Shared Ownership 1987 Mooney M20J

[Steve B]

I am not flying my plane enough and would like to consider a
partnership arrangement for the aircraft. I plan on having the aircraft
based on the west coast. I hope to start a partnership with 1/4 shares
at 22500.00 I am new to the dynamics of sharing ownership and flying
costs. Just curious if there is anybody that can share experiece with a
shared aircraft arrangement.

[N2310D]

"Steve B" > wrote in message
oups.com...
>I am not flying my plane enough and would like to consider a
> partnership arrangement for the aircraft. I plan on having the aircraft
> based on the west coast. I hope to start a partnership with 1/4 shares
> at 22500.00 I am new to the dynamics of sharing ownership and flying
> costs. Just curious if there is anybody that can share experiece with a
> shared aircraft arrangement.
>
Hi Steve,

Where on the west(left) coast.
I have no direct experience with shared ownership. I have however read a
couple articles about ownership plans. One in particular was written a
couple years ago by one of the editors of Flying Mag. In that case the
airplane was shared by owners NOT all in the same geographic location. Well,
two of them were and the other two weren't. In order to share, the
airplane's home base was changed periodically. As I recall, that scheme
worked well enough for the sharing to work for four years or so. The editor
pulled out because he wanted to step up to a higher performance craft.
I'm not suggesting that is the way to go, but you can think about it.
At this time, I'm in an "association" with four other pilots. I can't
really call it a partnership because, in this case, one of the pilots is the
outright owner of the airplane. The other four have no equity in the
airplane. And it is not under any mortgage.
The five of us operate under a set of mutually agreed upon rules pretty
much the way a club would operate. The aircraft owner keeps all the records,
pays the bills, etc. At the beginning of each year, the owner tallies up the
cost of operation, and projects (guesstimates) what it will cost for the
coming year to put money in the kitty for insurance, airport fees, etc. and
that divided by 12 and 5 becomes the monthly dues. The cost of maintenance
(cleaning the plugs, changing the oil and filters, annual, etc.) is divided
by the number of hours the airplane was flown and that becomes the hourly
rate. Each pilot is expected to top off the tanks after each flight so the
next person on the schedule starts with full tanks (minus a gallon or three
now and then, but it is not a big deal).
The informal arrangement works pretty well for us. We have an on-line
calendar for scheduling and I haven't seen any conflict in the year or so
I've been in the gang. The airplane went to Osh this last year and was gone
from home for ten days. Nobody seemed to care. I've warned in advance that I
plan on doing a two-week junket around the western states next summer and no
one is griping. I have the luxury of being self-employed and the airplane is
almost always available to me Monday through Friday for two and three day
trips. I leave the weekends for the rest of the guys unless I have a
pressing need.
I hope this gives you some ideas.

Regards,

Casey Wilson
Freelance Writer
and Photographer

[Robert M. Gary]

Steve B wrote:
> I am not flying my plane enough and would like to consider a
> partnership arrangement for the aircraft. I plan on having the aircraft
> based on the west coast. I hope to start a partnership with 1/4 shares
> at 22500.00 I am new to the dynamics of sharing ownership and flying
> costs. Just curious if there is anybody that can share experiece with a
> shared aircraft arrangement.

For Mooney it comes out to about $40/hr dry plus $500 month, assuming a
$60/month tie down (which you would divide). That doesn't include
insurance or GPS updates though.
That does include annual property tax.

-Robert

[B A R R Y[_2_]]

N2310D wrote:
>
> At this time, I'm in an "association" with four other pilots. I can't
> really call it a partnership because, in this case, one of the pilots is the
> outright owner of the airplane. The other four have no equity in the
> airplane. And it is not under any mortgage.

How do you handle insurance?

That agreement sounds like the owner is renting the aircraft to you,
without officially and legally stating that's he's actually renting.

I would think this might get interesting, in a very bad way, if the
airplane gets bent.

