View Full Version : Revocable Trust and Texas
Here is the scenario. I have a co-worker here who wants to purchase a suppressor in Texas using a trust. He lives in the Waco area. Here is what I want to know.
1. Are there any reputable class 3 dealers in the Waco area? They could also be in Dallas as well.
2. Are there any issues or known pitfalls of using a Trust in Texas?
3. Any other useful or pertinent information is appreciated.
SeriousStudent
06-30-09, 18:42
PM sent.
Don't know about Waco as I am in Houston but I can talk about Trust issues a little.
Any trust can work but I had a good friend who is an attorney (and corporate general council) who has done all of my other legal work look into setting up a trust for me and he had me actually pay another attorney to do it.
What he told me is that any trust can work but to avoid any potential issues with the ATF (and he found numerous online legal citations backing this up) it would be best to get an attorney who not only specializes in estate/probate law but one who has specific experience with trusts used for this purpose.
I finally settled on an attorney here in Houston whose husband actually works for one of the Class 3 dealers in town to set mine up. I have met her husband but I have never actually met her as everything we did was via phone and email.
Please PM me if you are interested in her contact info.
A trust does not have to go through an attorney to be a legally binding document (at least here in Texas). You have to get your trust notarized and that is what makes it binding in the eyes of Texas Law. I used Quicken Will Maker with no problems. When I got my AAC M4-1000, my SOT gave me some specific wording to use which blanketly covers anything NFA. The form 4 was approved without problem. I was going to pull the trust document to give that wording to someone else and can provide same to you. Makes any future NFA purchase that much easier because there will be no changes to the trust document.
What adh says is true and can be done. The problem comes from what the IRS likes to call "comingling of assets". If a Trust is used to get ATF approval for a NFA item but you, as an individual write the check, do you own it or the Trust?
I spent hours going over these issues with my Trust attorney (thank goodness for flat rate billing) just because my friend the corporate lawyer (actual specialty is electronic comerce and digital security) found several instances of ATF requiring individuals to forfeit items to ATF that had been approved by ATF on standard Trust paperwork because ATF agents subsequently found something about the way the were paid for questionable and decided that the individual had bought the item as opposed to the Trust which made it illegal for the individual to possess even though the individual was a Trustee of the Trust.
I know this sounds really nit-picking, stupid and against all common sense but this is the ATF and Federal regulations/interpretations of regulations that we are talking about.
Do I think that they will go after someone for a single item? Probably not. But I am not willing to save a few hundred dollars and have there be ANY possibility that ATF might decide that I have to forfeit my LMT lower, my AKS-74S, my can, etc. to them. I would rather spend a few hundred to be safe than risk thousands and the legal expenses that go along with ATF crawling into your life. I know a regular FFL at my gun club that spent almost $8000 in legal fees to have the ATF finally agree that he did nothing wrong and drop the case against him. And don't think that for one second they will pay you back for your expenses.
If you do decide to use a Trust document that is not specific to NFA items, please at least follow the three main, DO NOT VIOLATE rules that my attorney gave me:
Do NOT use the Trust to hold anything other than NFA items.
The Trust MUST be the purchaser of all items. (There is a way around this for preexisting items by use of a legal document to officially transfer ownership to the Trust.) Open a new bank account that is used ONLY for NFA purchases and only transfer money into it to make NFA and NFA related purchases. (This will be a business account. Mine is with Bank of America so I can do immediate electronic fund transfers from my regular checking account when necessary. This Account gives me checking and a debit card. Using the debit card for ammo, magazines, etc. at least once a month allows me to avoid the monthly fee for the account.)
NEVER pay cash for an NFA item! You absolutely need the proof of payment method paper trail in case there is ever any question.
I know this may sound like overkill but, as an old First Sergeant of mine once told me, the object is not to survive getting hit but to never get hit in the first place.
cd,
Thanks for the info. If possible I would love to see some links to the information that you found. In my particular situation the trust is very similar to "our" name so I am unsure as to how they could find that questionable. I would also think that BATFE would pass along such information to examiners and that they would just deny someones paperwork.
Was the FFL that you referred to involved in something pertaining to a trust or did it have to do with his FFL in general? Regardless, I think that it shows even if you do everything 100% if their perception is otherwise they can still "come after you".
I paid cash for my most recent purchase but I don't see it being an issue since I got that all important bill of sale/receipt from the business. ;)
What adh says is true and can be done. The problem comes from what the IRS likes to call "comingling of assets". If a Trust is used to get ATF approval for a NFA item but you, as an individual write the check, do you own it or the Trust?
