Suppressors NFA trust vs. family trust vs. individual?

[BoilerUP]

Getting ready to dive into NFA ownership and see that many folks recommend setting up a trust vs. individual ownership.

I've done a bit of internet research, but wanted to ask the experienced folks here before I call our attorney. Forgive me if this has been asked before (I've done a search)...

My wife and I have a testamentary trust set up for our son (and any other children). Its fairly straightforward - our estate goes to the surviving spouse, then to our son upon my wife and I both passing, and if that occurs while our son is still a minor my wife's mother will be the trustee of the trust, which will dissolve upon our son turning 21 years old. In that event, passage of my firearms to my son by the trustee is explicitly required by the trust (though I have no reason to doubt my M-I-L on this).

Can I use this established trust for NFA items (perhaps with some changes/addendums) and have it achieve the same legal purpose, or do I need to establish a specific NFA/gun trust?

My biggest concern is the ability for my wife/son to use my suppressor(s) at their convenience without being outside the law, and them (or the trustee) not needing to worry about transfer and taxes for them in the event of me untimely passing.

If I purchase a suppressor myself now and pay the stamp, and want to transfer it to a trust later, I'd have to pay another $200 tax right?

Thanks!

 

[Doogie]

Re: NFA trust vs. family trust vs. individual?

Trust all the way, cause once you buy one you will want one for every so single gun you own. And getting pictures, prints, and LEO signatures become a pain.

My understanding is that your trust would work as long as the stipulations are set up like you mentioned (over 21 etc). You would have to talk with your attorney to make sure it complies with state laws.

The only thing that might be a problem (and I could be way off base on this) is that only the co-grantors on the trust can use the suppressor. Thus any offspring wouldn't be able to use it as the trust does not include them until both grantors have passed on. And you can't have a beneficiary also be a co-grantor.

Oh and yes on the individual to trust $200 stamp as the can would be changing ownership.

 

[AZGunLaw]

I am going to respond to this even though it is old because others may have the same questions.

A trust is far superior to individual ownership of NFA firearms for several reasons:
1) avoid fingerprints, photos, and CLEO approval
2) all trustees of the trust can possess the NFA firearms. Sharing an individually owned NFA firearm is more problematic. It is illegal to possess an NFA firearm that is not registered to you. 26 U.S.C. 5861(d). Defining the term "possess" is a can of worms, but there is no doubt that knowledge and access, or control, are forms of possession.
3) avoiding probate when you die - who wants a court involved in controlling your gun collection?
4) ensuring your firearm collection goes to your chosen beneficiaries, how and when you want
5) a trust CAN last for multiple generations, which means NFA firearms can pass to the next generation without ATF approval. Individual ownership requires filing ATF form 5 for permission after you die. And then your chosen beneficiary has the same problems you would have if you bought individually (instead of in a trust) - only he or she can possess the item. How does that work if they are married? Or what if you have more than one child - they can't share the NFA firearms.
6) after your death, the trust can provide asset protection (it becomes irrevocable at your death) to protect the assets in it against your beneficiaries lawsuits and creditors
7) a trust provides directions (or at least it should) to your loved ones on what to do with the firearms after you die so they don't accidentally break the law, such as not filing the ATF form 5 if item was individually owned. Think about it, you had to research to learn what you know now...have your wife and kids done the same research?

It is possible to use your existing family trust for your guns, but it is not recommended. First, your regular trust has different concerns than a gun trust would - your regular family trust is concerned with real estate, bank accounts, and avoiding and minimizing taxes at death (among other things), while a good gun trust is primarily concerned with ensuring compliance with state and federal gun laws. The two trusts have different focuses. That means you COULD revise your existing trust to deal with those issues, but its probably cheaper and easier to just get a standalone gun trust. Second, I just think it is better to have your highly regulated gun collection separate from the rest of your financial assets. If there were ever a problem with your NFA firearms or the trust, I just wouldn't all of the rest of your financial assets tied so closely together.

In full disclosure, I am a gun law attorney and have drafted several hundred gun trusts this year alone. My trusts start at just $249. Arizona Gun Law

 

[Oleshep]

I am going to respond to this even though it is old because others may have the same questions.