[N2310D]

"B A R R Y" > wrote in message
. ..
> N2310D wrote:
>>
>> At this time, I'm in an "association" with four other pilots. I can't
>> really call it a partnership because, in this case, one of the pilots is
>> the outright owner of the airplane. The other four have no equity in the
>> airplane. And it is not under any mortgage.
>
> How do you handle insurance?
>
> That agreement sounds like the owner is renting the aircraft to you,
> without officially and legally stating that's he's actually renting.
>
> I would think this might get interesting, in a very bad way, if the
> airplane gets bent.
>
The owner lists all five pilots on the policy. The pilots pay an equal
share of the premium cost. The insurance company is happy with the
arrangement.

[B A R R Y[_2_]]

N2310D wrote:
>
> The owner lists all five pilots on the policy. The pilots pay an equal
> share of the premium cost. The insurance company is happy with the
> arrangement.
>

That makes sense.

It's also less informal than I originally would have thought, because
all of you ARE listed together on paper somewhere.

[Robert M. Gary]

B A R R Y wrote:
> N2310D wrote:
> >
> > The owner lists all five pilots on the policy. The pilots pay an equal
> > share of the premium cost. The insurance company is happy with the
> > arrangement.
> >
>
> That makes sense.
>
> It's also less informal than I originally would have thought, because
> all of you ARE listed together on paper somewhere.

You have to be. For a pilot to be covered under the open warranty he
has to be restricted to "causal" access to the aircraft. Rule of thumb
in the industry is that if the pilot has his own set of keys then its
probably not "casual access".

-Robert

[B A R R Y[_2_]]

Robert M. Gary wrote:
> B A R R Y wrote:
>> N2310D wrote:
>>> The owner lists all five pilots on the policy. The pilots pay an equal
>>> share of the premium cost. The insurance company is happy with the
>>> arrangement.
>>>
>> That makes sense.
>>
>> It's also less informal than I originally would have thought, because
>> all of you ARE listed together on paper somewhere.
>
> You have to be. For a pilot to be covered under the open warranty he
> has to be restricted to "causal" access to the aircraft. Rule of thumb
> in the industry is that if the pilot has his own set of keys then its
> probably not "casual access".

That's how I understand it, and that's how my two owner aircraft is set
up. We both coughed up 1/2 the equity, it's registered to both of us,
etc...

However, N2310D's original description sounded a lot like a single owner
renting or bartering blocks of time to cover his ownership costs.

[Robert M. Gary]

B A R R Y wrote:
> Robert M. Gary wrote:
> That's how I understand it, and that's how my two owner aircraft is set
> up. We both coughed up 1/2 the equity, it's registered to both of us,
> etc...
>
> However, N2310D's original description sounded a lot like a single owner
> renting or bartering blocks of time to cover his ownership costs.

Yea, you'd want to be real careful with that, both from the FAA and the
insurance side. You don't want it to look like you're renting the plane
out (even if you're only renting to a few pilots).

-Robert

[Jim Macklin]

If you have a partnership on an airplane with three
partners... and two partners are flying together and crash
and die, also killing some people on the ground...
The surviving partner is legally liable as the owner of the
airplane... His personal assets are on the line;home,
businesses, everything.

Incorporation and owning shares protects your assets.




"Robert M. Gary" > wrote in message
oups.com...
|
| B A R R Y wrote:
| > Robert M. Gary wrote:
| > That's how I understand it, and that's how my two owner
aircraft is set
| > up. We both coughed up 1/2 the equity, it's registered
to both of us,
| > etc...
| >
| > However, N2310D's original description sounded a lot
like a single owner
| > renting or bartering blocks of time to cover his
ownership costs.
|
| Yea, you'd want to be real careful with that, both from
the FAA and the
| insurance side. You don't want it to look like you're
renting the plane
| out (even if you're only renting to a few pilots).
|
| -Robert
|

[Jon Kraus]

Steve,

I am a co-owner of a '79 Mooney 201 and have been for over 2 years now.
Before buying the plane my partner and I had only rented and been in
clubs so we were VERY green at the aircraft owning thing. In our case
it might have been a little easier because since we didn't already own
we knew that all the expenses would just be split down the middle.

We found a plane that we both liked and then bought it (paid too much of
course but that is another thread altogether). The way we work our
partnership is that we have a Limited Liability Corporation that "owns"
the plane and we own the corporation.

