Incorporating for aircraft ownership?

[FloridaMan]

Should I create a separate corporate entity to own my aircraft in Florida? If so, what's the best way to go about it?

[74657]

If you have a legitimate business purpose and/or are wanting to limit liability then yes.  I formed my LLC using legalzoom.com.  What started off as a liability shelter has turned itself into a standalone business with my plane being the primary asset.

 

 

[KSMooniac]

You need to consult with an aviation attorney as well as a tax specialist to see if it will be beneficial in your state.  In KS, for a personal-use plane with me as the only pilot the answer for me was a resounding NO.  I was advised to just keep it as personal property and buy as much insurance as I could.  If you have a true business use for the plane, then the answer may be different.  This of course varies by state and by situation, so what someone else does may or may not be applicable to your situation.

[FloridaMan]

I have AOPA legal; could I rely on them to advise me appropriately?

[Parker_Woodruff]

Quote: Antares

I have AOPA legal; could I rely on them to advise me appropriately?

[donshapansky]

I have just gone through this exercise purchasing an Aerostar 700 for business and some personal use. Montana offers the best by far in terms of simplicity and the best tax setting with the legal protection that an LLC offers. I used Deer Creek Corporate Services in Helena, MT they are a one stop service for the complete package.

You register the aircraft in Montana, no sales tax due, you have a hangar at a specific airport, which is listed as the aircraft's base of operation, the hangar you may have elsewhere is where the aircarft is currently operating from. You have a bank account, the company formed is perpetual, you have a legal mailing address. The Montana registration fee is 50 - $75 for singles. You also regiser as a pilot for the aircraft. My total bill was $1,690.00 and took 3 days total to get it up and operational. You will need a fax and e-mail capability.

My $.02 worth

 

[danb35]

There's no liability protection from incorporation if you're the only owner and pilot.  If there are multiple owners and/or pilots, then it may be advantageous from that perspective.

[flyboy0681]

I would definitely suggest conferring with an aviation attorney. When I joined my partnership and met with one, he explained things that I had never known or even thought about. As much as we all hate spending money on legal fees, sometimes it's money well spent - especially if setting up an entirely new LLC for asset protection.

Just imagine where the economy might be if everyone that signed onto an adjustable rate mortgage was required to have an attorney explain to them exactly what they were getting into.

 

[Jeff_S]

I had formed an LLC to start a real-estate operating company, which never got off the ground. What did get off the ground was me, in airplanes, so I used that LLC to purchase first my Warrior and then the Mooney. I don't think I've gained any financial benefit from this, because I use the plane strictly for personal reasons and haven't tried to take any tax advantages. However, having the LLC made it very easy to bring on a silent minority partner when I needed to do this to take over his hangar. I simply added him to my LLC and presto, the hangar lease (effectively) transferred. No new paperwork to the FAA (which would be required if I had been the registered owner myself) and it's all totally legit. So in that way, I definitely have benefited by the LLC, but it certainly wasn't what I intended it for originally.

[jetdriven]

You are required to update the list of owners or managers on the LLC to the FAA, arent you?  We did when we bought our aircraft under an LLC.  Something about foreign owners.

[Jerry 5TJ]

Quote: danb35

There's no liability protection from incorporation if you're the only owner and pilot.  If there are multiple owners and/or pilots, then it may be advantageous from that perspective.

[flyboy0681]

What a country.

[jetdriven]

Almost all other countries, people who are not insanely wealthy cannot afford a Mooney.  There is no GA in most countries, so I would take the good with the bad.

[flyboy0681]

But by the same token, most (yes most) other countries don't have a litigious society such as ours. We also graduate the most number of lawyers on the planet.

This subject can (and probably will) spawn into a lot of responses, but let's face it, a lot of what we do in our daily lives is influenced by past and current lawsuits. Everything from the Warning labels on your favorite coffee cup to the back of the sunvisor in your car to the near bankruptcy of our beloved general aviation industry.

Let me close on this note. I was watching a program and the American legal system was the subject. The producers compared it to the Japanese system and a government official there was interviewed. He said of the American's, "When I was in America I was amazed to see over a dozen warning labels and stickers on a common household ladder. Here in Japan we know how to use ladders and don't require such nonsense".

 

 

[GeorgePerry]

I live in Japan, and trust me when I tell you they have their own set of problems.  I'll take the good Ole US of A any day... Even with more lawyers than engineers.  Humor aside, In the US, It's easier to make money suing someone who makes something than to make somthing yourself...that's a sad state of affairs.  God bless the small business owners and entrepreneurs who make our country great!

 

[KSMooniac]

Quote: GeorgePerry

I live in Japan, and trust me when I tell you they have their own set of problems.  I'll take the good Ole US of A any day... Even with more lawyers than engineers.  Humor aside, In the US, It's easier to make money suing someone who makes something than to make somthing yourself...that's a sad state of affairs.  God bless the small business owners and entrepreneurs who make our country great!

 

[fantom]

Quote: KSMooniac

[Parker_Woodruff]

Quote: fantom

Simple solution is tort reform....basically --- Loser Pays. All our lawyer politicians in Washington will never move on it, however.

[flyboy0681]

Agreed the loser should pay. Parker has it partially correct, except if the lawsuit won is for compensatory damages the proceeds are fully taxable.

[jetdriven]

the fundamental problem with loser pays is someone cannot even file a valid suit because the defense will simply run the bill up to 200k, 300k, or a million.  The plaintiff quits before even seeing court.  This prevents equal access to justice, something that is probably even more important than defending from frivolous lawsuits.  Texas had tort reform basically you can't sue doctors in this state anymore, and if you are allowed to, damages are capped.  Malpractice insurance keeps going up along with all the other states and there never came a "flood" of doctors.  In fact, the munber of them now is the same as before.  Just no right to sue now. Great.

[flyboy0681]

My brother learned first hand about that. He had a solid case against a distributor he had to deal with but no attorney would take his case on contingency. He felt so strongly about the case that he set out on his own but had to quit after poring $75k into it and not even getting to discovery. In the end the other party simply wore him down.

[fantom]

Quote: jetdriven

the fundamental problem with loser pays is someone cannot even file a valid suit because the defense will simply run the bill up to 200k, 300k, or a million. 

[BorealOne]

In Canada, we have a much less litigious society. Part of the reason for this is our rule that 'costs should follow the cause', but there is not automatic 'loser pays' award.

The court will hear submissions on costs after deciding the issue at trial, and take into account the public interest, the relative positions of the parties, etc in deciding whether the loser pays or whether each party assumes its own costs. In most cases, the loser does pay, but not always. There are also rules which can be invoked to deal with 'bad behaviour' by parties during litigation (eg delaying tactics), which can increase the rate at which costs are assessed.

The two major differences that I see between our approach to litigation and that in the US is that 1) we rarely have jury trials on civil suits - those most often heard by judge alone; and 2) our cost rule.

The results of these differences? Well, 1) we don't have outrageous damage awards that defy logic or precedent simply because a jury was moved by a particular plaintiff; and 2) there is a greater incentive for parties to settle valid claims, as a party likely to lose must factor in not only damages, but an adverse costs award in the event that the matter proceeds to trial.

Which makes it a better environment within which to fly a Mooney - incorporated or not :-)

[flyboy0681]

Quote: borealone

The results of these differences? Well, 1) we don't have outrageous damage awards that defy logic or precedent simply because a jury was moved by a particular plaintiff