How To Set Up A Trust For NFA

[wired]

Bingo

 

[NW GUN GUY]

Thanks for your help

 

[jbett98]

A friend of mine passed away in Nov, 2008. He left a .45 Thompson and a 9mm Mac 11 (both are full auto's and with the correct tax stamp papers in his name) to his wife.
He had a living trust set up before he passed away. She wants to leave both to me after she dies (77 years old). She has not transferred them into her name as yet. Does she need to put these in her name, or can she name me as the recipient of the guns, and than I try to put them in my name after her passing?

 

[wired]

It depends . Did he have the guns in the trusts name or were they on a conventional Form 4? In any case she needs to transfer them to her name on an ATF form 5 . Tell her to call the ATF and they'll walk her through the details. Then she can will the guns to you if thats her choice.

Take her out for a nice dinner . You have good friends.

 

[jbett98]

It's a real sad story. My friend had inherited a lot of rental property, which set him up for life, but his big mistake was not taking seriously the warning signs of the cancer that killed him.
The guns were registered on the form 4's. I will get her to fill out the proper forms and get this squared away. Thanks for the advice.

 

[curmudgeon]

After reading some of these posts, I think perhaps a call to competent attorney may be the best .02 worth of advice I can offer. I recently had a lot of the same concerns regarding the trust issues. I am a Washington resident, we don't have all the luxuries of "freedom" of title II gun ownership up here, but near the end of July of this year our new suppressor law changes for the better. It has spurred a whole bunch of activity up here. Hence, the interest in a trust so that I stay within the law, have flexibility in ownership and I will be able to let my grand children have possession of these items some day as beneficiaries, yes, all within the law. But all this is best done by a competent attorney. Locally here in western Washington, we have Dennis Brislawn. He is one of the the best in country. Your probably wondering what is in it for me? Nothing. I am just another person just like you looking to stay within the law and do so without spending a fortune to obtain a correctly written trust. Dennis is not going to rob you. If you meet him, you will understand who he is and what he is all about. For a few hundred dollars and a well written trust that fits my family needs, it allows me to sleep at night. And these revocable trusts can be amended, so if your life changes (new wife, new kids, etc), you can have it amended. The way I look at it is if you spend $200 for a transfer tax for one item, why wouldn't you spend a few hundred to protect all of your NFA stuff so that you don't have to place a $200 burden per item on your beneficiary(s)? No, I am not a lawyer. Just someone that doesn't want my heirs to get hassled by the BATF when I check out.
If you want to visit Dennis Brislawn's web site for more info go here: Dennis Brislawn: 223,000,000 GUNS OR SO... THINK THIS MIGHT BE A PLANNING ISSUE?

 

[wired]

Then again my free copy of quicken willmaker and the $10 I spent to get the trust notarized saved me a lot of money to spend on other stuff like more tax stamps. 10 so far.

Still a valid trust with all the bells and whistles.

 

[curmudgeon]

I am writing this not to argumentative in this thread. My intent is to present a different perspective because not everyone has the same personal needs for a trust. For what ever your needs for a trust, I am sure they are similar, but not exact to mine. I too have pondered using the canned software solution. I started my research on the internet, then talked to people who have done the trust. I read them, I didn't like what I saw as the canned trust software did not have what I needed. I studied the various state laws because I plan on moving and wanted a trust to be transportable. I then came to the conclusion an attorney written trust is where I needed to be. After I met with the attorney, I realized there was whole lot more to this than what I realized. And like many of you, I had lots of questions that only the attorney could really answer. Someone who is a well versed in making trusts as business and is very well versed in NFA law. There are only a few of these attorneys that fit this description. Most will tell you they can do it. They can't. If the attorney can't recite NFA law off the top of head, he is not the one. If he is not into owning NFA items, he is not the one. If he is not pro-actively involved in the second amendment some how, he is not the one.

For those that want to use the canned software trust to provide a mechanism to purchase Title II firearms, I have a few things to for you think about. Does your trust software have provisions for:
Protection from trustees that use items in the trust while your not present?
What happens to your title II items if you become incapacitated? Who acts in your behalf for keeping/controlling your title II items?
What happens if one of your co-trustees breaks a law and becomes not eligible to legally own a firearm? Does your trust protect you from that person?
What if you get divorced? Does your trust have a clause that defines where the title II firearms reside? Or if your spouse has a claim to them?

