Registering Your Aircraft in Trust: Who Can be a Beneficiary of an Aircraft Trust?

Clients often wonder who the beneficiary can be when they register an aircraft in trust. It’s fairly straightforward – the beneficiary of an aircraft trust can essentially be who or what you want it to be, as long as it is legal within local structures. 

After all, aircraft trusts were created to solve a problem – airlines, publicly traded with their ownership changing regularly, must be registered in the US to effectively operate. With the expansion of general aviation and the global nature of the aircraft market, the use of aircraft trusts became more widespread.

Approved by the Federal Aviation Administration (FAA) and used legitimately for over 40 years, trusts provide a transparent and legal way for these high-value assets (just like many others) to be owned by a third party for US registration purposes, structural purposes, simplification purposes, or convenience. 

After meeting any legal and tax requirements there are few guidelines for who can be a beneficiary – it makes sense to have a lot of different structures available to suit different scenarios. The different structures to choose from can make the decision a bit more complex, but each provides benefits to registering in trust.

The beneficiary of an aircraft trust can be an individual, a corporation, a limited liability corporation, or a kind of partnership unique to a certain country, among other structures. Regardless of the pick – the best set up for the situation – it still must be verified through Know Your Customer (KYC) protocols.

Properly identifying prospective clients, whether a new beneficiary or a beneficial transfer, will always be a huge part of the aircraft trust process. The main requirement to fulfill here is transparency – visibility of the owner and operator is a must. 

The beneficial owner doesn’t have to be the operator though – the operator can be anyone the beneficiary chooses. Both owner and operator must submit passport and proof of residence for verification, and information about where the aircraft is hangared is also filed with the FAA.

This information, along with aircraft maintenance records and more details about operations and crew, must also be available within days of request by the FAA. 

Beyond transparency, with the options available for beneficiary structures, the client’s situation and preferences are paramount in the decision. One example of a beneficiary structure used in trusts that we often get questions about is the LLC.

The LLC is often a smart strategy for protecting an asset, but there are restrictions and a specific course of action to adhere to, namely the FAA requirement for two thirds of the stakeholders to be US citizens. Foreign entities, however, are able to put the aircraft in an LLC and register the title in trust in the US.

Registering an aircraft with an LLC is a strategy often put to use by US citizens. The purpose in both forming an LLC and registering an aircraft with it are the same: to limit the liability of an individual in any kind of recourse, protecting the asset. 

The approach for our clients using an LLC has the same results. An LLC can be the beneficiary of the trust instead of an individual. In this way, liability is limited to the LLC, protecting both the individual and the owner trustee. 

With this course of action, as well as the many others available, Aircraft Guaranty Corporation can help ensure that the aircraft and the beneficial owner are carefully protected. This is always the aim for a reputable owner trustee.