I spent hours going over these issues with my Trust attorney (thank goodness for flat rate billing) just because my friend the corporate lawyer (actual specialty is electronic comerce and digital security) found several instances of ATF requiring individuals to forfeit items to ATF that had been approved by ATF on standard Trust paperwork because ATF agents subsequently found something about the way the were paid for questionable and decided that the individual had bought the item as opposed to the Trust which made it illegal for the individual to possess even though the individual was a Trustee of the Trust.
I know this sounds really nit-picking, stupid and against all common sense but this is the ATF and Federal regulations/interpretations of regulations that we are talking about.
Do I think that they will go after someone for a single item? Probably not. But I am not willing to save a few hundred dollars and have there be ANY possibility that ATF might decide that I have to forfeit my LMT lower, my AKS-74S, my can, etc. to them. I would rather spend a few hundred to be safe than risk thousands and the legal expenses that go along with ATF crawling into your life. I know a regular FFL at my gun club that spent almost $8000 in legal fees to have the ATF finally agree that he did nothing wrong and drop the case against him. And don't think that for one second they will pay you back for your expenses.
If you do decide to use a Trust document that is not specific to NFA items, please at least follow the three main, DO NOT VIOLATE rules that my attorney gave me:
Do NOT use the Trust to hold anything other than NFA items.
The Trust MUST be the purchaser of all items. (There is a way around this for preexisting items by use of a legal document to officially transfer ownership to the Trust.) Open a new bank account that is used ONLY for NFA purchases and only transfer money into it to make NFA and NFA related purchases. (This will be a business account. Mine is with Bank of America so I can do immediate electronic fund transfers from my regular checking account when necessary. This Account gives me checking and a debit card. Using the debit card for ammo, magazines, etc. at least once a month allows me to avoid the monthly fee for the account.)
NEVER pay cash for an NFA item! You absolutely need the proof of payment method paper trail in case there is ever any question.
I know this may sound like overkill but, as an old First Sergeant of mine once told me, the object is not to survive getting hit but to never get hit in the first place.
adh,
Thanks for the info. I would definitely appreciate that info you have so I can pass it on to him and help with the process.
A trust does not have to go through an attorney to be a legally binding document (at least here in Texas). You have to get your trust notarized and that is what makes it binding in the eyes of Texas Law. I used Quicken Will Maker with no problems. When I got my AAC M4-1000, my SOT gave me some specific wording to use which blanketly covers anything NFA. The form 4 was approved without problem. I was going to pull the trust document to give that wording to someone else and can provide same to you. Makes any future NFA purchase that much easier because there will be no changes to the trust document.
I spent hours going over these issues with my Trust attorney (thank goodness for flat rate billing) just because my friend the corporate lawyer (actual specialty is electronic comerce and digital security) found several instances of ATF requiring individuals to forfeit items to ATF that had been approved by ATF on standard Trust paperwork because ATF agents subsequently found something about the way the were paid for questionable and decided that the individual had bought the item as opposed to the Trust which made it illegal for the individual to possess even though the individual was a Trustee of the Trust.
Do you know where or how he "found" these instances of forfeiture? I'd like to learn more about this and see if there is more to the story.
Gotta pull the trust from safety deposit box which will be sometime next week...will shoot yo uthe wording then
Do you know where or how he "found" these instances of forfeiture? I'd like to learn more about this and see if there is more to the story.
Unfortunately I do not. I know he mentioned calling some people he knows after doing a "search" (which normally means the subscription Lexis/Nexis legal database but I don''t know for sure). I do know the calls were to friends in the Justice Department but past that I couldn't tell you. He has lots of government contacts and has twice (that I know of) turned down an Undersecretary position at Commerce (it only pays about 1/4 what he makes in the private sector). I tried to get in touch with him but he is overseas on a negotiation and I haven't heard back from him yet.
cd,
Thanks for the info. If possible I would love to see some links to the information that you found. In my particular situation the trust is very similar to "our" name so I am unsure as to how they could find that questionable. I would also think that BATFE would pass along such information to examiners and that they would just deny someones paperwork.
Was the FFL that you referred to involved in something pertaining to a trust or did it have to do with his FFL in general? Regardless, I think that it shows even if you do everything 100% if their perception is otherwise they can still "come after you".
