FAA Owner Trust
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 one of the leading providers of FAA owner trust services to the aviation marketplace.
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
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FAA Owner Trust
To own and 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 determining citizenship are complex and often times 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 other various reasons. These can include anonymity, sales facilitation, and loan and lease structuring.
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. 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.
Protecting privacy, especially for aircraft owners, is becoming more and more important. TVPX has developed a trust structure that can help customers maintain their privacy better than they could with a traditional owner trust while still complying with TVPX’s obligations to the FAA pursuant to the FAA’s Policy Clarification for the Registration of Aircraft to US Citizen Trustees.
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 “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 Utah 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 as TVPX does not provide these types of services.
Why might I want to put my aircraft in a trust?
The main 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 directly to the beneficiary, as though the trust were not there. Most other taxes can be handled 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 fill 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 completed in two or three days, and can be undone just as easily.