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Anyone looking for general information regarding whether to apply individual, trust, or corp, should check out the article I wrote here: http://www.princelaw.com/2007/12/19/national-firearms-act-estate-planning-101. The blog was recently updated and it looks like some of the text got a little screwy but it should be readable.

The biggest pros are 1. multiple people (all empowered trustees) can possess the NFA firearms; 2. no CLEO signature, fingerprints, or pictures. Moreover, as compared to a corp, typically trusts do not have yearly costs (this can vary by state).

The biggest cons are: 1. It needs to be set up PROPERLY. Will and Trust maker is NOT designed for NFA Trusts. Spend a few dollars (usually around $500-$600) and have a properly drafted trust. If it is not set up properly, your NFA firearms could be seized and forfeited.  2. You will not likely get a tax free transfer upon the grantor/settlors death. 3. There will likely be a bunch of new regulations from the BATFE shortly...

Be advised, I know of at least 6 states where Quicken Will and Trust maker is NOT up to date on the current law. While Maine is not one of them, it may be one to add to the list, and relying on your FFL/SOT for legal advice is to throw caution to the wind. Just be forewarned...Also, if your trust is later found to be deficient, just try to sue Quicken.  You would have a much better chance with a malpractice suit against a local attorney.

There are a lot of things that can be out of whack with a trust, especially when you have generic trusts with everyone and anyone playing lawyer. A good example is you set up a trust, where you are grantor and trustee, with your wife as beneficiary. You die. Now, your trust has NO trustee to distribute the assets. So, your wife has to petition the court to appoint a trustee, who will likely not know the first thing about NFA firearms and may unlawfully transfer the NFA firearms.

Moreover, many who play internet/trust lawyer don't realize that you cannot have a trust where the Grantor/Settlor is also the beneficiary. The BATFE has received dozens of trusts designed in this way. Techinically speaking, these aren't trusts because they violate the basic requirements of a trust. Then, you get the individuals who are using the trust merely to acquire firearms with NO foresight as to the possible consequences in the future. They don't think about possible problems if/when they die. They only care about procuring the firearm now. Just wait until the BATFE comes and seizes and foreits the weapons upon his/her death.

My father's law firm writes Pennsylvania NFA Trust. There is no one canned NFA Trust because there are specific provisions depending on what the person hopes to accomplish. Moreover, every state's trust laws are different and thus, each NFA trust must be state specific.  

For better or worse I am the attorney that began promoting trusts for NFA purposes severla years ago and got this current trand going.  For information on pros and cons as well as how a trust works, you can review my article from Small Arms Review.  A copy of the first article from MArch 2007 issue is posted on Florida Shooters Network in the NFA forum.  If you like I can post the text from the follow up article (March 2008) here. 

As SigforLife correctly states, properly drafted within the laws of your state, a trust has many advantages.  However if improperly drafted, it may be years before you find out.  The internet software oftentimes does set up a valid trust, but where the problem is that whale it may be valid, it does not mean that it is set up for proper administration down the line when you die or become incapacitated.  The worst is some dealers are printing up trusts for folks for $50.  Not only is it the unlicensed practice of law which is the kind of thing that can get your FFL taken away, when they screw it up and the family is faced with a big legal fee to straighten it out years down the road, what do you do?  I have reviewed many trusts where this was the case, for NFA assets and even for forlks general esatet plan.  Heck I had one that a guys dealer in NC did for him where he listed the guys brother as sole trustee, meaning that the guy who set up the trust cannot be in possession of the NFA items, only the tustee can possess them (besides the fact the it is questionable whether a trust can own NFA in NC anyway due to a screwy provision in their law dealing with weapons of mas destructon. 

I believe that SigforLife is Joshua whom I was happy to help with answering some questions when he was working on his article.  If correct Joshua, hope you are doing well.

As for what to send, yes send a photocopy of the entire trust agreement, including any attachments or schedules.  I am working on an outline for additional provisions to be included in the next version of the NFA Handbook that will clarify in writing the procedure for trust as well as corporate transfers (i.e paperwork required, how to complete the forms, etc.).  Once it has been completed and approved by the NFATCA and ATF I will be happy to post it here as well.  If anyone has any particular questions on the subject, please let me know.

Bob J. Howell, Esq., FFL/SOT

Bob: Please email me the text of the article if possible and I will post it here for all to read. Your input is appreciated.
John

There are many posts on the Internet where non lawyers are providing incorrect information about NFA trusts and how to send in the trust. There seems to be some confusion over the Certificate of Trust and the Declaration of Trust.

The Certificate of Trust is typically 1-2 pages plus signatures and will not be accepted with the Form 4 or Form 1 Transfer.