I paid cash for my most recent purchase but I don't see it being an issue since I got that all important bill of sale/receipt from the business. ;)
I don't really have any links to the info as it all came through direct conversation with the attorneys. I can tell you that the firearms attorneys all said that the name of the trust does not matter with one caveat from the firearms law specialists. They said to make sure that you do not include anything in the name of the Trust that makes reference to the NFA or ATF and that the name making reference to firearms in any way was also not recommended. The rational for this had to do with the theory that ATF could, at some point decide (or be told to decide) that Trusts like this that are done to avoid having a CLEO signoff violate the "spirit" of the exemption and could be voided. The firearms attorneys cited something similar that happened in the early '90s as an example of the possibility but I honestly can't remember the example now.
The attorney also said that they had several clients who insisted on putting some type of NFA or firearm reference in the Trust name have their paperwork rejected by ATF. When ATF was questioned by the attorneys, this reference was cited as the reason for denial. Interestingly enough she did tell me that for every Trust they had rejected like this, they had another go through. What can you say, the ATF is the ATF. They now just make sure there are no references in the Trust name just for safety's sake. Conversely, you can have references to the NFA and firearms all through the Trust document itself as it is only the name that seems to cause problems.
The use of a special Trust bank account to make purchases is one more CYA from the attorneys. Mine did say that if I absolutely had to pay cash for something to make sure that all of the sale documentation lists the Trust as the buyer. Referencing a Trustee's name as acting as the representative of the Trust is OK as long as the way it is written leaves no doubt that the Trust is the purchaser. My attorney also said it would be best if I could show a withdrawal from my Trust's bank account for the cash before the date the purchase occurred.
All of this is just an attempt to avoid any semblence of impropriety in your actions or records in the rare instance that the ATF decides to take a closer look at something you have, or they think you have, done. I have also talked these issues over with a friend's wife who is an FBI Special Agent who has done some joint task force work with the ATF. Her comment was that while the ATF examiners she had worked with seemed to be good people, some of the ATF investigators were "a little overzealous".
Take all of this in whatever way you wish. Considering how much money I have/will have invested in NFA items, I personally will do whatever the experts tell me to do so that I can avoid any issues with the ATF.
As to the FFL, it did not involve a Trust. He is a regular Class 1 dealer. As I understand it, he sold several guns (I think it was between 10-15) to a "security company" based on responding to a request for bid that they provided him. Unfortunately the "security company" didn't exist even though everything looked legit and they paid with a company check which cleared just fine. Long story short, the guns ended up in the hands of some people they shouldn't have and the ATF basically accused him of knowingly making a straw man sale in quantity. I just used this as an example of the kind of hell that ATF can put you through if they think you have done something wrong.
Let me know if there are any others questions I can answer.
Stay safe over there.
Unfortunately I do not. I know he mentioned calling some people he knows after doing a "search" (which normally means the subscription Lexis/Nexis legal database but I don''t know for sure). I do know the calls were to friends in the Justice Department but past that I couldn't tell you. He has lots of government contacts and has twice (that I know of) turned down an Undersecretary position at Commerce (it only pays about 1/4 what he makes in the private sector). I tried to get in touch with him but he is overseas on a negotiation and I haven't heard back from him yet.
That's why I'm asking. I have Lexis (and other tools) and I don't see anything like that. The only credible stories I have seen involve situations where the trust itself is flawed in really obvious ways, such as the grantor naming himself as both beneficiary and trustee, or not dating the trust, etc. and then ATF comes knocking but will let you "fix" it. Or they just won't approve the transfer if the examiner catches it.
The legal fiction behind putting the money into an account in the name of the trust, then using that money to buy the NFA gun, does make sense on some level but I just doubt that anyone cares, or that the government could realistically make a distinction between my paying for an item as grantor or trustee and directing its transfer into trust, versus my transferring the purchase money into trust then buying it via trust money. If I am both the grantor and the trustee, who is to say that I didn't hand the money from my "grantor" hand to my "trustee" hand, then have my grantor brain cell tell my trustee brain cell to invest the money in an NFA asset? At that point, the money has been put in trust, if only for a moment, and then the trustee has invested it according to the direction of the grantor. I guess if you wanted, you could write something up stating that you did that.
You'd also need to keep up with your trust accounting if you did it this way, which adds another layer of recordkeeping. If you individually pay for something and through doing that, cause its transfer to the trust (via a Form 4) without ever actually having it, did you ever really own it? Was it ever actually "transferred" to you, individually, if you never even saw it until it got transferred to the trust?
Presumably the theory is that if "you" pay for it, then it gets transferred to the trust, then "you" actually owned if first (illegally) and it should have been transferred to you, then from you to the trust. I don't disagree with doing the trust account stuff, but it may be overkill.
