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Do you have Questions on Why a Gun Trust for NFA Products is the preferred method of buying/transferring a Silencer, Short Barreled Rifle (SBR), Short Barrelled Shotgun (SBS), Machine Gun or Other NFA item? How about what different parts of the trust can do for you? See our FAQ's and Answers below. You can also search our Catalog for "NFA Trust" or Search for Part# NFATRUST & purchase the trust right online from Gun Smith Arms for only $99!! We will send you a email with the info we need from you in order to do this & get the ball rolling on a NFA Trust today.
Firearms regulated by the National Firearms Act (“NFA”), such as fully-automatic weapons (also known as “machine guns”), short-barreled rifles (“SBRs”), short-barreled shotguns (“SBSs”), and sound suppressors (also known as “mufflers” and “silencers”) are commonly known as “NFA firearms,” formally known as “Title II weapons,” and oftentimes incorrectly referred to as “Class 3” firearms or weapons. On the other hand, firearms that are not regulated by the NFA, but that are regulated by the Gun Control Act of 1968 (“GCA”) and other federal laws, are formally known as “Title I weapons.” To distinguish them from NFA firearms, Title I firearms are commonly referred to a “non-NFA firearms” or “regular firearms.”
Basically, there are two ways that an individual or a legal entity, such as a trust, corporation, limited liability company, or partnership, may legally acquire NFA firearms, if the individual or entity is not prohibited by federal, state, or local law from receiving or possessing firearms:
(1) by transfer after approval by the ATF of a registered NFA firearm from its lawful owner residing in the same state as the transferee (ATF Form 4); or
(2) by obtaining prior approval from the ATF to make NFA firearms (ATF Form 1).
A trust is a fiduciary agreement that allows a party (known as a trustee) to hold assets on behalf of one or more beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries. When a trust is created by a party (known as the settlor), a separate legal entity is created. After the trust is created, the settlor transfers ownership of assets from the settlor’s name to the trust’s name. If the asset is personal property, the settlor signs an assignment of the personal property to the trust. The trustees of the trust may also acquire assets on behalf of the trust. The duty of the trustee, who is named in the trust agreement, is to administer trust assets in accordance with the terms of the trust agreement, for the benefit of the trust beneficiary.
A trust is classified as a “living” trust when it is established during the settlor’s lifetime and as a “revocable” trust when the settlor has reserved the right to amend or revoke the trust during the settlor’s lifetime. A revocable living trust can help assets pass outside of probate, yet allows the settlor to retain control of the assets during the settlor’s lifetime. It is flexible and can be dissolved by the settlor at any time, if the settlor’s circumstances or intentions change. A revocable trust typically becomes irrevocable upon the death of the settlor. A settlor can also serve as a trustee (or co-trustee) and retain ownership and control over the trust, its terms, and its assets during the settlor’s lifetime, but make provisions for a successor trustee to manage the assets in the event of the settlor’s incapacity or death.
A gun trust is special type of trust designed to address issues that are unique to firearms, which are one of the most heavily-regulated types of personal property in the United States. Many ordinary law-abiding citizens use gun trusts to acquire and enjoy NFA firearms. Most gun trusts are highly-customized revocable living trusts that address the rights and duties of the parties to the gun trust relating to the use, possession, and transfer of firearms. Most gun trusts determine how a single person or a married couple’s firearms are to be managed during his/her/their lifetime, in the event of his/her/their incapacity, and also upon his/her/their death. Because firearms in the gun trust pass privately to the beneficiaries outside of the probate court process, many people also assign their non-NFA firearms to their gun trusts. A well-written gun trust can serve as a comprehensive estate plan for all of the settlor’s firearms that are assigned to or acquired by the gun trust.
The new ATF 41F regulations became effective on July 13, 2016. This rule affects the documentation that needs to be submitted with each new Form 1 (request to make an NFA firearm), Form 4 (request for tax-paid transfer of an NFA firearm), and Form 5 (request for tax-exempt transfer of an NFA firearm) filed on or after July 13, 2016. ATF 41F does not change the advantages of using a gun trust to acquire NFA firearms.