One other fact, even if the BATF signs off on your Form 4 trust approval, they can always come back later on it's approval. Is the software company you purchased or got your free copy from going to represent you when dealing with the BATF?

One other thing to think about, if you already have a revocable trust, it can be amended or re-written to accommodate your personal needs as you grow older or your personal life changes and still be within the law.

 

[wired]

For those that want to use the canned software trust to provide a mechanism to purchase Title II firearms, I have a few things to for you think about. Does your trust software have provisions for:

Protection from trustees that use items in the trust while your not present?

Here the thing that you need to remember when using ANY trust. You are just a trustee. Anyone else you name as a trustee is also just a trustee. They have as many rights to possession and use as you do unless you spell out otherwise in the trust. You can put whatever proviso's for use that you want but in the end the other trustee has to follow the law and THEY are responsible as a trustee for their actions

What happens to your title II items if you become incapacitated? Who acts in your behalf for keeping/controlling your title II items?

Its spelled out in the quicken trust. You name someone to act as trustee if you become incapacitated.

What happens if one of your co-trustees breaks a law and becomes not eligible to legally own a firearm? Does your trust protect you from that person?

Its a revocable living trust. As Grantor you can add or remove trustees at will.

What if you get divorced? Does your trust have a clause that defines where the title II firearms reside? Or if your spouse has a claim to them?

Trust property is held by the grantor/trustee. If you name your wife as trustee you can remove her later and she cannot take the NFA items with her. You will still be bound by state laws concerning community property value and may have to compensate for 1/2 of the value of the items attained since the relationship began just like every other asset you hold.

One other fact, even if the BATF signs off on your Form 4 trust approval, they can always come back later on it's approval. Is the software company you purchased or got your free copy from going to represent you when dealing with the BATF?

THAT IS NOT A FACT !!!You'd have to retain and pay an attorney for that anyway. The fact an attorney drafted a trust for you does not mean he will represent you for free if the ATF remarkably changes its mind about your trust. In 75 years the ATF has never reversed itself on a trust owned transfer form 1 or 4 . They arent chomping at the bit to do so now. Once that form is approved the trust and form 4 go into the Indiana Jones Warehouse never to be looked at again unless you do something to warrant it and even then they arent going to cancel the form 4. Once approved...Its approved. Lawyers have been using that scare tactic for years. Its never been true.

One other thing to think about, if you already have a revocable trust, it can be amended or re-written to accommodate your personal needs as you grow older or your personal life changes and still be within the law.

Thats why its best to write a separate gun trust. You can write as many trusts as you want. one fits all doesnt fit anything perfectly. If you can do your own taxes even if they are somewhat complicated with off the shelf software then you can draft your own trust with off the shelf software. If someone does your taxes then yes, you may want to consider paying an attorney to do it. The net effect will be the same in the end either way.

I knew this change in the state law would bring out the attorney's.

 

[curmudgeon]

As I have said in my previous posts, I am not an attorney. My intention here is to provide perspective other than a canned software solution to a revocable trust. We are all free to make choices for ourselves. Informed decisions are best. Nuff said.

 

[NW GUN GUY]

A friend of mine and I want to form a Trust for our NFA stuff. I am the FFL class 1 and am in process of getting my Class 7 and SOT. My friend is the one that has the Knowledge and experience concerning the manufacture of NFA type stuff. We want to be able to share our "Toys" and we figured that a Trust would be the ticket. I would be the Grantor/trustee and he would be a Co-trustee if I understand it correctly. He and I working together will create our Toys and Share them. The bottom line is that I want him to be able to take possession of "his" toys, and keep them at HIS house, as I will be doing the same. Does this scenario sound like it will be set up in the correct fashion?

 

[NW GUN GUY]

The other question that I have is......... Do I need to form the Trust BEFORE I pay for my SOT. Does the Trust purchase the SOT or is it me as an FFL?

 

[wired]

If you build anything as an SOT you and want it to be trust property you will have to transfer it to the trust on a regular form 4 with the $200 stamp and all that jazz. Then the trust "owns" it. Doesnt matter if the trust or the SOT is formed first. Of course you could only do transferables like silencers, SBR's etc. No new machineguns .