A trust is far superior to individual ownership of NFA firearms for several reasons:
1) avoid fingerprints, photos, and CLEO approval
2) all trustees of the trust can possess the NFA firearms. Sharing an individually owned NFA firearm is more problematic. It is illegal to possess an NFA firearm that is not registered to you. 26 U.S.C. 5861(d). Defining the term "possess" is a can of worms, but there is no doubt that knowledge and access, or control, are forms of possession.
3) avoiding probate when you die - who wants a court involved in controlling your gun collection?
4) ensuring your firearm collection goes to your chosen beneficiaries, how and when you want
5) a trust CAN last for multiple generations, which means NFA firearms can pass to the next generation without ATF approval. Individual ownership requires filing ATF form 5 for permission after you die. And then your chosen beneficiary has the same problems you would have if you bought individually (instead of in a trust) - only he or she can possess the item. How does that work if they are married? Or what if you have more than one child - they can't share the NFA firearms.
6) after your death, the trust can provide asset protection (it becomes irrevocable at your death) to protect the assets in it against your beneficiaries lawsuits and creditors
7) a trust provides directions (or at least it should) to your loved ones on what to do with the firearms after you die so they don't accidentally break the law, such as not filing the ATF form 5 if item was individually owned. Think about it, you had to research to learn what you know now...have your wife and kids done the same research?

It is possible to use your existing family trust for your guns, but it is not recommended. First, your regular trust has different concerns than a gun trust would - your regular family trust is concerned with real estate, bank accounts, and avoiding and minimizing taxes at death (among other things), while a good gun trust is primarily concerned with ensuring compliance with state and federal gun laws. The two trusts have different focuses. That means you COULD revise your existing trust to deal with those issues, but its probably cheaper and easier to just get a standalone gun trust. Second, I just think it is better to have your highly regulated gun collection separate from the rest of your financial assets. If there were ever a problem with your NFA firearms or the trust, I just wouldn't all of the rest of your financial assets tied so closely together.

In full disclosure, I am a gun law attorney and have drafted several hundred gun trusts this year alone. My trusts start at just $249. Arizona Gun Law

I had just posted this in a separate thread but I was wondering if you might have a comment on it,

Can you place the Non-NFA firearms into the trust as "property" after they have been acquired legally by an individual? Strictly for purpose of inheritance?

My trust has language preventing the inheritance of the items until all legal requirements are met. i.e. Age, Background check etc... It would be nice to have both NFA and Non-NFA items protected for all the reasons you list above..

 

[AZGunLaw]

I had just posted this in a separate thread but I was wondering if you might have a comment on it,

Can you place the Non-NFA firearms into the trust as "property" after they have been acquired legally by an individual? Strictly for purpose of inheritance?

My trust has language preventing the inheritance of the items until all legal requirements are met. i.e. Age, Background check etc... It would be nice to have both NFA and Non-NFA items protected for all the reasons you list above..

Yes you can absolutely do that, generally speaking. I do that exact thing in ALL of my gun trusts - all of the clients, guns, ammunition, and firearm accessories are transferred into the trust. Some states have some laws that make this difficult or complicated though...for example, states that have gun registration laws. If the state requires every gun to be registered to a specific person, and the state has to approve all transfers, they may consider it a legal transfer to put the gun into a trust which will require state approval. This is especially so in community property states when the trust creator is married. Barring that type of issue, I absolutely recommend transferring all title 1 guns into my client's gun trusts. We do so either by drafting a general bill of sale (I transfer, sell, convey all of my firearms to the trustees of the xxxxx trust...) or by a general assignment (similar verbiage as the bill of sale). In that document, we make all future guns trust property as well.

One other consideration, if you have a regular estate planning trust, you may have already made a general assignment of all your personal property (which includes guns) into the trust. In that scenario, we do a bill of sale of assignment from one trust to the new gun trust.

 

[Pinecone]

The local 2A attorneys around here recommend to NOT put non-NFA items into an NFA trust.

And I would not use another trust for my NFA items, just set up another one for the NFA items.

 

[Oleshep]

Yes you can absolutely do that, generally speaking. I do that exact thing in ALL of my gun trusts - all of the clients, guns, ammunition, and firearm accessories are transferred into the trust. Some states have some laws that make this difficult or complicated though...for example, states that have gun registration laws. If the state requires every gun to be registered to a specific person, and the state has to approve all transfers, they may consider it a legal transfer to put the gun into a trust which will require state approval. This is especially so in community property states when the trust creator is married. Barring that type of issue, I absolutely recommend transferring all title 1 guns into my client's gun trusts. We do so either by drafting a general bill of sale (I transfer, sell, convey all of my firearms to the trustees of the xxxxx trust...) or by a general assignment (similar verbiage as the bill of sale). In that document, we make all future guns trust property as well.

One other consideration, if you have a regular estate planning trust, you may have already made a general assignment of all your personal property (which includes guns) into the trust. In that scenario, we do a bill of sale of assignment from one trust to the new gun trust.

