Page 15 - Volume 17 Number 5

for centuries by stockholders and officers of corporations.There have been very few, if any, cases at the appellate level testing the ability of an injured party to go after an individual who has set up an LLC obviously with the principal purpose to prevent exposure of personal assets. It has been well- settled that such individuals are well- protected by a corporation that is legitimately established and operated in accordance with the laws of its home state. But LLCs are a new creature. And the LLC agreements are structured in a manner foreign to many courts, which might be asked to grant protection to individuals who have established one in another state. My advice to clients thus far has been to stick with corporations to insulate them from personal liability, and file the Subchapter S Election with the IRS, causing them to be treated as a partnership or sole proprietorship for tax purposes. This may not haveall the tax and other advantages of an LLC, but the liability protection is well-established.And the methods of setting up and maintaining a corporation are also important. Many individuals are tempted by the cost-savings of Internet or other advertised cheap corporations, which end up being “shells,” with no stock issued, no officers, no meetings, and essentially no existence, other than one piece of paper from the state. If there should be an accident involving liability of the owner of the aircraft, this corporation would offer little or no protection, since the so-called corporate veil could easily be pierced, exposing the underlying individuals to personal liability.So, the best course of action for an individual in the market for a corporate aircraft who intends to share its use is to carefully choose an aviation lawyer, CPA, aircraft, and insurance broker to assist inorchestration of the ownership and operation of the aircraft in a manner that will meet the FAA requirements, and, perhaps more importantly, avoid the owner from suffering crippling personal liability should a tragic accident occur. T&T•MAY 2013TWIN & TURBINE • 13James A. Robb is an aviation attorney. He is also an ATP rated pilot and former instructor and captain on corporate jets. E-mail jar@robbaviationlaw.com. www.RobbAviationLaw.com