News & Thought Leadership from Sulloway & Hollis
Estate Planning and the Personal Aircraft
Estate planning frequently involves the creation of a revocable trust for the purposes of managing property during the Grantor’s lifetime, and disposing of the property after death. Unlike a Will, which is filed at a Probate Court upon the death of the Testator, the terms of a trust are private with regard to the disposition of assets. If, however, the assets include an aircraft, the U.S. Federal Aviation Administration (“FAA”) has adopted strict policies and regulations regarding the ownership and registration of aircraft.
Upon creation of a trust, the Grantor must transfer title to most assets to the trustee of the trust. If the asset is a house, a new deed is prepared; if it is a bank account, a new account is opened, and; if it is a car, the title and registration are replaced. If the particular institution requests a copy of the trust, the provisions relating to the disposition of assets, may be omitted. Their only interest in the document is to verify that the trust exists. In the case of an aircraft, the FAA will only transfer title to a trust if it gets a copy of the entire trust. Any confidentiality with regard to all assets in the trust and their disposition is sacrificed.
Although the FAA allows aircraft to be registered in the name of a trustee of a trust, under Federal Aviation Regulations (“Regulations”), the trustee and each beneficiary under the trust must be either a U.S. citizen or a resident alien. If this is not the case, the Regulations contain special requirements which must be met, including affidavits specifying the nature of the interest, circumstances that may affect the exercise of trustee authority, and the removal of a trustee.
Estate planning attorneys familiar with these regulations often recommend special “owner trusts” created for the sole purpose of registering aircraft. If you own one of the 1,834 FAA registered aircrafts in New Hampshire, and are considering creating an estate plan that includes a trust, we recommend that you consult an experienced attorney who can help you comply with FAA Regulations and meet your estate planning objectives. Sulloway & Hollis is dedicated to helping its clients achieve their goals. If you have questions regarding your estate plan, please contact our Business and Private Clients Practice Group.
