Under Federal Law all aircraft located in the United States must be registered with the Federal Aviation Administration (FAA). 49 USCS 1403. The procedure for registering and transferring ownership of aircraft is “federal,” so state law is typically not involved. The “trap” for the unwary is the possibility that the FAA may change the personal aircraft designation from private to commercial when transferring the aircraft to a LLC or partnership and a “tax” is often associated with this change. Transferring your aircraft into a family or revocable trust is typically not subject to this tax trap.
Documents to transfer an Aircraft
Many of our clients have personal aircraft that they would like to be funded into their trust. To transfer an aircraft to a revocable trust or any other entity, the Trustee or Co-trustee applicants must send a Letter of Instruction to the FAA requesting they change the registration.
Other documents that need to be filed with the Letter of Instruction include:
1. Bill of Sale signed by the present owner to the Trustee(s)*
2. The original Certificate of Registration
3. New Aircraft Registration Application showing the Trustee(s) as the applicant (owners are required to retain the “PINK COPY” of the registration in the aircraft until the new Certificate of Registration is received.)
4. Certified copy of the complete Trust
5. Affidavit certifying that all of the Trustees are U.S. Citizens or legal residents and that all beneficiaries of the Trust are U.S. Citizens or legal residents. This includes each person whose security interest in the aircraft is incorporated in the trust. If any beneficiary under the trust is not a U.S. Citizen or a resident alien, the trustee or trustees must provide an affidavit stating the trustee is not aware of any reason, situation, or relationship that would give the non-citizen a share of control greater than 25 percent to influence or limit the exercise of the trustee’s authority.
6. $5.00 Aircraft Registration Fee
*NOTE: A Trustee should always include “Trustee” following their name on the bill of sale or application documents. The applicant Trustee(s) must also print their names below their signature on the application for registration form.
The FAA will then issue a new certificate of registration in the name of the revocable trust or the asset protection entity. Additional information and registration application forms can be obtained from the FAA’s Aircraft Registration Branch at (405) 954-3116 or Aircraft Owners and Pilots Association (AOPA) at 1-800-USA-AOPA or download the form Information to Aid in the Registration of U.S. Civil Aircraft, AC Form 8050-94.