When the Form 4 is sent in to the ATF for a trust it must contain:
The Full Trust document;
Any assignment page or attachment A;
The Form 4; and
A check for the $200 Transfer tax.

I have started gathering a list of frequently asked questions in regards to Form 4 and Form 1's which can be found on my NFA Gun Trust Website/ in the NFA FAQ's.

If anyone has any specific questions, I would be happy to address them through this forum or you may contact me directly. Please do not post information of a confidential nature.

David Goldman, Attorney
http://www.guntrustlawyer.com

Thanks for your input David. I would like to take this opportunity to encourage any other attorneys that may wish to submit posts along with their contact information for the benefit of those seeking a NFA trust. Feel free to post a phone number as well.

NFA trusts seem to be quite popular and growing in number. It is important that anyone with a trust or intending upon setting up a trust understand the various aspects and most importantly make 100% sure that you are up to date on any and all requirements. That very last thing anyone would want to find out would be some sort of technical violation that gets them in trouble. As a group I am sure that all NFA owners, regardless of status as an individual or dealer, want to make certain we stay within bounds of the law.

John

John asked me to post a reprint of my article from the March 2007 Small Arms Review on the topic of NFA Trusts so here it is:

Use of the Revocable Trust to Purchase NFA Items

By Bob J. Howell, Esq.

 

            My CLEO says he wont sign off on any Form 4s, now what do I do?  This is something that many in the NFA community have heard time and again.  Despite the best efforts of many to explain the true meaning of the signoff provision of the Form 4, there are still many LEOs who dont understand the meaning of the signoff or dont want to understand for personal or political reasons.  For many years, the standard reply to this question has been to advise the potential Buyer to set up a corporation.  While this method of purchasing NFA items has been in widespread use for many years, there is an alternative, the Revocable Trust. 

 

A Revocable Trust is a legal entity established under state law, like a corporation, and as such, a Trust can hold title to real and personal property.  Some are familiar with the use of a Revocable Trust for Estate Planning.  However, many are unfamiliar with the use of a Revocable Trust to purchase and own NFA items.  Section 179.11 of the Federal Firearms Regulations, Part 179 Machine Guns, Destructive Devices and Certain Other Firearms, specifically defines a Person (i.e. someone who is authorized to purchase NFA items) to include Trusts as well as Corporations.  Therefore, absent a state law in your particular jurisdiction prohibiting same, you may purchase and own NFA items through a Revocable Trust. 

 

Aside from being merely an alternative method of purchasing an NFA item, the Revocable Trust provides many benefits over a Corporation or LLC.  In states where a Trust is not required to be registered, a Trust will provide a more private method of ownership.  In the authors home state of Florida, there is no requirement to register or record a Revocable Trust.  Therefore, the existence and terms of the Trust are known only to those whom you choose to tell.  This is generally not the case with a Corporation.  In a casual conversation with someone at the range who is new to NFA and has questions about it, you might explain the legalities and process for purchase and ownership as well as how you purchased them through your corporation because the local LEO refuses to sign.  A quick search through the states Division of Corporations website using your name or the name of the Corporation can yield a wealth of information.  Through such sources a stranger can find out information such as what corporations you are an officer of and the registered address of any such corporations.  If you use your home address as the registered address of your corporation, the person performing the search now knows where you live and where you may store your NFA items.

 

Another area where a Trust may be more desirable is cost.  With the cost of initial filing fees and annual corporate fees, your cost for the corporation may exceed the cost of setting up a trust either initially or over time.  As an example, an individual in Florida wants to purchase a .22 suppressor from a dealer for $300.00.  As his LEO wont sign the Form 4, he sets up a Corporation to purchase the suppressor.  Filing fees to set up the corporation (absent cost of any legal assistance or cost of a corporate book) were $70.00.  The annual corporate filing fee is $150.00 and is paid every year the corporation is active.  Five years later he still has the suppressor, but he has paid $820.00 in initial filing and annual fees and will continue to pay $150 a year as long as he wants to keep the suppressor.  A lot of money for a $300 suppressor.   Filing fees and annual fees for Corporations or LLCs may be different in your state, but the point is that once the Trust is established there are generally no further fees to maintain it.

 

In a typical Revocable Trust where you act as your own Trustee there is no separate Federal tax return to be filed and any profit or loss incurred by the trust is passed through on your individual tax return.  With a Corporation or LLC, you may be required to file state or federal tax returns, depending on your jurisdiction and the activities of the corporation.  This too can be an added expense that using a Trust may avoid.

