Not every aircraft owner wants their aircraft registered in their home country, notes Dave Higdon. For those seeking an alternative registration - specifically, a US 'N'-number - putting the airplane into an aircraft trust can offer financial, maintenance & tax benefits.
Owners and operators in more than 127 countries understand the benefits of a US registration through Aircraft Guaranty Corporation (AGC), a legally qualified provide of aircraft trusts for more than 28 years. AGC specializes in aircraft trusts and registering the aircraft on behalf of those seeking the N-number registration.
Aircraft trusts are legal agreements in which a qualified trustee owns an aircraft on behalf of an actual owner. The trustee acts on behalf of the actual owner (beneficiary), but it's the trustee's name on the aircraft title and registration.
Indeed, aircraft trusts help keep AGC owner Debbie Mercer-Erwin busy working with trist agents in more than a dozen countries while provididng parallel benefits of being a 'one-stop shop' for transactions and registrations through Wright Brothers Aircraft Title (WBAT), the company she started 15 years ago.
WBAT and AGC are co-located at Oklahoma City, Oklahoma where the FAA maintains the US aircraft and airment registries. Mercer-Erwin acquired AGC two years ago, upgrading the company's services and technologies to strealine the processes for clients of bothe companies. And that's particularly useful for those who need the expertise of both.
Trusteeship: No Simple Avenue
The hard truth is that many companies offering trust services are not legally authorized to do so, Mercer-Erwin explained. The FAA doesn't vet entities applying for registration as a Trustee.
By law, Corporate Trustees must gain their authority from either a state banking commission or by a court in the company's state of incorporation - and, those trust powers must be granted in the ir Articles of Incorporation.
Because the FAA doesn't require verifiable state government-issued prrof of this authority, many companies with the words 'Trust' or 'Trustee' in their name register aircraft in trust without the legal authority to perform that service. To protect the integrity of the Trust, Mercer-Erwin says owners should insist on documentation of the woul-be Trustee's legal authority.
Aircraft Guaranty Learning New Tricks
Aircraft Guaranty provides US and International clients with ownership entities and structures that can help solve no-citizen issues, allowing foreign entities to register their aircraft with the FAA. Since entering this business AGC has registered more than 2,000 aircraft forclients from more than 160 different countries.
Although she only acquired AGC in 2015, Mercer-Erwin has worked hard to give AGC the technology she used to build Wright Brothers into a major player; and Mercer-Erwin has upped the game for both since she purchased AGC.
"The transition has gone really well", she tells GA Buyer Europe. "With Wright Brothers being in OKC and AGC in Texas, it made it all a smooth transaction. Now we're consolidated the two staffs here in Oklahoma City, which helped us become a one-stop shop. Having everything in one room have been a great advantage."
She also elavated the use of technology for both companies. "Another good thing is that we use the web-based service DocuSign more frequently - thanks to the FAA changing how it recognizes documents. With DocuSign we no longer need to wait on document shipments, making it a smoother, cleaner, quicker process."
Reasons Vary, Benefits Are Many...
While not widely used in the US, registrations in Trust are a valuesd solution coveted by many an International operator or owner. Whether for corporate entities or individuals, the reason for registering aircraft in trust varies widely.
For some it's the more favorable maintenance requirements and simplified registration process of the US. For others, Trust registration provides a higher degree of anonymity. Still others gain tax benefits available under certain circumstances. "It varies some for everyone," Mercer-Erwin explains.
Regardless of the underlying logic, registering an aircraft in trust requires a more knowledgeable approach that the simple from the FAA requires of US citizens. "The steps vary somewhat according to the country involved,' Mercer-Erwin offers.
Through the process developed by the company, once an aircraft isregistered in trust with AGC it becoms the title holder of an aircraft. That means AGC receives all communication from the FAA regarding airplanes registered in trust with them. The beneficiary retains control and, upon liquidation of the trust, title and registration.
"We take that responsibility very seriously, and will comply with current FAA guidelines for re-registering your aircraft, maintaining title, and notifying you of any pressing issues that might arise," Mercer-Erwin assures. "We worry about maintaining your title so you don't have to."
Moving Up and On...
When time comes to sell that trus-registered aircraft, AGC and WBAT are on-hand to ease the transition. AGC can help owners navigate the various options for entities who have registered their title in trust. One option involves simply changing the beneficiary of the trust rather than transferring title to a new entity, for example. AGC works on that change with existing and new owners.
For sales involving a new owner Wright Brothers Aircraft Title's escrow and title services include lien and document searches to ensure a clear title. And Mercer-Erwin stressed the importance of using services like WBAT, regardless of the aircraft's value.
"We have a client who bought an aircraft in Europe but didnt do a title search or use escrow," she illustrates. "In working on the trust the buyer wanted, we performed a title search and learned that he had an airplane with an outstanding mechanics lien on it, and a court order mandating payment. The owner is obligated to pay the lien but isn't going to. So we can't do a trust on it because of that lien.
"That's why it's important to do a title search, and why using escrow is important,' Mercer-Erwin stressed. And therein is a key lesson for anyone buying any size aircraft from anywhere in the world.
This article features in AvBuyer's 2018 Yearbook. Read the full edition here.