Asset Protection Strategies for Airplane Owners

Real LifernFortunately, airplanes crashes are rare. Unfortunately, those that do occur are almost always catastrophic. Rarely does everyone survive, and often planes collide with one another or into buildings causing even more collateral destruction. rnIf such a catastrophe involves an airplane owned by you personally — a plane in your name and not owned by another entity - your personal assets will be at risk. Placing the airplane into an entity - specifically, a Delaware LLC or Delaware corporation - is a wise and prudent way to shield your personal assets from the consequences of a crash. Benefits of Incorporating in Delaware * Limited liabilityrn * Asset protectionrn o Homesteading & Insurancern o Delaware Family Limited Partnershipsrn o Delaware Corporations and Limited Liability Companiesrn o International Corporationsrn o Delaware Trustsrn o International Trustsrn * Offsets inadequate insurancern * Pass-through taxation (with S-Corp and LLC) * Business deductions for losses and expensesrn * Enhanced credibility with existing and potential customersrn * Investor attraction StrategyrnFollowing are strategies implemented by our customers to protect their assets through Harvard Business Services, Inc., depending on whether they own one plane or multiple planes. OWNERS OF ONE PLANE:rnWe often hear pilots ask, "I fly my own plane, so how can incorporating protect me from liability?" These pilots mistakenly believe that if they are behind the stick they are liable no matter what, which is simply not true if they take the right precautions. Here are a few tips from owner/operators faced with the same situation: * If you are sued for an accident that wasn't your fault, it may help to be incorporated in Delaware. A Delaware corporation or Delaware LLC will provide another layer of protection that complicates the plaintiff’s lawyer’s task. This extra layer of protection may cause the lawyers to reconsider suing you personally, or may be an inducement for them to attempt to reach a settlement. * If you own a home, check on your state's "Homestead Laws." These laws, which vary greatly from state to state, may afford you protection from losing your home, even if you lose everything else and can't pay for it. In some states, you have to qualify first, so check it out. * If you own any other real estate — a farm, a beach house, a cottage in the woods, or an apartment building—put each piece of real estate under a separate Delaware LLC immediately. Include your spouse and children in the LLC as non-voting members. In most states you'll need to file a quit-claim deed to transfer the ownership. If the property has a loan against it, you may need the permission of the lender to transfer the title. * If you have numerous assets, consider setting up a family trust. You'll need a good trust lawyer, which adds to the cost, but it is the best form of protection there is. * If you've got nothing to lose (that is, you don't have any sizable assets), consider increasing your insurance. It may keep you from declaring bankruptcy. OWNERS OF MORE THAN ONE PLANE:rnAt great risk to their future financial wellbeing, most owner/operators who own more than one plane are still doing business in their own names as sole proprietors. If an accident occurs, in an effort to recover damages the victim or victims will go after both the assets of the business plus the owner's personal assets. This could not only bankrupt the business but also strip the owner of all other personal assets. There are those who have incorporated the business and placed the ownership of all the planes in this one corporation. While this arrangement is preferable to a sole proprietorship, it still leaves the corporation vulnerable to losing all its other assets and planes in a lawsuit resulting from an accident involving one plane. Forming multiple entities so that each one owns a single plane is the safest strategy—a strategy the large transportation companies, including major airlines, employ. They use this strategy for maximum protection from lawsuits, and so can you.