 

A Trust also has the benefit of being able to manage or distribute the Trust assets upon your death or incapacity.  If you own NFA items in a Corporation and die, then your interest in that Corporation, and accordingly the assets held by the Corporation, will likely be subject to Probate.  For those not familiar with Probate, it is the court authorized procedure where the assets of a deceased person are collected, their debts are paid and the remaining assets are distributed to their beneficiaries pursuant to the terms of the their will, or in absence thereof, pursuant to the terms of state law.  The duration and cost of this process may vary from state to state, but it is generally not cheap.  By placing NFA items into a Trust, you can direct where those items are to go upon your death without fear of the high cost of probate.  Revocable Trusts are a common tool used by estate planning attorneys across the country to help their clients avoid probate.  The Author has prepared many Trusts for individuals, as part of their general estate plan, which they have used for the dual purpose of avoiding probate on their estate as a whole as well as to purchase NFA items.

 

Like a Corporation, there are no fingerprints or photos submitted with a transfer to a Revocable Trust.  However, like a corporation, you must submit proof of the existence of the entity (be it a trust or corporation) with your Form 4.  While many practitioners will advise the purchaser to simply submit a Certificate or Trust (typically a short one page notarized document confirming the existence of the trust and identifying the Trustee) as proof, the Author recommends that you submit a full copy of the trust itself to avoid any questions from the ATFE as to the legitimacy and existence of the Trust.  While some are uneasy about submitting a copy of their trust with the Form 4, the author has had no issues with this practice.  Additionally, as the Form 4 is essentially a tax document the Form 4, and the documents accompanying it, would be deemed private tax information between you and the ATFE.

 

The last question the author is often presented with when discussing a Revocable Trust for NFA ownership is the subject of a professionally prepared Trust versus a self- prepared document.  Depending upon the complexity of the trust provisions regarding the management and distributions of the NFA items and whether the trust is also being used for general estate planning purposes in many areas the cost can run as little as a few hundred dollars.  It has been the Authors experience that many of the forms and computer programs available for drafting trusts and other legal documents provide just enough information to be dangerous.  Like the wise man said, you get what you pay for.  While doing it yourself may save a few bucks, doing it wrong can cost you quite a bit more in legal fees or even your freedom.  The author generally provides a prospective client with two pieces free of advice when asked about do-it-yourself documents.  One is that you dont have to use the Author, but do yourself a favor and use an attorney with experience in trust preparation.  The other is that if the cost of correctly preparing the documentation scares you, perhaps NFA is not the hobby for you.

 

            Use of the Revocable Trust for NFA purchases is not new but rather is something that many were, until recently, unaware of.  The Author has seen an increasing number of questions about its use on various websites along with an increasing number of well intentioned but misleading or incorrect answers.  This article is intended to address many of those questions and provide an overview of the general traits and benefits of using a Revocable Trust for NFA ownership. Before proceeding however, you should always  seek competent legal advice in your jurisdiction to determine if it is right for you. 

 

For further questions on NFA Trusts call or email

 

Bob J. Howell, Esq.8551 W. Sunrise Boulevard, Ste 207Plantation, FL33322954-424-8889bjhowell@att.net

hi fellas i was refered this way when asking questions about using a trust. Thanks again!

quick question for question 2a. it ask for transferee's name so there i put Sshooters Trust.

now on question 15 "transferee's certification starts with I,(INSERT NAME)

is it proper to have it say I, Sshooter, have a reasonable... or should it also say I, Sshooter trust?

thanks again

almost forgot on the certification of compliance
for number 1. I Put Sshooter Trust in the name of corp, partnership or asso. section then my name in number 2. is this correct?

-- Edited by Sshooter at 14:51, 2008-09-22

thanks Bob, i was told to put my name and my title, my trust is worded to where it states my name as the settlor.. i suppose this will be the same thing?

so my paper work is

Sshooter, Settlor

damn, i guess i will have some delays on my paper work, it was done..

I____Sshooter, Settlor__ blah blah.. All lawful purposes..

then signed

Sshooter.. and nothing more..

i did a form 4 on a machine gun through a dealer and they had me do it that way aswell.. will atf just send all my forms back or what is the handling process when they are kicked back?

thanks, hopefully my mistakes are not major issues and it goes through..

Hey David, I notice you often call the BATFE the "AFT." It has never been the "AFT." It was the AFTD from 1968-1972, but was then renamed the ATF. With the passage of the Homeland Security Act, it became the BATFE (some call it the ATFE).

For the history of the BATFE, see my article Section II, subsection B. http://www.princelaw.com/assets/2008/9/21/Violating_Due_Process.pdf

my trust with done by an attorney in orlando who is familiar with the NFA scene. Im sure thats upto par, i just filled out the forms with a slight error i guess