Your buddy can be a trustee on the trust you form and take the stuff home. He can only take home stuff that you as an SOT have built on your license and transferred on a regular form 4 to the trust. OK thats not entirely accurate. You two can add anything to the trust including items you buy on a form 3 as long as they are transferred to the trust on a form 4.

The trust and your FFL are two separate legal entities. The SOT is attached to the FFL only. Remember to add anything you transfer on a form 4 to the trusts schedule A which will function as your trusts bound book or you can have a separate bound book for the trust. Do not add trust items to your personal property bound book. They do not belong to you. One the most difficult concepts to grasp and let in as a trustee is that you no longer "own" the NFA item. The trust does. You do not own the trust. You simply manage it.

 

[NW GUN GUY]

Thanks for your insight Wired.......

 

[skydiver]

So...if I understand this right, every NFA item would require a $200 stamp to move into a trust?

I'm not talking about new purchases, but ones that they already own and have a stamp for in their own name.

 

[NW GUN GUY]

What I am understanding is If I as an FFL / SOT holder.....my once a year $500 fee covers me Solely for the Acquisition and Possession of Quantities of NFA items with NO need to pay for individual SOT's. The downside is that I Legally don't "own" the items on a Permanent basis during the period of possession..... it's ONLY possession.

IF I desire to PERMANENTLY keep an item as a "personal" possession I must pay that Individual fee of $200 for each item that "I" want to own.

Items OWNED can be passed on to others.

Items in FFL/ Trust inventory belong to the Entity and must be destroyed or transfered if the entity is dissolved.

Now mind you as an FFL the wait times should be far less , as if it matters...since I already have possession, for receipt of those Tax stamps, but I too must pay for the Stamp If I want to "CALL" the item "mine".

IF I choose to ONLY take possession, USE, PLAY, and Demonstrate the NFA items, and am willing to give the item up someday... I need NOT pay for an individual Tax Stamp for ANY of the Inventory I may have Available to me during the Years that I pay $500 to maintain my SOT status.

ONLY if I decide to let the my SOT expire would I have to pay Taxes to keep items that I may want to keep MINUS any "new" machine guns I may have made as they cannot be transferred to an individual if made after 1986 and NEW full auto's CANNOT be manufactured or possessed by anyone OTHER than a Class 2 /SOT manufacture/Dealer.

IF I let my SOT expire ALL of the FULL AUTO guns I may have made must be Sold to COPS, GOVT, MILITARY or destroyed. I can't keep them without the SOT.

So.......for $500 a year...... you get to PLAY with as much NFA stuff as You want, and make some money....... is it worth it? You decide.

The UPSIDE to the LLC/ Trust situation is that my PERSONAL NFA inventory ,should I choose to maintain one, can be passed on to another "trustee" or Board member in the case of an LLC without further transfer or tax because of the nature of the "entity" out living ME.

Yes it's $500 ..... but it's a write-off too......

I think that's about right...... PLEASE someone correct me if I am off track.

 

[skydiver]

Also, isn't there a special provision for someone in the estate...say a son or daughter... to transfer the NFA items with only a $5 stamp?

 

[NW GUN GUY]

Not sure on that....... I am sure someone will throw us a bone....

 

[wired]

You are slightly off track. Not much. I keep seeing the FFL/Trust reference. Get that out of your head. Trust and FFL are separate never to join entities. Theyre like me and Rosy O'Donnell.

Your 02 SOT at $500 a year lets you buy and sell NFA items. While they are on your books you can use them. Dissolve the FFL and you have to sell your stuff you dont register to yourself. If you do give up the SOT FFL you can sell the post samples to other dealers even if they don't have a LEO letter or you can sell them to the cops. Pre samples you can keep if you transfer them to yourself ( not trust ) on a form 4 or you can sell them to other dealers. If you sell them later on they have to be sold to an SOT. If you make stuff on an 02/07 SOT you need to be registered with the state dept and pay a $2000 ITAR fee a year or whatever it is they charge now. I know they wanted to raise it last year but I don't know if it went through. If you want to keep transferables you transfer them to yourself or your trust at $200 tax a pop.

 

[wired]

No fee on a form 5 to transfer to a listed lawful heir. Its a tax free transfer. Of course YOU have to be dead which takes all the fun out of it but your heir pays no NFA tax on the transfer.