Don’t Forget: Limited Liability Companies Offer Limited Liability Protection

A Limited Liability Company (LLC) is often an attractive mechanism for owning an aircraft. An LLC is usually simple to establish, cost effective to operate, and provides flexibility while shielding the LLC’s members from liability in certain circumstances. However, people often fail to understand that the liability protection offered by an LLC is limited. While the extent of liability protection varies by state, an LLC will generally only limit the liability of members as to the debts, obligations, and liability of the entity itself. In other words, the members are usually not held personally liable for the LLC’s debts, obligations, and liability. As pilots who like to fly, it is important  to remember that, in the event of an accident or incident which results in injury to third-parties or damage to property, a claim of pilot negligence may still create exposure to personal liability—even when the aircraft is owned by an LLC. Therefore, it is vital that you consult with an experienced attorney to understand your exposure, including the role entity choice and insurance play, before placing your aircraft under the ownership of an LLC. An additional topic for discussion with counsel is ensuring the operations are legal under Part 91, including the possible use of a dry lease.

Topics: Insurance, Financing, Buying and Selling an Aircraft

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