Thank you that answers my question exactly..

 

[Grumulkin]

What about putting NFA items purchased by an individual into a trust controlled in part by the same individual? Does one have to buy more tax stamps?

 

[AZGunLaw]

The local 2A attorneys around here recommend to NOT put non-NFA items into an NFA trust.

And I would not use another trust for my NFA items, just set up another one for the NFA items.

Why? What is their reasoning? What state are you in? The only valid reason for that is if there is some state law which makes it impossible or very burdensome, which there some of those out there. For example, in some states, all firearms must be registered to a specific person. Transferring to a joint (ie married couple) could be construed as a transfer and thus require state approval for each and every title 1 gun.

 

[AZGunLaw]

What about putting NFA items purchased by an individual into a trust controlled in part by the same individual? Does one have to buy more tax stamps?

That is fine and done all of the time so that the person can have the benefits of a trust - shared usage, ability to pass on the firearms for multiple generations without ATF or gov intrusion, protection against gov bans, etc.

And yes, transferring an individually owned NFA firearm into a trust does require a new tax stamp. Unfortunately. This is because the trust is a legal "person" under title II of the CGA of '68. A transfer to the trust is the same as a transfer to some stranger. That sucks, but it is the very reason we can use trusts in the first place. So, form 4 and $200 (or $5 if AOW) to go from individually ownership to trust ownership.

 

[RollingThunder51]

He said looking up in disbelief "this is the problem, these folks do not know the law. One never, repeat never, places NFA items into anything other than a fully fire-walled and separate NFA Trust. Only NFA items go into that Trust.
That is rule #1. Anybody tells you otherwise, run away."

Thanks, I will tell them.

 

[Whit]

I am going to respond to this even though it is old because others may have the same questions.

A trust is far superior to individual ownership of NFA firearms for several reasons:
1) avoid fingerprints, photos, and CLEO approval
2) all trustees of the trust can possess the NFA firearms. Sharing an individually owned NFA firearm is more problematic. It is illegal to possess an NFA firearm that is not registered to you. 26 U.S.C. 5861(d). Defining the term "possess" is a can of worms, but there is no doubt that knowledge and access, or control, are forms of possession.
3) avoiding probate when you die - who wants a court involved in controlling your gun collection?
4) ensuring your firearm collection goes to your chosen beneficiaries, how and when you want
5) a trust CAN last for multiple generations, which means NFA firearms can pass to the next generation without ATF approval. Individual ownership requires filing ATF form 5 for permission after you die. And then your chosen beneficiary has the same problems you would have if you bought individually (instead of in a trust) - only he or she can possess the item. How does that work if they are married? Or what if you have more than one child - they can't share the NFA firearms.
6) after your death, the trust can provide asset protection (it becomes irrevocable at your death) to protect the assets in it against your beneficiaries lawsuits and creditors
7) a trust provides directions (or at least it should) to your loved ones on what to do with the firearms after you die so they don't accidentally break the law, such as not filing the ATF form 5 if item was individually owned. Think about it, you had to research to learn what you know now...have your wife and kids done the same research?

It is possible to use your existing family trust for your guns, but it is not recommended. First, your regular trust has different concerns than a gun trust would - your regular family trust is concerned with real estate, bank accounts, and avoiding and minimizing taxes at death (among other things), while a good gun trust is primarily concerned with ensuring compliance with state and federal gun laws. The two trusts have different focuses. That means you COULD revise your existing trust to deal with those issues, but its probably cheaper and easier to just get a standalone gun trust. Second, I just think it is better to have your highly regulated gun collection separate from the rest of your financial assets. If there were ever a problem with your NFA firearms or the trust, I just wouldn't all of the rest of your financial assets tied so closely together.

In full disclosure, I am a gun law attorney and have drafted several hundred gun trusts this year alone. My trusts start at just $249. Arizona Gun Law

I was reading They r getting ready to vote on changing it Jan 2015. I was reading that they are going to change it to where you still have to do finger prints, CLEO has to sign off (basically everything you have to do without a trust) and everyone listed will have to do a background check too. Is that true? I will find it again and post the link.

 

[Whit]

That's a heck of a deal. I contacted a lawyer here and he wants $600 for a trust.

 

[AZGunLaw]

I was reading They r getting ready to vote on changing it Jan 2015. I was reading that they are going to change it to where you still have to do finger prints, CLEO has to sign off (basically everything you have to do without a trust) and everyone listed will have to do a background check too. Is that true? I will find it again and post the link.