They said to make sure that you do not include anything in the name of the Trust that makes reference to the NFA or ATF and that the name making reference to firearms in any way was also not recommended. The rational for this had to do with the theory that ATF could, at some point decide (or be told to decide) that Trusts like this that are done to avoid having a CLEO signoff violate the "spirit" of the exemption and could be voided. The firearms attorneys cited something similar that happened in the early '90s as an example of the possibility but I honestly can't remember the example now.
The attorney also said that they had several clients who insisted on putting some type of NFA or firearm reference in the Trust name have their paperwork rejected by ATF.
I'd really like more information on this as well. I've never heard of a trust being rejected or even questioned just because of its name, and I've seen several with "NFA" in the name.
The use of a special Trust bank account to make purchases is one more CYA from the attorneys. Mine did say that if I absolutely had to pay cash for something to make sure that all of the sale documentation lists the Trust as the buyer.
I agree with this general sentiment - all the paper you have, and your position at all points in the process, is that the NFA item is being transferred/sold to the trust - not to you.
Sorry for the delay in responding. I've been down ill.
All I can do is pass on what the attorneys who are subject matter experts in the area have told me. I am one of those people who believes an ounce of prevention is much better than a pound of cure so I will continue to follow the advice given to me by the attorneys. If they are wrong, that in itself is an affirmative defense. Which, by the way, was one of the reasons my friend the attorney wanted me to use an attorney who specializes in firearms law.
How much more expense are you seeing by going the trust route?? I see more guys doing that as well down this was and have heard about $100+ for the docs.
For me, it is just easier to go down and chat with the Sherrif I have known for years and get a sign off.
I haven't done an nfa item in years & the last one went through pretty quick +/-5 weeks. Does the trust delay the back ground check / wait times or is that a non issue??
I am one of those people who believes an ounce of prevention is much better than a pound of cure so I will continue to follow the advice given to me by the attorneys. If they are wrong, that in itself is an affirmative defense. Which, by the way, was one of the reasons my friend the attorney wanted me to use an attorney who specializes in firearms law.
If your lawyer gives you shitty advice and you follow it, and then you get in trouble - your reliance on advice of counsel is not an affirmative defense to anything. You can sue him for malpractice. That's your only recourse.
Not saying you got shitty advice on any of this, just saying the fact that you used an attorney isn't an affirmative defense.
How much more expense are you seeing by going the trust route?? I see more guys doing that as well down this was and have heard about $100+ for the docs.
For me, it is just easier to go down and chat with the Sherrif I have known for years and get a sign off.
I haven't done an nfa item in years & the last one went through pretty quick +/-5 weeks. Does the trust delay the back ground check / wait times or is that a non issue??
No extra time that I can tell compared to how long other people report it is taking.
I did the trust route for one reason and one reason only: I live in Harris County, TX (read Metro Houston) and even the new poor-gun DA much less the anti-gun sheriif will sign of on NFA paperwork. For them it does not matter who you are or any other factors, it is "policy" to NOT sign so the only way to legally purchase an NFA item and live in the county is to go the Trust or corporation route and the corp route makes no sense legally or financially unless you are actually a corporation that will use the items as part of its ongoing business.
Believe me I wish that I could have gotten the new DA to sign off but so far I know of no one who has had any luck getting the "policy" changed. From what I have heard, the old sheriff who was reasonably pro-gun (but not as much so as the new DA) did not even sign off to let his own deputies purchase NFA items.
If your lawyer gives you shitty advice and you follow it, and then you get in trouble - your reliance on advice of counsel is not an affirmative defense to anything. You can sue him for malpractice. That's your only recourse.
Not saying you got shitty advice on any of this, just saying the fact that you used an attorney isn't an affirmative defense.
Sorry, sick and tired had me use the wrong terminology. Affrimatice defense is definitely not the correct phrase I was going for but I can't remember the correct legal phrase since I am not an attorney and my attorney friend explained it to me over a year ago.
I was going to pull the trust document to give that wording to someone else and can provide same to you. Makes any future NFA purchase that much easier because there will be no changes to the trust document.
Could you provide this here for all of us to benefit from? Thanks.
The Trust MUST be the purchaser of all items. (There is a way around this for preexisting items by use of a legal document to officially transfer ownership to the Trust.)
Can you shed any light on this document? I am anticipating a move to a different State and will need to move my NFA items owned by my LLC either to another LLC in that State, or, preferably, to a trust. If there is a better way to do it than having to pay for new tax stamps, I'm interested. Thanks.
I am anticipating a move to a different State and will need to move my NFA items owned by my LLC either to another LLC in that State, or, preferably, to a trust. If there is a better way to do it than having to pay for new tax stamps, I'm interested. Thanks.