Three of the most important benefits of a gun trust are:
(1) NFA firearms registered to a gun trust can be used and possessed by more than one person. The settlor of the gun trust can add or delete persons (co-trustees) who are allowed to use and possess the NFA firearms throughout his or her lifetime. NFA firearms registered to an individual can only be used and possessed by the registered individual during the individual’s lifetime.
(2) NFA firearms registered to a gun trust pass to the beneficiaries of the gun trust outside of the probate process according to the terms and conditions of the gun trust agreement prepared by the settlor. NFA firearms registered to an individual pass to his or her beneficiaries according to the terms of the individual’s last will and testament, which is probated in a probate court and provided to the ATF during the transfer process so the executor can prove to the ATF that the individual intended to transfer the NFA firearms to the beneficiaries.
(3) If your NFA firearms are owned by you individually and you are later deemed to be incompetent, your NFA firearms are subject to confiscation immediately since it is illegal for any other individual to take possession of your NFA firearms. On the other hand, if your gun trust owns your NFA firearms, any co-trustee can take possession of your NFA firearms to hold them on your behalf. In other words, you will not lose ownership of your firearms. As as result, you will retain the ability to either direct that the NFA firearms be sold and the cash returned to you, or that the NFA firearms continue to be held in trust for the beneficiaries to inherit when you die.
Yes, but there are several disadvantages to doing so. These types of entities are required to file federal income tax returns to the IRS and state tax returns and public information reports. Overall, a gun trust is the most flexible, most private, least expensive, and least maintenance-intensive method of registering NFA firearms.
No, gun trusts are not required to file any annual reports or to pay any franchise taxes.
No. Since the gun trust is a revocable trust, it does not need to be registered or recorded with the or any county or local government entity. An NFA gun trust is not a public document, rather it is private, much like a will. However, when the trust files an application with the ATF to transfer or make an NFA firearm, a complete copy of the gun trust, any amendments, and any current appointment of additional co-trustee documents are filed with the application.
No, as long as a settlor is a trustee of the gun trust, no taxpayer identification number is required. Instead, a settlor’s social security number is used.
NFA firearms must be titled in the name of an individual or an entity, much like other real property (land) and some types of personal property, such as cars, trucks, boats, and airplanes. However, unlike almost any other kind of titled property, the ATF has never allowed more than one person’s name to appear on the ATF tax stamp, which is effectively a title certificate. As a result, if an NFA firearm is titled in the name of an individual, only that specific individual may possess it. One of the chief advantages of registering NFA firearms in the name of a gun trust, rather than in the name of an individual, is that more than one person may legally possess and use the NFA firearms. In most states, any person at least 18 years of age who can legally possess firearms may agree to be included as a trustee of the gun trust and, thereby, legally possess the NFA firearms assigned to the gun trust. However, in those states where a person must be at least 19 years of age (New Mexico) or 21 years of age (Connecticut, District of Columbia, Hawaii, Illinois, Iowa, Maryland, Massachusetts, New Jersey, and New York) to legally possess all types of firearms, our gun trust requires a trustee of the gun trust to meet those states’ minimum age requirement.
For a married couple, it almost always makes sense for an NFA firearm to be registered in the name of a gun trust. For example, suppose the husband owns a suppressor, which is legally registered with the ATF in his own name. The husband goes to work and leaves his suppressor at home. If the wife stays at home that day and could have access to the suppressor, she is committing a federal felony offense that carries a prison sentence of up to 10 years and/or a fine of up to $250,000. 26 U.S.C. §§ 5861, 5871; 18 U.S.C. § 3571(b). Further, the suppressor is subject to seizure and forfeiture. 26 U.S.C. § 5872. If convicted, the wife loses her right to own or possess any kind of firearms in the future. In addition, if the husband instead left the suppressor in the wife’s vehicle, the vehicle is subject to seizure and forfeiture. If the husband had simply registered the suppressor in the name of a gun trust and appointed his wife as a co-trustee of the trust, this situation would have been prevented. Additionally, the husband could appoint other individuals, such as friends and family who may legally possess firearms as co-trustees of the trust, as long as the other individuals agree in writing to be co-trustees.
Even if a person is single, it still makes sense to register NFA firearms in the name of a gun trust because of the built-in flexibility of being able to amend the trust throughout the person’s lifetime to add or remove additional trustees and beneficiaries as the person’s life and roles evolve (i.e., husband, father, grandfather, etc.). If the person registers NFA firearms in his own name and then decides later to title the NFA firearms in the name of a trust, the person will end up paying the $200 transfer tax (or whatever the transfer tax amount is at that time) for each NFA firearm to be transferred to the trust. This short-term thinking (registering NFA firearms in the name of an individual) could end up costing the person a large sum of money down the road.
Upon the death of the settlor.
The trust property assigned to the trust passes to the beneficiaries of the trust without being subjected to the probate process. Until the trust property is distributed to the beneficiaries, the trustees of the gun trust continue to hold and possess the trust property in trust for the beneficiaries.
If you already have your gun trust prepared, the process of buying a silencer from a dealer is as follows:
First, you visit your Class 3 dealer and pick out the silencer that you want to buy.
Next, you pay the dealer for the cost of the silencer plus sales tax.
After that, the Class 3 dealer will partially prepare an ATF Form 4 application requesting permission to be allowed to transfer the silencer from the dealer to your gun trust. The Class 3 dealer will provide the partially completed ATF Form 4 to you.
Next, you will complete the rest of the ATF Form 4 application. On page 2 of the ATF Form 4 application, you will identify the Chief Law Enforcement Officer (“CLEO”) where you live. The CLEO is usually your sheriff or police chief. Every time an NFA firearm is transferred from one party to the other (such as from the dealer to the gun trust), the ATF charges a $200 tax. On page 3 of the ATF Form 4 application, you will indicate whether you are paying the transfer tax by check, cashier’s check, money order, or debit or credit card. Also, on page 3 of the ATF Form 4, you will need to identify all “Responsible Persons” in your gun trust. The Settlor (you) and the Initial Trustee (you) are considered a “Responsible Person” under the ATF’s definition of the term. In addition, any person whom you appointed as an Additional Co-Trustee using the Appointment form (and who is still serving as an Additional Co-Trustee) is considered a “Responsible Person.” Beneficiaries and Successor Trustees identified in the gun trust are not considered to be “Responsible Persons,” unless you have later appointed them as Additional Co-Trustees using the Appointment of Additional Co-Trustee document. In other words, if an individual, other than you, has not signed an Appointment of Additional Co-Trustee document, he or she is not a “Responsible Person.”
In addition, each “Responsible Person” will be required to complete a Responsible Person Questionnaire. Each “Responsible Person” will need to provide two (2) fingerprint cards and one (1) passport photo. Each “Responsible Person” mails a copy of his or her complete Responsible Person Questionnaire to the CLEO where he or she lives. The CLEO does not need a copy of the photograph or fingerprint cards.
You mail a copy of the ATF Form 4 application, each Responsible Person Questionnaire (including the photographs and the fingerprint cards), and a complete copy of the gun trust to the ATF at the address indicated near the top of page 1 of the ATF Form 4. If you are paying the $200 transfer tax by check, then the check is included in the package that you mail to the ATF.
After the ATF receives the ATF Form 4 transfer application, it takes the ATF several months before the application is processed and approved.
After approval, the ATF sends a copy of the approved application (commonly referred to as the “ATF tax stamp” or the “tax stamp”) back to the dealer. The ATF tax stamp serves as proof that the $200 transfer tax has been paid and that the dealer has the ATF’s permission to transfer/sell the silencer to the gun trust. What you thought was a sale when you paid the dealer many months ago was really just a deposit.
After the dealer receives the ATF tax stamp, the dealer contacts the customer to come pick up the silencer. Any trustee of the gun trust who is at least 21 years old may pick up the silencer. When the trustee picks up the firearm from the dealer, the trustee provides the dealer with his or her driver’s license, and optionally, his or her concealed handgun license (CHL), and completes an ATF Form 4473, which is the same ATF form a person would fill out if he or she were buying any a non-NFA firearm from a dealer.
After that, the dealer hands the ATF tax stamp and the silencer to the trustee, and the trustee walks out the door.
No. As part of the ATF application process, the ATF conducts a background check on each “Responsible Persons” to ensure that each “Responsible Person” in not prohibited from receiving and possessing firearms and ammunition. In addition, when the trustee visits the dealer, the trustee provides the dealer with his or her driver’s license, and optionally, his or her concealed handgun license (CHL), and completes an ATF Form 4473, which is the same ATF form a person would fill out if he or she were buying any a non-NFA firearm from a dealer.
Not just no, but HELL NO! All gun trusts explicitly provide that no person who is ineligible to possess trust property, which may include NFA firearms and non-NFA firearms, regulated by federal firearms laws or applicable state firearms laws may serve as a trustee or receive firearms as a beneficiary. Moreover, if any trustee becomes ineligible to possess such trust property, the trustee is disqualified to serve as a trustee and is deemed to have resigned immediately upon ineligibility.
(1) Any person who has been convicted in any court of a crime punishable by imprisonment for a term exceeding one year;
(2) Any fugitive from justice;
(3) Any unlawful user of or any person who is addicted to a controlled substance;
(4) Any person who has been adjudicated as a mental defective or who has been committed to a mental institution;
(5) Any alien who is illegally or unlawfully in the United States or, except as provided in 18 U.S.C. 922(y)(2), has been admitted to the United States under a non-immigrant visa (as that term is defined in 8 U.S.C. 1101(a)(26));
(6) Any person who has been discharged from the Armed Forces under dishonorable conditions;
(7) Any person who, having been a U.S. citizen, has renounced his or her citizenship;
(8) Any person who is subject to a court order that:
(a) was issued after a hearing of which such person received actual notice and at which such person had an opportunity to participate;
(b) restrains such person from harassing, stalking, or threatening an intimate partner of such person or child of such intimate partner or person, or engaging in other conduct that would place an intimate partner in reasonable fear of bodily injury to the partner or child; and
(c) (i) includes a finding that such person represents a credible threat to the physical safety of such intimate partner or child; or (ii) by its terms explicitly prohibits the use, attempted use, or threatened use of physical force against such intimate partner or child that would reasonably be expected to cause bodily injury; and
(9) Any person who has been convicted in any court of a crime of domestic violence.
See 18 U.S.C. 922(g). Moreover, under current Federal law, it is unlawful for the trustee to sell or otherwise dispose of any firearm or ammunition to any of the persons listed above. See 18 U.S.C. 922(d).
No. Under Federal law, only machine guns (fully-automatic firearms) made before May 1986 are allowed to be owned by individuals and gun trusts.
No. Each time a gun trust applies to transfer or to make an NFA firearm, it must pay the $200 tax for each NFA firearm to be transferred or manufactured.
No. In most cases, all of your NFA firearms would be assigned to the same gun trust. Note: Some dishonest Class 3 dealers who sell gun trust forms tell their customers that they need a new gun trust for each new NFA firearm.
There is no limit to the number of NFA firearms that may be held by your gun trust.
To add another NFA firearm to the gun trust, you simply use the gun trust to complete another purchase. You do not need to change the gun trust. The ATF tax stamp itself is the official U.S. government document that is indisputable evidence that the NFA firearm is owned by the gun trust. There is no other additional document that you need to create prove that the NFA firearm is trust property.
Yes. However, the trustee will not be able to use and possess the NFA firearms in a state that does not allow possession of NFA firearms. The trustee will only be able to use and possess the NFA firearms in a state where possession of NFA firearms is legal. Some states only allow possession of specific types of NFA firearms.
There are three parties to a trust — settlors, trustees, and beneficiaries.
A settlor is the person who creates the trust, and is usually the person who provides the funding for the trust and assigns personal property, such as firearms and cash, to the trust.
In a gun trust, a trustee is a person who is allowed to use and possess the firearms assigned and acquired by the gun trust. The settlor of the gun trust is almost always, at a minimum, the trustee of the gun trust, so that he or she can continue to use and possess his or her firearms assigned to and acquired by the gun trust. However, if the settlor wants to be able to lend his or her NFA firearms to another responsible adult, such as a spouse, son, or daughter, so that the adult can take the NFA firearms to the range or the ranch (without the settlor), then that adult also needs to be a trustee.
However, being a trustee isn’t all fun and games. The trust agreement between the settlor and the trustees is a contract. In addition to the right to use and possess the trust property in accordance with the terms of the trust agreement, a trustee also owes fiduciary duties to the settlor and to the beneficiaries of the trust. If a trustee breaches his or her fiduciary duty, the trustee can be sued for damages. Since the trust agreement is a contract, all trustees must agree in writing to serve as a co-trustee. In addition, a trustee must have the legal capacity to enter into a contract. By law, minors do not have the capacity to enter into a contract. Further, parents cannot impose the duties of a fiduciary on a minor. In other words, parents cannot make their children trustees of a trust by signing on their behalf. For these reasons, children under the age of 18 cannot be trustees of a trust.
Unfortunately, many gun trusts claim to allow the settlor to name as many co-trustees as he or she wants within the trust document, but only provide a space for the settlor to sign the trust document. In other words, the settlor has been led to believe that simply naming a trustee makes it so. In one particularly egregious example we have seen, a married settlor of the gun trust merely listed his wife, a couple of friends, and his minor children (a 4-year old toddler and an 18-month old infant) as co-trustee. No one, other the settlor, signed the trust document. Quite possibly, the settlor was the only person who even knew about the existence of the trust agreement. That trust had two major flaws: (1) it did not require the trustees to sign to accept the duties and responsibilities of a trustee; and (2) it allowed the settlor to list very young children as persons allowed to use and possess NFA firearms independently of an adult trustee.
Additionally, many gun trusts instruct the settlor how to amend the trust to add additional co-trustees, but the example illustrated in the instructions teaches that the additional trustee need not sign the document. Arguably, a trustee who does not sign the trust document (that supposedly makes him or her as a trustee) is not really a trustee. These “fake” trustees are arguably violating the National Firearms Act when they are in possession of NFA firearms outside the presence of the settlor (the only real trustee). This could ultimately result in the arrest of the “trustee” and confiscation the NFA firearms that were illegally in the “fake” trustee’s possession.
A few gun trusts do not name the settlor as a trustee in their own gun trust. This is the most egregious example of a bad gun trust that we have ever seen. This means that it is illegal for the settlor to use and possess the NFA firearms acquired by his or her own gun trust. If you have one of these gun trusts, you need to amend and restate your gun trust immediately!
Our gun trust is designed so that the settlor is the only initial trustee of the gun trust. This means that our gun trust customer is the only person who needs to sign the gun trust in front of a notary.
After the gun trust is created, you can appoint additional co-trustees to your gun trust (so that they can use and possess your NFA firearms) at any time without amending the gun trust. This is a significant difference between our gun trust and almost every other gun trust out there. Moreover, unlike almost every other gun trust, you can appoint additional co-trustees to serve either long-term or short-term (such as while you and a friend are on a hunting trip). In addition to several other documents, our customers receive a document entitled “Appointment of Additional Co-Trustee and Acceptance of Additional Co-Trustee.” With this document, our customers are able to appoint additional co-trustees to their gun trust at any time. The Appointment of Additional Co-Trustee document and Acceptance of Additional Co-Trustee is signed by the settlor and the additional co-trustee in front of a notary public. Now, that person is an additional co-trustee of our customer’s gun trust. It’s that easy! We are not aware of any other gun trusts that have anything like this.
In stark contrast, almost every other gun trust out there requires you to anticipate every person who will want to borrow your NFA firearms in advance, so that you can list them as co-trustees of the gun trust. Before their gun trust is created, their customer will need to coordinate with each of the other co-trustees so that they can all sign the gun trust in front of a notary. Depending on the number of additional co-trustees listed, this can cause a significant delay between the time that their customers pay for their gun trust and time that they are able to actually use the gun trust to buy NFA firearms. Additionally, if the customer wants to add another additional co-trustee after the trust is created, their customers need to amend their trust, which means more legal fees to prepare an amendment.
Our customers love having the ability to add additional long-term or short-term co-trustees to their gun trusts at any time using our Appointment of Additional Co-Trustee document. None of their friends have this capability, unless, of course, we prepared their gun trust. You will love it, too!
The settlor is usually the beneficiary of a revocable living trust during his or her lifetime. After the settlor die, the settlor’s wife is usually the primary beneficiary (also known as the “remainder beneficiary”) and the settlor’s children are usually the secondary beneficiaries (also known as “contingent remainder beneficiaries”). However, the settlor is free to name any persons or organizations (such as a charity) as the trust beneficiaries. While the settlor is alive, he or she can direct the co-trustees to buy more firearms for the gun trust or to sell any of the firearms in the gun trust and distribute the cash to the settlor. After the settlor dies, the primary beneficiary (usually the spouse) is entitled to inherit whatever property (usually the settlor’s firearms collection) remains in the gun trust. If the primary beneficiary dies before or at the same time as the Settlor the secondary beneficiaries (usually the settlor’s children) are entitled to inherit whatever property remains in the gun trust. If the beneficiaries are too young to inherit the firearms in the gun trust when the settlor dies, the gun trust makes provisions for the trustees to use and possess the trust property until the beneficiaries are old enough and (in the trustees’ opinion) mature enough to inherit the trust property.
In a revocable living trust, the settlor reserves the right to amend or revoke the trust during the settlor’s lifetime. A settlor can add or delete beneficiaries whenever he or she wishes. Because the listed beneficiaries have, at best, an expectation that they may inherit the trust property after the settlor dies, beneficiaries normally do not have any rights or duties during the settlor’s lifetime. Additionally, the trustees do not owe fiduciary duties to the beneficiaries of the trust during the settlor’s lifetime. As a practical matter, beneficiaries may not even know of the existence of the gun trust or that they are listed as beneficiaries of the trust. Because beneficiaries have no rights or duties relating to the trust while the settlor is alive, beneficiaries do not sign the trust agreement. More importantly, beneficiaries cannot use or possess NFA firearms owned by the gun trust outside the presence of at least one trustee of the gun trust. However, an adult child of the settlor can be a beneficiary and a trustee. Then, only because he or she is a trustee, the adult child would be able to use and possess the NFA firearms owned by the gun trust.
Only a settlor can revoke a revocable living trust. During the settlor’s lifetime, the settlor considers the trust property to be his or her property. If the trust is revoked, the trust property is returned to the settlor and the trust is terminated. In contrast, during the settlor’s lifetime, beneficiaries of a revocable living trust cannot terminate a trust.
Since a gun trust is a fiduciary agreement, the settlor and trustee must sign the gun trust agreement in the presence of a notary public. Beneficiaries and successor trustees do not sign the gun trust agreement, nor do they even need to know of the existence of the gun trust while the settlor and trustees are alive.
GUN SMITH ARMS HAS A NOTARY ON HAND TO HELP GET YOUR NEWLY FORMED TRUST NOTARIZED AND SIGNED IN ALL THE CORRECT PLACES.