NAFA member, Michael Hoggan, Senior Vice President with TVPX, discusses owner trusts, cross-border transactions, and U.S. Customs Issues.
The U.S. is the most popular jurisdiction in the world in which to register aircraft. The FAA’s maintenance and operational requirements are widely respected and the legal precedents regarding title priorities and lender rights are well established.
Buyers and sellers who are not U.S. citizens often utilize an owner trust when registering aircraft in the U.S. This is because aircraft registered in the U.S. generally must be owned by a U.S. citizen. These aircraft may remain registered in the U.S. for the entire ownership period. However, many times FAA registration is needed for only a short time to facilitate a cross-border transaction.
For example, a foreign seller may need an owner trust to register the aircraft in the U.S. in preparation for a sale, or a foreign buyer who closes on a purchase in the U.S. may need a trust to legally operate and remove the aircraft to the buyer’s home jurisdiction. Another example is the situation in which foreign buyers and sellers use an owner trust to take advantage of the numerous bilateral agreements the U.S. has with foreign jurisdictions for reciprocal airworthiness certification. Such trusts can remain in effect for as long as necessary, depending on the customer’s particular needs.
Cross-border transactions in the U.S. also involve customs issues. For example, a foreign seller may bring an aircraft to the U.S. in preparation for a sale, a U.S seller may remove an aircraft to another jurisdiction for sale, a foreign buyer may remove a recently purchased aircraft from the U.S. to be based in another jurisdiction, or a U.S. buyer might bring an aircraft purchased overseas back to be based in the U.S. These situations all require a proper U.S. customs entry or export.
Recently, there has been increased scrutiny of aircraft imports and exports by U.S. regulatory authorities, in large part due to confusion many people have about what it means to import or export an aircraft properly. Some people wrongly believe that aircraft on the N registry do not need to be imported or exported through customs. Other people are under the mistaken assumption that an Export Certificate of Airworthiness issued by the FAA satisfies the requirements for an export for customs purposes. These can be very costly mistakes. Fortunately, a proper import or export is easy and inexpensive to accomplish through a U.S. customs broker familiar with aircraft transactions. However, it is critical that the broker is retained prior to moving the aircraft into or out of the United States so that the required customs process is followed.
The keys to a successful cross-border transaction are retaining qualified advisers and advanced planning. The experienced TVPX owner trust and U.S. customs brokerage teams can help clients avoid common pitfalls. For assistance with owner trusts for short or long-term U.S. registration purposes, please contact Scott Nielsen at +1.801.877.0509 and firstname.lastname@example.org or Jackson Frandsen at +1.801.797.4869 and email@example.com. For assistance with an import or export through U.S. customs, please contact Tobias Kleitman at +1.978.610.1150 and firstname.lastname@example.org.
This article was originally published by TVPX on February 16, 2021.