Why couldn't your existing LLC continue to own them? At most you might have to register the LLC with the state corporation commission in your new state (as well as maintain it in the old state). No reason why you can't register to "do business" and have a new "principal office" in a different state.
This could mean paying two annual fees, so do the math and see, depending on how many items you have, the cost of this versus the stamps to transfer them to a new entity.
I don't expect to ever live in the State I am currently in, again, so I don't want to continue with the LLC here. I have asked for a legal opinion on whether the NFA items, which are property of the "ABC of State #2, LLC," would transfer like any other assets if my other LLC, "ABC of State #1, LLC" were to buy it out and then close operations in State #2. I have not yet gotten a definitive answer on the topic from legal counsel, as I was told there are new laws that may affect what would have been the solution in the past. Essentially, it is looking like I will have to pay for new stamps to move the LLC's assets to a trust. Thanks.
Can you shed any light on this document? I am anticipating a move to a different State and will need to move my NFA items owned by my LLC either to another LLC in that State, or, preferably, to a trust. If there is a better way to do it than having to pay for new tax stamps, I'm interested. Thanks.
It's a rather simple document but it is based on the assumption that YOU, not an LLC or Corp., owned the items directly. This is based in trust law as trusts are designed for individuals to pass assets into for legal/estate/etc. reasons. I do not believe that this would work for transferring into a trust from an LLC based on something that my attorney said but, as I am not an attorney, I suggest that you get appropriate legal counsel on this.
If you have to close out your LLC as you mentioned in another post, create the trust, and get new stamps you do not need this document anyway as your trust will need to be created first and it will be the entity that you transfer the items to on the new stamps.
I will go ahead and post what I can of the transfer of assests form this evening for those who need/want it. I may not legally be able to post the exact text as some parts of my trust are based on copyrighted material.
I just bought my AAC M4-2000 supp a couple of weeks ago at Tactical Firearms here in Katy, Tx and they did all the Trust paperwork for me as part of the purchase.
They gave me a great price on it as well!:cool:
Just waiting to receive my tax stamp from the BATF.
Moose-Knuckle
07-05-11, 04:19
IG, not sure if you have found a dealer yet for your buddy. If you haven't here is a Dallas dealer.
http://www.dallassubguns.com/Site/Welcome.html
I have passed on all the previous info. It's up to him now. I'll pass this on as well.
IG, not sure if you have found a dealer yet for your buddy. If you haven't here is a Dallas dealer.
http://www.dallassubguns.com/Site/Welcome.html
Feel free to have him give me a call.
I can anwer his questions.
Sean Cody
Attorney
www.TexasGunTrust.com
281.451.4175
Ready.Fire.Aim
07-06-11, 22:18
Feel free to have him give me a call
Sean Cody
Attorney
www.TexasGunTrust.com
281.451.4175
My sister is an attorney with her own practice focusing on estate planning, she understands trusts. She recommended that I hire a specialist that understands BATFE trust requirements. Especially since I would be (and have) spending many $K on multiple NFA purchases.
I hired Sean Cody. Simple and easy. You get what you pay for. I wanted peace of mind so I paid for it.
Good luck
RFA
viperashes
07-11-11, 11:17
What adh says is true and can be done. The problem comes from what the IRS likes to call "comingling of assets". If a Trust is used to get ATF approval for a NFA item but you, as an individual write the check, do you own it or the Trust?
I spent hours going over these issues with my Trust attorney (thank goodness for flat rate billing) just because my friend the corporate lawyer (actual specialty is electronic comerce and digital security) found several instances of ATF requiring individuals to forfeit items to ATF that had been approved by ATF on standard Trust paperwork because ATF agents subsequently found something about the way the were paid for questionable and decided that the individual had bought the item as opposed to the Trust which made it illegal for the individual to possess even though the individual was a Trustee of the Trust.
I know this sounds really nit-picking, stupid and against all common sense but this is the ATF and Federal regulations/interpretations of regulations that we are talking about.
Do I think that they will go after someone for a single item? Probably not. But I am not willing to save a few hundred dollars and have there be ANY possibility that ATF might decide that I have to forfeit my LMT lower, my AKS-74S, my can, etc. to them. I would rather spend a few hundred to be safe than risk thousands and the legal expenses that go along with ATF crawling into your life. I know a regular FFL at my gun club that spent almost $8000 in legal fees to have the ATF finally agree that he did nothing wrong and drop the case against him. And don't think that for one second they will pay you back for your expenses.
If you do decide to use a Trust document that is not specific to NFA items, please at least follow the three main, DO NOT VIOLATE rules that my attorney gave me:
Do NOT use the Trust to hold anything other than NFA items.