That's partially correct. You are referring to ATF 41p. It is a PROPOSED RULE at this point - not a valid, enforceable rule (law). There is no "vote" - that's not how it works. I will try to keep this as brief and simple as possible so as to not bore you with the intricacies of administrative law. First, administrative agencies, like the BATFE, exist because Congress has delegated power to the Executive branch. The case law regarding delegation of power is rich, however, it is sufficient to say that Congress can delegate their legislative (law making) authority so long as they provide "an intelligible principle" to guide the agency. That intelligible principle can be nearly bare bones and offer little guidance, sadly. For those that interpret the Constitution in an originalist fashion, like me, that seems unfathomable. However, that is the current state of the law. Once the administrative agency has the intelligible principle to guide them, they are free to develop rules and guidelines to regulate whatever it is they regulate, subject to any limitations Congress placed on the agency. Here, the BATFE regulates firearms, and as such, is reasonably free to draft and create new rules, or revise rules relating to the regulation of firearms, so long as they don't run afoul of the Congressional laws that have been passed regarding the subject matter of the rule. Here, the laws provide that business entities and trusts can purchase and possess NFA weapons, however, the laws do not expressly provide the methodology and processes for such purposes. Thus, the BATFE is free to develop rules as it sees fit. That's what is happening here - the ATF has a developed a proposed rule to revise the process for trusts and entities that wish to purchase NFA firearms.

There was a public comment period regarding ATF 41p that ended in the end of 2013 and a final rule was originally due to be released in June of 2014. Of course, that didn't happen. The ATF received about 9300 public comments, of which about 8300 were valid. By law the ATF has to review the comments and consider them when formulating the final rule. ATF has one employee reviewing the public comments part-time. I don't think we will see a final rule until mid-2015, but that's just speculation. On that note, I think there is a chance the final rule will look quite different than the proposed rule, or perhaps won't ever been released. The proposed rule was very poorly written, legally speaking, and fraught with problems and violations/irregularities of the Administrative Procedure Act. If the rule is released in a way that is substantially similar to the proposed rule, I think there are lots of grounds to mount a legal challenge to it. It was simply poorly done. In their haste to steal and suppress our rights, they shot themselves in the foot be crafting a giant turd. Sadly, if they want to successfully steal our rights, doing so through administrative regulation would be the most effective route. I would hope all of you would pay attention to such things.

In short, the primary effect of the proposed rule, if enacted as proposed, is to extend requirements of individual NFA item purchasers to apply to trust or business entity purchases, as you stated. Previously, trust and business entity purchasers did not have to submit fingerprint samples, photographs (think 2" x 2" passport style pictures), nor Chief Law Enforcement Officer (CLEO) approval forms to obtain BATFE approval of their NFA purchases, however, individual purchasers did. Under the new proposed rule, trusts and business entities will have to submit fingerprint samples, photographs, and a CLEO approval form for all "responsible parties" of the trust (grantors, trustees, and beneficiaries) or the business entity (partners, members, officers). All of the other benefits of purchasing NFA weapons through a gun trust or business entity will still apply though (like legal sharing, designating beneficiaries, etc). And truth be told, avoiding CLEO sign off and fingerprints was never the most important benefit (or even in the top 5) of a gun trust (at least for those where CLEOs do signoff). Sure is a nice cherry on top though. It is also unlikely that the new rule will have any affect on existing trusts or the NFA firearms that they own. The rule will however, still apply (after it is officially implemented) to NEW applications to purchase NFA items made by existing trusts. Also of note, the ATF has unofficially-confirmed that all applications submitted prior to the effective date of the rule (the date it officially becomes law) will be processed by the ATF under the old rules.

Hope that helps clarify the issue for you.

 

[Whit]

Yes it does, thank you.

 

[Whit]

The biggest reason I was looking at the trust is for example when I buy a suppressor (heaven forbid) and a week later I get in accident and die what happens? I don't want to have it taken away from the family.

 

[Whit]

Deleted

 

[TexasGunTrustLawyer]

Well, we are watching and waiting to see what happens with atf41p.

No reason not to put title 1 firearms into an NFA trust. At least I can't think of any.

Trust? Been covered above. But yes, it's the only way to fly.

I do trust all the time for clients who have purchased title 2 weapons individually and then wanted to move them into a trust because their life needs have changed. I.e. Kurds grew up and hunt with dad and dad wants adult kids to use the items. The additional 200.00 transfer tax is a small price to pay for the added flexibility.

I charged $350.00 for a trust. They can be had for anywhere from free to 1000s of dollars.