizenship rules. By combining the world’s most experienced team of owner trust professionals with its focus on responsiveness, customized solutions and efficiency, TVPX has become the leading provider of FAA owner trust services to the business aviation marketplace.
PRIVACY ENHANCEMENT TRUSTS
Protecting the privacy of aircraft owners and passengers has become a greater priority over the last few years. Often owners and passengers have security concerns, need to maintain a competitive advantage over other similar businesses, want to avoid unwanted public or media attention, or simply wish to avoid commercial solicitation. TVPX has developed a flexible trust structure that can help customers protect their privacy better than they could with other permitted ownership structures while still complying with all regulatory obligations.
TRUSTS FOR COMMERCIAL AVIATION
In addition to business aviation, TVPX provides trust services for commercial aviation participants such as airlines, lessors and lenders. TVPX’s team of aviation trust professionals has extensive experience in establishing and managing all types of commercial aviation trust and agency structures including:
- Owner Trustee
- Security/Indenture Trustee
- PDP Financing
- Paying Agent
- Escrow Agent
- Collateral Agent
FAA Owner Trust
To register an aircraft in the United States, the aircraft owner must qualify as a US citizen. Under FAA rules, individuals who are not US citizens and businesses established outside the US may not own and register aircraft in the US. In addition, the rules for determining citizenship are complex and often can even disqualify US corporations, LLCs and partnerships. Fortunately, US law allows non-qualifying individuals and entities to form trusts with US citizen trustees who then hold legal title to and register the aircraft on behalf of the non-US citizen owner.
US citizens can also take advantage of the FAA owner trust structure for various other reasons. These can include anonymity, sales facilitation, and loan and lease structuring.
Benefits of US Registration
The US is the most popular jurisdiction in which to register aircraft, even for aircraft that will be primarily based outside the US. Partly this is to protect the owner’s sizable investment in the aircraft. The FAA’s standards for operations and maintenance are respected worldwide. Also, the US is the largest market for used aircraft sales and US buyers prefer to buy aircraft that are US registered. A high percentage of sales occur while aircraft are located in the US and foreign buyers often keep the aircraft US registered even if it will be reregistered in another jurisdiction after it is removed from the US. Finally, non-US aircraft owners can sometimes benefit from the many bilateral agreements between the US and foreign aircraft registration authorities by registering temporarily in the US to facilitate moving the registration from one foreign jurisdiction to another.
Export Trusts for Newly Purchased Aircraft
TVPX can establish short-term trusts to assist non-US owners who only need US registration for a short period of time until the aircraft is exported and re-registered in another jurisdiction. Because of its unrivaled experience, TVPX understands the complexities and requirements related to the export process and can provide valuable solutions to issues that can arise.
Sales Facilitation Trusts
Industry data shows that aircraft registered with the FAA sell faster on average than comparable aircraft registered elsewhere. TVPX has developed a customized trust product for non-US citizens seeking to obtain FAA registration to facilitate the sale of aircraft.
Payment Management Services
TVPX offers a full suite of payment management services:
- Lease payment servicing
- Loan payment servicing
- Sale and use tax remittance
- Payment management for fees and invoices
TVPX’s experienced team can work quickly and efficiently to provide customized solutions for holding and sending funds to facilitate aircraft acquisitions.
What is an aircraft trust?
An aircraft trust is a relationship where a trustee owns an aircraft on behalf of an entity or individual, also called the trustor or trust beneficiary. The trustee acts for the beneficiary and the aircraft is titled and registered in the name of the trustee. This relationship is often called an owner trust because the benefit of the trust and all assets go to the true owner of the trust. It is important to note that this structure has been approved by the FAA, has been used for over thirty years and is widely accepted by the business aviation industry.
Why use TVPX for your owner trust?
TVPX has built the most experienced owner trust team in business aviation. The owner trust business is changing. Institutional providers are confronted by internal and external pressures that sometimes restrict their ability to respond to their clients’ needs and may delay closings. In contrast to those institutional providers, TVPX’s main focus is business aviation. Its priority is to satisfy the clients’ timing requirements, while still exercising the utmost care and professionalism with every relationship and every transaction. TVPX built its business on being more efficient, more flexible and more attuned to the goals of clients and other key parties than anyone else in the industry.
What services are provided by TVPX?
TVPX works with the customer to form a trust under state law that satisfies the requirements for FAA registration. In addition, TVPX prepares the paperwork necessary to register the aircraft to TVPX, as owner trustee. As directed by the beneficiary of the trust, TVPX can also assist in preparing and signing documents necessary for exporting the aircraft, cancelling the aircraft’s registration, or conveying title to a third-party. If there are questions related to tax liability, FAA operational requirements or other general regulatory requirements, it is recommended that the customer seek assistance from qualified advisors.
Why might I want to put my aircraft in a trust?
A common reason to use an owner trust is because an individual or business does not qualify as a US citizen under the FAA’s citizenship test. The individual or business can use an owner trust to validly obtain US registration. This is important because FAA registration is widely accepted around the world and generally assures a higher resale value for aircraft which remain US registered. Many foreign parties operate aircraft within the US which necessitates some sort of accommodation for registration purposes. The owner trust is the simplest and least expensive way to accomplish this.
Other reasons to use an owner trust include anonymity, structural purposes, simplification purposes or convenience.
A trust can also be used to maintain FAA registry for a short period of time. For example, a short-term trust (lasting only days, weeks, or months) is commonly used to export aircraft.
Who has legal title to the aircraft?
The beneficiary owns the beneficial interest in the trust and the owner trustee holds legal title to the aircraft on behalf of the beneficiary. Although the FAA requires that ownership be held by a US citizen, the beneficiary retains certain important rights. For example, the beneficiary may direct the owner trustee to transfer legal title to any party designated by the beneficiary. Furthermore, the trustee cannot sell the aircraft without the beneficiary’s direction. Finally, operational control (the right to operate the aircraft) is granted back to the beneficiary via an operating agreement or to a third-party via a lease agreement as directed by the beneficiary.
Can I still use the aircraft as I please?
TVPX, as owner trustee, will enter into an operating agreement or a lease agreement which will transfer operational control of the aircraft back to the beneficiary or on to any third-party operator designated by the beneficiary. The operator, whether the beneficiary or a third-party, will be obligated to insure the aircraft and to operate and maintain the aircraft in accordance with FAA requirements.
Can I still borrow against the aircraft?
A trust will not negatively affect, and in some cases may actually enhance, the ability to get financing for an aircraft. Most aircraft lenders are familiar with the owner trust structure.
How does this affect taxation?
This type of trust is tax–neutral, and should have neither a positive nor a negative impact on your income tax situation. It is not a way to avoid taxes which would otherwise have to be paid. Any income and expense will flow through to the beneficiary, as though the trust were not there. Most other taxes, such as sales and VAT, can be handled by the beneficiary much like the way they would be if no trust were used.
Why not just use an LLC?
For most parties who do not qualify for N-registration, the establishment of a simple LLC or other corporate layer will not solve the problem, as the FAA will look through that structure to the member or shareholder for citizenship qualification purposes. A qualifying trust, however, can satisfy the citizenship requirement for almost any individual or entity.
A trust is a very flexible and readily accepted vehicle for registering aircraft owned by non-US citizens. TVPX registers hundreds of aircraft with the FAA through owner trusts each year. A trust is easy to establish and can be undone just as easily.
Finally, it is important to note that the identities of the members and managers of an LLC are publicly available. Aircraft owners should consult TVPX about a privacy enhancement trust to better protect their privacy and security.