The Trust MUST be the purchaser of all items. (There is a way around this for preexisting items by use of a legal document to officially transfer ownership to the Trust.) Open a new bank account that is used ONLY for NFA purchases and only transfer money into it to make NFA and NFA related purchases. (This will be a business account. Mine is with Bank of America so I can do immediate electronic fund transfers from my regular checking account when necessary. This Account gives me checking and a debit card. Using the debit card for ammo, magazines, etc. at least once a month allows me to avoid the monthly fee for the account.)
NEVER pay cash for an NFA item! You absolutely need the proof of payment method paper trail in case there is ever any question.
I know this may sound like overkill but, as an old First Sergeant of mine once told me, the object is not to survive getting hit but to never get hit in the first place.
Here's what I got:
My question:
I've done quite a bit of research, and being new to NFA, I want to separate fact from myth. I've heard the same thing about a bank account, at least as far as paying for the weapons themselves, as well as tax stamps on my Form 1's and 4's. What is your best advice in the interest of avoiding litigation for myself, as well as my family and colleague.
My trust attorney's reply:
As far as the checks go it really doesn't matter. Most everyone uses personal checks even when the trust is buying. Technically it is the seller (not the buyer as most people think) who is supposed to pay the tax anyway (of course we know it doesn't work like that in reality) so the ATF doesn't care as long as they get paid. It is highly unlikey there will be litigation over your trust because you control everything and can change it at any time. My best advice to avoid litigation when it comes to guns generally is to use them safely and have anyone else you let use the guns to the same.
--------------
Basically, to sum it up, what it sounds like is the fact that even though "you" are paying for the NFA item, you are acting as an agent for "the trust". Basically, to put it simply, it's similar to you giving someone power of attorney. They act as an agent to conduct business for you in your absence. With an NFA trust, you are acting as an agent for the trust, because the trust obviously can't physically represent itself. If you are the primary trustee, you have full rights to conduct business on behalf of your trust.
What adh says is true and can be done. The problem comes from what the IRS likes to call "comingling of assets". If a Trust is used to get ATF approval for a NFA item but you, as an individual write the check, do you own it or the Trust?
I spent hours going over these issues with my Trust attorney (thank goodness for flat rate billing) just because my friend the corporate lawyer (actual specialty is electronic comerce and digital security) found several instances of ATF requiring individuals to forfeit items to ATF that had been approved by ATF on standard Trust paperwork because ATF agents subsequently found something about the way the were paid for questionable and decided that the individual had bought the item as opposed to the Trust which made it illegal for the individual to possess even though the individual was a Trustee of the Trust.
I know this sounds really nit-picking, stupid and against all common sense but this is the ATF and Federal regulations/interpretations of regulations that we are talking about.
Do I think that they will go after someone for a single item? Probably not. But I am not willing to save a few hundred dollars and have there be ANY possibility that ATF might decide that I have to forfeit my LMT lower, my AKS-74S, my can, etc. to them. I would rather spend a few hundred to be safe than risk thousands and the legal expenses that go along with ATF crawling into your life. I know a regular FFL at my gun club that spent almost $8000 in legal fees to have the ATF finally agree that he did nothing wrong and drop the case against him. And don't think that for one second they will pay you back for your expenses.
If you do decide to use a Trust document that is not specific to NFA items, please at least follow the three main, DO NOT VIOLATE rules that my attorney gave me:
Do NOT use the Trust to hold anything other than NFA items.
The Trust MUST be the purchaser of all items. (There is a way around this for preexisting items by use of a legal document to officially transfer ownership to the Trust.) Open a new bank account that is used ONLY for NFA purchases and only transfer money into it to make NFA and NFA related purchases. (This will be a business account. Mine is with Bank of America so I can do immediate electronic fund transfers from my regular checking account when necessary. This Account gives me checking and a debit card. Using the debit card for ammo, magazines, etc. at least once a month allows me to avoid the monthly fee for the account.)
NEVER pay cash for an NFA item! You absolutely need the proof of payment method paper trail in case there is ever any question.
I know this may sound like overkill but, as an old First Sergeant of mine once told me, the object is not to survive getting hit but to never get hit in the first place.
This is exactly right.
Can you shed any light on this document? I am anticipating a move to a different State and will need to move my NFA items owned by my LLC either to another LLC in that State, or, preferably, to a trust. If there is a better way to do it than having to pay for new tax stamps, I'm interested. Thanks.
It would be easier to leave the LLC intact in the home state and do interstate transport forms (Form 20s) every year for the items you want to take with you.
Can the OPs person in question get a LEO sign off in Texas?
The trust thing is too much of a fad to get around fingerprinting and LEO signature, when they would be better served by individual ownership.
Can the OPs person in question get a LEO sign off in Texas?
The trust thing is too much of a fad to get around fingerprinting and LEO signature, when they would be better served by individual ownership.
The trust/LLC is not "less work" in the long run.
viperashes
07-12-11, 03:38
I've been figuring that out recently. My reasoning for my trust is legal possession while I am deployed. That way my weapons are legally cared for, as well as if something happens to me, the weapons aren't in limbo and I don't have to worry about my family being on the receiving end of some bs litigation from the ATF.
I've been figuring that out recently. My reasoning for my trust is legal possession while I am deployed. That way my weapons are legally cared for, as well as if something happens to me, the weapons aren't in limbo and I don't have to worry about my family being on the receiving end of some bs litigation from the ATF.
A trust does not make it easier for your heirs to get your weapons. They still need to be transfered to the beneficiary on a form 5.
The same thing can be accomplished via individual ownership and a will to your heir.
viperashes
07-13-11, 00:54
A trust does not make it easier for your heirs to get your weapons. They still need to be transfered to the beneficiary on a form 5.
The same thing can be accomplished via individual ownership and a will to your heir.
I have my father as a second primary trustee. If I died tomorrow, he already owns a 50% stake in the weapons, he'd just gain full control rather than having to be transfered to.
I have my father as a second primary trustee. If I died tomorrow, he already owns a 50% stake in the weapons, he'd just gain full control rather than having to be transfered to.
But that doesn't make it easier for your future son, daughter, etc to get the weapons.
Here's what I got:
My trust attorney's reply:
As far as the checks go it really doesn't matter. Most everyone uses personal checks even when the trust is buying. Technically it is the seller (not the buyer as most people think) who is supposed to pay the tax anyway (of course we know it doesn't work like that in reality) so the ATF doesn't care as long as they get paid. It is highly unlikey there will be litigation over your trust because you control everything and can change it at any time. My best advice to avoid litigation when it comes to guns generally is to use them safely and have anyone else you let use the guns to the same.
This is bullshit. Every trust, including non NFA trusts, should have its own bank account with its own checks that say XXX Revocable Trust.
viperashes
07-13-11, 09:53
But that doesn't make it easier for your future son, daughter, etc to get the weapons.
No, it doesn't, but in the short term, it's a safeguard for my investment in my NFA firearms, just in case something happens and I get blown up tomorrow or something. Granted, there are other ways around this. I'm not arguing that. I'm just saying that by personal preference, this is the path I chose to protect my investment and my family from a potential mess of paperwork and legal process.
viperashes
07-13-11, 10:10
This is bullshit. Every trust, including non NFA trusts, should have its own bank account with its own checks that say XXX Revocable Trust.
I disagree. I've known more than a couple of people who practice what I'm saying, including a good friend that operates under a reputable security contracting company. If you look at it from a business standpoint, rather than a legal document, that essentially what a trust is. When an entrepreneur starts a business, they may have to spend money out of their personal checking account to provide the overhead required to start up their small business. When you start a small business, you don't take out a loan under "XXX Gun shop", you take it out in your name, with the intention of expenditure toward the business that you are creating.
The same principle applies to the trust. You as an individual are a trustee, granted power over said trust to provide material assets as well as financial control. Saying that the trust is only legally able to spend money for itself is asinine, because if you trace that money back far enough, it's going to trace back to you anyway. I'm not saying do or don't create a separate bank account for your trust. All I'm saying is that it's not entirely necessary for all funds to come exclusively from a bank account that is designated as the "trust's" business account. As primary trustee and grantor, you are essencially the CEO of your trust, and take action for the trust on it's behalf, because a legal document can't make it's own decisions and/or decrees. Also, as I stated before, if you do your research, you will find that it is technically supposed to be the seller that pays the tax stamp, not the buyer, which is where it seems most peoples' fears come from, is paying for the tax stamp personally, when the trust is going to own the firearm. The trust that YOU own, owns the firearm.
http://www.atf.gov/firearms/faq/national-firearms-act-firearms.html#transfer-procedure
3rd paragraph: "A check or money order for $200 ($5 for transfer of “any other weapon”) shall be made payable to ATF by the transferor"
My whole problem with this is what is considered the NFA item?
If its a suppressor, I can see where it would be easy to see "who" or "what" bought the item since it is all just one "unit".