As far as expenses go we start off the the month with an equal share of
fixed costs that include the note on the plane, hanger rent, insurance
escrow and XM weather for the month (gotta have that!!). Then we
decided on an hourly wet rate that will include fuel, engine and prop
reserve, and an escrow for the annual inspection.

Any maintenance or upgrades gets split right down the middle and paid at
the end of the month that the expense was encountered. I keep the books
and send out a bill at the end of the month with the expectation that
the money be deposited sometime in the week after the the bill was sent.

I feel extremely fortunate to have found a great guy for a partner.
We've never had an issue with money or availability of the aircraft, and
I think these are the two biggest things that can kill a partnership.

We would even entertain the possibility of one last partner but 3 would
be the most we would do before availability could start to cloud the deal.

Good luck and my opinion is that unless you have a LOT of extra
disposable income, then a partnership is a great way to afford and fly a
nice aircraft.
Jon




Steve B wrote:
> I am not flying my plane enough and would like to consider a
> partnership arrangement for the aircraft. I plan on having the aircraft
> based on the west coast. I hope to start a partnership with 1/4 shares
> at 22500.00 I am new to the dynamics of sharing ownership and flying
> costs. Just curious if there is anybody that can share experiece with a
> shared aircraft arrangement.
>

[Peter Duniho]

"Jim Macklin" > wrote in message
...
> [...]
> Incorporation and owning shares protects your assets.

Incorporation and owning shares MAY protect your assets. If you are in any
way principally responsible for the maintenance and operation of the
partnership and airplane, the corporate veil may not protect you.

[Robert M. Gary]

Jim Macklin wrote:
> If you have a partnership on an airplane with three
> partners... and two partners are flying together and crash
> and die, also killing some people on the ground...
> The surviving partner is legally liable as the owner of the
> airplane... His personal assets are on the line;home,
> businesses, everything.
>
> Incorporation and owning shares protects your assets.

*maybe*. A good friend of mine was actually in that situation and the
judge dismissed him from the case because he said his ownership in the
airplane didn't make him liable for the accident.

However, I did incorporate my airplane. I'm not sure I would do it
again. In California its a **LOT** of work. The tax on the corporation
minimum tax (regardless of what state you incorporate in) is $800/yr if
the corp has *ANY* visibility in the state of CA. Waving that requires
about 2" of paperwork (I've done it twice now). Plus you must file a
Secretary of State statement every year declaring officers and pay an
addition $25. Forgetting to do that will result in going to jail.

-Robert

[Jon Kraus]

In Indiana it cost $90 one time to set up the LLC and you are done. You
just listed several more reasons not to live in California.

Robert M. Gary wrote:

> Jim Macklin wrote:
>
>>If you have a partnership on an airplane with three
>>partners... and two partners are flying together and crash
>>and die, also killing some people on the ground...
>>The surviving partner is legally liable as the owner of the
>>airplane... His personal assets are on the line;home,
>>businesses, everything.
>>
>>Incorporation and owning shares protects your assets.
>
>
> *maybe*. A good friend of mine was actually in that situation and the
> judge dismissed him from the case because he said his ownership in the
> airplane didn't make him liable for the accident.
>
> However, I did incorporate my airplane. I'm not sure I would do it
> again. In California its a **LOT** of work. The tax on the corporation
> minimum tax (regardless of what state you incorporate in) is $800/yr if
> the corp has *ANY* visibility in the state of CA. Waving that requires
> about 2" of paperwork (I've done it twice now). Plus you must file a
> Secretary of State statement every year declaring officers and pay an
> addition $25. Forgetting to do that will result in going to jail.
>
> -Robert
>

[B A R R Y[_2_]]

Jim Macklin wrote:
>
> Incorporation and owning shares protects your assets.
>


Right!

And if you're not personally involved in the accident, a simple LLC can
offer plenty of protection for a reasonable price, both in dollars and
effort. The LLC can go a long way toward protecting personal assets if
one of the other owners has a problem.

I prefer to spend the extra effort to set myself up for happy-happy
endings. In other words, I'm happy if it works out well, and I'm as
happy as possible if it works out poorly. Not possible to get set up
that way? The deal probably isn't a good idea.