Updated . Educational only — not tax, legal, or lending advice. Confirm figures with your CPA, the state revenue department, and a lender before you close.
The Trust Holds Title. The Guarantor Holds the Credit.
Lenders do not finance a trust because the trust has good credit. Trusts usually have none. Registration reasons to use a trust are on non-citizen registration. This page is what changes in the credit file.
What the lender adds to the file
- The full trust agreement, not a summary. They are looking for who can sell, who can borrow, and whether a trustee can ignore the beneficiary.
- A personal or corporate guaranty from the people who actually have income and assets. The trustee’s signature alone is not the credit.
- An opinion, on non-standard trusts, that the trustee can grant the security interest and that FAA registration will not be invalidated by the structure.
- Insurance that lists the trust as registered owner and the lender as loss payee.
Non-citizen trusts versus estate trusts
A non-citizen trust exists so the FAA can register an aircraft to a U.S. trustee when the beneficial owner is not a U.S. citizen. A revocable living trust exists for estate planning of a citizen who could have taken title directly. Lenders see the first every week and the second as extra paper. Neither one is a tax shelter, and neither one hides the beneficial owner from a lender’s know-your-customer process.
Bring the trust draft to the lender before the seller’s deadline. Rewriting a trust the FAA has already accepted, because the lender’s counsel wants a sentence changed, is a common two-week delay.
Questions buyers actually ask
Can the lender be the trustee?
That is a different product, used by some non-citizen programs, and it is negotiated. Do not name the lender as trustee in a DIY document.
Will a trust lower the rate?
No. It adds conditions. The rate follows the guarantor and the aircraft.