Very Light Jet Magazine

Whereas only U.S. citizens and resident aliens may own an S Corporation, an LLC can be owned by any combination of individuals or business entities. There is also no limit on the number of investors.

That said, LLCs have certain drawbacks, too. While they require less on-going paperwork in most states, they require far more to get started - at least correctly. Since there are few state-imposed guidelines, LLC founders must draft comprehensive operating agreements to address many basic issues and to minimize the likelihood of future disputes.

The dearth of established state law precedents has indeed made LLCs conflict- prone. I have handled a disproportionate number of disputes between LLC owners who failed to draft meaningful (or logical) operating agreements to govern their relationships. Categories of disputes have included whether owners can sell their interest, what their obligations are to cover cash shortfalls or operating losses, whether the manager can divest the LLC of major assets, the fiduciary duties of owners and managers who seek to establish competitive enterprises, and much more.

As you can see, the LLC is hardly foolproof. A lawyer with an aviation law background will be able to tell you whether the LLC is best for you and set it up properly.

What if the owner is also planning to pilot the plane. What are his legal concerns?

This is known as the Owner-Pilot Problem. VLJ operation poses a major pitfall for some of us. Under the law of most states, individuals are always personally responsible for their own negligent acts. It is the same rule applied on the road. For example, if you borrow your brother's automobile and cause an accident on the road, you and your brother can both be held liable for the damages. The rule is the same in the sky. If, as pilot of your company's VLJ, you cause a loss, you could be liable together with the aircraft's owner. And it does not matter that you own the company that owns the VLJ.

If you own the aircraft in a separate entity, you will need to ensure that you are personally covered by insurance when piloting. Since many VLJ owners and users will likely be their own pilots, this is a concern to bear in mind, especially when you start shopping for liability insurance.

How does your firm work with the individual owner and individual owner- pilots of VLJs and what service options do you offer?

Our work includes drafting offers and contracts, negotiating terms, sealing deals, and overseeing closings. We also review aircraft financing and insurance proposals for our clients. We work for buyers, sellers, fractional managers, and corporate flight departments.

Chris - thank you for that valuable information.

Read more about Robbins Law Firm's aviation law services at RobbinsLaw.org.

The Legal Side of VLJ Ownership, Part II will discuss some important legal aspects of the increasingly popular VLJ fractional share owners and VLJ block hour purchases. Send questions and comments on this series to This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .