Taking the Trust route to the NFA...

[jwise]

This is in response to FormerNOPD's request for more information on the Trust route to the NFA. Enjoy!

Have you ever looked at pictures online of sound suppressors, machineguns, short-barreled rifles/shotguns, grenade launchers, or other weapons and wondered..."how'd they GET those great toys!?"

Most know that they aren't outright illegal, but the barrier to entry into what is commonly referred to as the "Class 3 World," is prohibitive. But knowledge is power, and so I want to give each of you the power to break into the fun-filled world of the NFA!

First off, let's briefly discuss what you can and can't hope to buy through the NFA process.

Registration categories in the NFA:

1- SBR: Short-Barreled Rifles (barrels <16", overall length <26")
2- SBS: Short-Barreled Shotguns (barrels <18", overall length <28")
3- Machineguns
4- Sound suppressors
5- DD: Destructive Devices (grenade launchers, grenades, etc...)
6- AOW: All Other Weapons (anything not a handgun, rifle or shotgun)

While you can purchase current production SBRs, SBSs, AOWs, DDs, and suppressors, the 1986 GCA banned all further registration of machineguns. This locked the books on machineguns, and only allows the further transfer of machineguns, but not the manufacture. This has had the economic result of pushing the price of machineguns to ridiculous prices, out of reach for the vast majority of folks (M16s go for >$12k.)

So, if this sounds like something that you would be interested in, read on.

Individual Method

You can have an NFA firearm (all categories are considered firearms, even suppressors) by simply filling out the Form 4 (application to transfer), and send it in with a $200 check, a set of passport photos, and a set of fingerprints. The processing usually takes anywhere from one month, to 6 months, depending.

However, a lot of people do not have access to this route, because one of the steps of filling out the Form 4 is to get your Chief Law Enforcement Officer of your jurisdiction to sign off that he knows of no reason why you should not be approved for the transfer. When I was on the job, MY OWN CHIEF would not sign my paperwork. Humph!

Well, enter the TRUST.

Trust Process

If you have a trust, the trust can be approved to own an NFA firearm. You would simply be the trustee, authorized to possess the items. The trust route is slightly different than the Individual route. For starters, no need for the fingerprints, as a paper entity does not have any. Ditto with the passport photos. When you send in your paperwork, you will need to include a copy (COPY, not original) of the Declaration of Trust. With very little background checking to do (none?), the paperwork is usually approved quicker than individual transfers.

Now, how do you GET a trust? I'm glad you asked...

First off, a trust is an entity, not a corporation. There is no ongoing paperwork that must be filed to maintain a trust. There is no filing fee for a trust. There are no obligations whatsoever once the trust is formed. It exists, and that's enough. It has legal implications over the assets of the trust, as ownership is no longer in YOUR name, but in the trust.

Now that we know a little about what a trust is, here's what you'll need to do if you want to form one. While an attorney can draft up a perfectly suited trust, that may be unnecessary if all you are wanting is a legal method for transferring NFA firearms into your possession. If you wanted something MORE out of a trust, you should consult an attorney.

If you have determined you do not need professional legal advice, you WILL need some help. Socrates and Quicken both make software packages suited to estate planning, and include templates for wills and trusts.

Socrates Estate Planner:



Quicken Willmaker 2009:



With the software in hand, you should go through the various templates and pick the one for you. There are married, single, irrevocable, revocable, and other types included. You will want the single revocable living trust, unless you are either married and want your spouse included in the process. This is not necessary.

First, you will need to pick a name for your trust. This will need to be engraved on any firearm you MANUFACTURE, but not those you have transferred to you. When you "make" a short-barreled rifle by slapping a 10" upper on a lower receiver, you have MANUFACTURED an SBR. So, you MAY not want to use your name. I chose "Wise Firearm Trust."

Where the software leaves a blank, fill it in appropriately.

Let's look at some legal vocabulary:

The Grantor is you.
The Trustee is you.

It looks awkward, but YOU are assigning all ownership rights of the included property to YOU, to take care of them for YOUR interests. It's a bit redundant, I know.

You can also assign joint Trustees, which could be your brothers, wife, dad, or friend. Keep in mind, this joint Trustee will have complete possessory rights of the items, and could exert this legal authority if provoked. Be careful!

You can also name beneficiaries of the assets, in the event of your death. In this way, the Trust acts like a will. But instead of passing the assets from YOU to your beneficiary, it passes from your TRUST to your beneficiary, OR to another named SUCCESSOR TRUSTEE to possess the assets until the beneficiary is old enough. (A lot of wills have trust provisions that do the same thing.)

Here is what the front of my Declaration of Trust looks like:



Once you have trust documents filled out properly, you will need to have it signed by a notary, and witnessed. I have blocked out most of the information on this page, but perhaps it might still be useful to see:



You will also have to fill out a Table of Assets. This will include every NFA firearm you transfer to the trust. It is a simple spreadsheet with the item description. I have three NFA firearms. A SBR and two suppressors. This is my table of assets:



The transferred (titled) assets do not need any further documentation, but you will need to document any transferring of non-titled assets into the trust. This comes up when you want to SBR an AR lower. You will first need to transfer the lower into the trust, via an Assignment of Property. You just fill out a simple form, include the description and serial number, then have someone witness your signature authorizing the assignment of the property.

It looks like this:



So, now you have a trust. WOOHOO! Make a copy of the Declaration of Trust pages. Then go put the original in your safe.

Now you are ready to start filling out those Form 4's (transfers) and Form 1's (application to manufacture.)

I hope this has inspired at least one of you to take the plunge into the World of NFA!

[jwise]

Now that you have a trust, let's look at those pesky forms.

Form 1

For my SBR, I had to fill out a Form 1. Remember, that's the application to manufacture a NFA firearm. This form is used to manufacture an SBR, SBS, DD, AOW, or machinegun. It's no longer used to register machineguns, since that has been banned, but it was the form that WAS used 20+ years ago.

Engraving

Before submitting the form, you should take your receiver that you are registering and have it engraved. You will need to engrave it with the name of your trust, and the city/state. It will need to be in a conspicuous location, easily viewable. You can't hide it under the grip! The most common place to put the engraving is on the receiver (for an AR), or the barrel (for a shotgun, etc...) Since the AR is modular, the receiver makes the most sense, so you can still take advantage of its modularity without compromising the legality of the firearm.

Here you can plainly see the HACK job my local engraver did on the side of my lower. I would recommend you plan ahead, and send you lower off to a PROFESSIONAL who can do a much better job than the guy who did mine...



There has been some disagreement in the NFA world as to engraving. Some have interpreted this to be only the ORIGINAL manufacturer, not the NFA manufacturer. Notice how the receiver of a Colt LE6920 is already engraved with "Colt, Hartford, CT." Some say THAT suffices, and THAT is what you should write down in the box labeled Addiitonal Description. I disagree, and I think I have the majority opinion on my side (as well as the "safe" side.)

After you have completed the Form 1, and have sent it off with your check/money order/cashier's check for $200, and a COPY of your Declaration of Trust, you will have some time to wait.

One day, you will receive a plain envelope in the mail. It will be from the ATF, and will have your stamped/approved Form 1 enclosed.

Here's what a Form 1 looks like. I have blotted out the sensitive parts, like my full name, address, phone number and the like. I also deleted the serial number of my rifle.



Notice the STAMP on the top right hand corner. If you can read it, the stamp is for $200! That's the most expensive stamp I've ever seen! Otherwise, it looks just like a postage stamp, but a little bigger.

You should do exactly what you did once your Trust was executed, and that is to RUN (don't walk) to the nearest copy machine and make duplicates. Then, take the original, and put it in your safe. After the original is secure, take ONE of the copies and KEEP IT WITH THE FIREARM! This is your GET OUT OF JAIL FREE CARD. DO NOT LOSE IT!

Some people copy the Form 1, shrinking it down to business card size. They then laminate it, and carry it around in their wallet. While it will take a magnifying glass to read, it IS a portable method for keeping your DEFENSE TO PROSECUTION with you.

I have chosen, instead, to fold up a copy and keep it near the firearm (or IN it!)

For my AAC M4-2000, I keep a copy in the pouch along with the suppressor:



For my SBR, go one step further. I love my Tango Down VFG, because it has STORAGE capability!



You'll notice TWO Forms in the picture, other than the batteries. One is for the SBR, and the other is for the AAC M4-2000, since it is the rifle the suppressor is usually attached to.

Speaking of the M4-2000, I love this thing. Check out the front of it:



Too cool...

Form 4

The Form 4 is similar, except there is no engraving. The ORIGINAL MANUFACTURER already engraved it. Do you see the engraving on the suppressor above? See the required text? It's there.

The process for a Form 4 transaction is slightly different. You will go to the Fun Store, and pick out what you want. You then arrange the transaction with the store owner (Class 3 Firearms Dealer.) He will most likely have you pre-pay either a percentage, or full amount, before he sends off the forms. He will need you to fill out a Form 4, and bring a $200 check along with your Declaration of Trust. He then will send off the paperwork to be approved.

A month or so later, he will give you a call. You now get to go to the store, where he will present you with the stamped/approved Form 4 and your treasure!

This was my first...



Here's the Form 4 that went with it:



Now you know how to do it. So get out there, and support our economy!

[Omega_556]

Originally Posted by jwise

I hope this has inspired at least one of you to take the plunge into the World of NFA!

You're a bastard...

I have wanted to enter the NFA world for a long time, and I considered the Trust avenue. I used excuses like cost, complexity, and my own lack of understanding to keep me from doing it. Now you have made it so easy and clear that I'm going to buy some software tonight, and some hardware soon.

Thinking SBR & suppressor...

I'll report back in about 4 months and post pic

[jwise]

MISSION ACCOMPLISHED!

[David Hineline]

I have done both trust and corporate for customers, I let them decide for themselves as to what works best for them in thier own situation.

I reccomend for an individual going the CLEO route, as then when one gets pulled over by the PoPo it is most likely his boss who has signed your forms.

[jwise]

Originally Posted by David Hineline

I have done both trust and corporate for customers, I let them decide for themselves as to what works best for them in thier own situation.

I reccomend for an individual going the CLEO route, as then when one gets pulled over by the PoPo it is most likely his boss who has signed your forms.

I recommend the Trust route over all other methods, as it limits your exposure, liability, and attachment of the assets from a judgment against you.

But I could be wrong. I haven't taken Estate Planning, yet...

[zeplin]

jwise, That's great stuff! Can Trust apply for and get an FFL?

[Sgt. Slaughter]

OH! It's freakin' ON!!!!!

jwise - You da man!

[jwise]

Originally Posted by zeplin

jwise, That's great stuff! Can Trust apply for and get an FFL?

I do not believe so. That might be a question to ask the ATF.

[ABC144]

Woo Hoo!!! Here we go!

[AgentFox]

Now what potential drawbacks exist with this? Could the ATF say come and take the guns away from the trust? Have legal right to attack the trust? Which is more secure, for me to own the firearms or for the trust to own them? In terms of a retroactive gunban/confiscation?

Just thinking way ahead. I like the idea. Just need to see all the bad with the good. Who is this not for?

Also, does each SBR, suppressor, SBS, etc require an individual tax stamp?

[lazycop]

Originally Posted by AgentFox

Also, does each SBR, suppressor, SBS, etc require an individual tax stamp?

Yes.

[AgentFox]

This is ripped from MDShooters.com which ripped it from AR15.com; it covers the same topic in certain areas with more detail and follows a nice Q 'n A format:

http://www.mdshooters.com/showthread.php?t=7074

[formerNOPD]

Thank you SIR! Most EXCELLENT POST!

[zeplin]

Just found out we can't have an NFA Trust in Missouri.

[Hoosier_Boy]

Jwise I swear to goodness. You are like the Fire-Arms Angel. Sent from heaven to us... You da man!

[bankfraudguy]

Originally Posted by zeplin

Just found out we can't have an NFA Trust in Missouri.

says who? Is that a state law then?

Being from Illinois, I already know that NO class III weapons are allowed for civilians, but now I wonder if a trust can? (prolly not)

[zeplin]

Originally Posted by bankfraudguy

says who? Is that a state law then?

Being from Illinois, I already know that NO class III weapons are allowed for civilians, but now I wonder if a trust can? (prolly not)

Got it from a reputable source. Maybe there's a chance my source is wrong. That'd be great!

[LA DEP]

I just want to point out how cruel and heartless this thread is to us currently trapped behind the new Iron Curtain.......

[jwise]

I guess everyone needs to remember to read the ENTIRE post, before jumping to conclusions. It CLEARLY states at the bottom of my posts, that I am ONLY referring to Texas...

(SEE BELOW)

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"Any comments contained herein regarding the legality of firearms, or the application of law, are strictly applicable to Texas. If you live in CA, NY, IL, MA, D.C., etc., the above comments will probably shock you, and should be read for educational purposes only. Most likely nothing I write will apply to you."

[Sgt. Slaughter]

Well, I know AZ allows every type of Class 3 there is. It's just a matter of me checking into the Trust info. I don't forsee it being a problem, though.

[dbphotos]

I just completed my trust with my attorney. A little more costly than the software method, but I know it was done right, he's always there for questions and he provided some forms for future use and good written instructions. Now it's time for an SBR and suppressor for one of my .223 and my 9mm RRA AR-15.

Thanks for the great information JWise.

[daspy21]

Originally Posted by jwise

While you can purchase current production SBRs, SBSs, AOWs, DDs, and suppressors, the 1986 GCA banned all further registration of machineguns. This locked the books on machineguns, and only allows the further transfer of machineguns, but not the manufacture. This has had the economic result of pushing the price of machineguns to ridiculous prices, out of reach for the vast majority of folks (M16s go for >$12k.)

Originally Posted by jwise

Form 1

For my SBR, I had to fill out a Form 1. Remember, that's the application to manufacture a NFA firearm. This form is used to manufacture an SBR, SBS, DD, AOW, or machinegun.

I just got confused.

One says we can't manufacture machine guns.
The other says we can.
Clarification please.

Edited to add:
Is there any special stuff that has to be done for income tax purposes? does the trust (which is an entity) have to file income taxes?

Edited to add again:
are there different form 4's? I do not see where the Chief of Police would be signing that

[jwise]

Originally Posted by daspy21

I just got confused.

One says we can't manufacture machine guns.
The other says we can.
Clarification please.

Edited to add:
Is there any special stuff that has to be done for income tax purposes? does the trust (which is an entity) have to file income taxes?

My entire quote was as follows:

Originally Posted by jwise

This form is used to manufacture an SBR, SBS, DD, AOW, or machinegun. It's no longer used to register machineguns, since that has been banned, but it was the form that WAS used 20+ years ago.

The Form 1 was used before 1986. Since the ATF no longer allows the manufacture of machineguns to be entered into the NFA registry. That means, although machineguns can be manufactured under Special Occupations Tax (SOT) licenses, they cannot be transferred through the NFA process.

While they can no longer be manufactured for transfer within the NFA, the ones that were registered BEFORE 1986 are still legal to transfer.

Does this help?

While Trusts DO have to file income taxes in general, NO ONE has to file income tax returns if they have no income. Do your guns make money? Do they have a job? Mine don't. However, let's say you have the cash to buy a $5k Mac-10. You own it for about 5 years, and then sell it for $20k!! Well, that income will have to be reported on the Trust's income tax, as that is reportable income. Does that make sense?

[Omega_556]

Jwise,
I got Quicken, I’ve made my trust, but I have a few questions.

(1) - I bought Quicken Willmaker Plus 2009 but I can’t figure out how to separate my name, First Mid Last, from the name of the trust. It wants to make my name, the grantor, and the trust name; and I can’t figure out how to separate them. The only way I can figure out how to make this change is to export the document into a word processor and manually change the trust name, any advice?

(2) - What is the time line of purchase, assignment, and registration? If I understand correctly for an SBR I create my trust, and I assign my lower to the trust, I get it engraved, I fill out my Form-1, and I send it off w/ $200 to the ATF. How does it work for a suppressor? Do I pay for it, assign the Ser# to my trust, fill out my Form-4 then send it off w/ $200 to the ATF. I know I simplified the process, but is that the basic gist of it.

(3) - Is there any reason I shouldn’t assign non-NFA firearms to the trust? Fearing future firearms legislation, I thought this could avoid firearms & magazine transfer issues to my children in the event Arizona or the Fed impose legislation like California did in ’99. I was born in raised in California before moving to Arizona, so I am sensitive to these issues. In California when “assault weapons” were banned along with “high capacity” magazines and they could no longer be transferred; so in the event of the death of a shooter the beneficiaries must sell out of state, destroy, or turn into law enforcement all “high capacity” magazines &/or registered “assault weapons”.