But in the case of an SBR, the lower is the "firearm" and is in essence the NFA item (correct?). Now what happens when you buy a lower, shoot it with a 16" upper, and then a year later decide to create a trust, SBR the original non-NFA lower, and buy a sub-16" barrel/upper receiver group? Does that "paper trail" now lead back to the individual instead of the trust because the lower (the "firearm") was originally bought by him and not the trust? Even if the "trust" bought the short barrel/upper receiver group, the lower was still bought by the individual. What happens then?
I think its all semantics, and you can't have it both ways, so which one is it?
viperashes
07-13-11, 10:52
My whole problem with this is what is considered the NFA item?
If its a suppressor, I can see where it would be easy to see "who" or "what" bought the item since it is all just one "unit".
But in the case of an SBR, the lower is the "firearm" and is in essence the NFA item (correct?). Now what happens when you buy a lower, shoot it with a 16" upper, and then a year later decide to create a trust, SBR the original non-NFA lower, and buy a sub-16" barrel/upper receiver group? Does that "paper trail" now lead back to the individual instead of the trust because the lower (the "firearm") was originally bought by him and not the trust? Even if the "trust" bought the short barrel/upper receiver group, the lower was still bought by the individual. What happens then?
I think its all semantics, and you can't have it both ways, so which one is it?
It all comes down to what is known as "constructive possession". When you construct a rifle with <16" barrel, using an existing lower receiver from a rifle with >16" barrel, you must register the lower receiver as a short barreled rifle. Say you wanted to take the rifle across state lines into a state that doesn't allow SBRs. If you leave the <16" upper at home, the lower is still registered as an SBR, but because you don't have "constructive possession" to actually build the SBR (by placing the short barreled upper reciever on the lower reciever) at that point, it's not purview to NFA laws until you are once again in "constructive possession" of an SBR.
As far as what classifies as an NFA item, as far as I understand it, is the serial numbered reciever upon which an SBR, SBS, MG, or AOW can be built (when in "constructive possession" of the parts to do so[?]), as well as destructive devices and suppressors.
viperashes
07-13-11, 10:56
If you don't know for sure, please don't speculate. It creates more confusion. Please read the various threads in the NFA area. There is alot of info here. IG
It all comes down to what is known as "constructive possession". When you construct a rifle with <16" barrel, using an existing lower receiver from a rifle with >16" barrel, you must register the lower receiver as a short barreled rifle. Say you wanted to take the rifle across state lines into a state that doesn't allow SBRs. If you leave the <16" upper at home, the lower is still registered as an SBR, but because you don't have "constructive possession" to actually build the SBR (by placing the short barreled upper reciever on the lower reciever) at that point, it's not purview to NFA laws until you are once again in "constructive possession" of an SBR.
As far as what classifies as an NFA item, as far as I understand it, is the serial numbered reciever upon which an SBR, SBS, MG, or AOW can be built (when in "constructive possession" of the parts to do so[?]), as well as destructive devices and suppressors.
My whole problem with this is what is considered the NFA item?
If its a suppressor, I can see where it would be easy to see "who" or "what" bought the item since it is all just one "unit".
But in the case of an SBR, the lower is the "firearm" and is in essence the NFA item (correct?). Now what happens when you buy a lower, shoot it with a 16" upper, and then a year later decide to create a trust, SBR the original non-NFA lower, and buy a sub-16" barrel/upper receiver group? Does that "paper trail" now lead back to the individual instead of the trust because the lower (the "firearm") was originally bought by him and not the trust? Even if the "trust" bought the short barrel/upper receiver group, the lower was still bought by the individual. What happens then?
I think its all semantics, and you can't have it both ways, so which one is it?
I am interested in the "paper trail" that has been discussed. Not "constructive intent". As seen in the bold text, I am buying the short barrel/URG AFTER creating the trust so constructive intent isn't an issue. I think we are on the same page as far as the "paper trail" is concerned, but I wanted the other guys who say that you need the separate account, ect to weigh in.
viperashes
07-13-11, 11:23
I am interested in the "paper trail" that has been discussed. Not "constructive intent". As seen in the bold text, I am buying the short barrel/URG AFTER creating the trust so constructive intent isn't an issue. I think we are on the same page as far as the "paper trail" is concerned, but I wanted the other guys who say that you need the separate account, ect to weigh in.
If you are going the trust route, not only would you need to wait until after creating the trust, you would need to wait until your Form 1 came back approved. Hence, the "constructive possession" comment. Basically, as I gather from what has been said is that paper documentation of the fact that "the trust" bought the NFA firearm, or bought the parts to construct the NFA firearm, rather than you, the individual. My counter arguement was that you, the individual are the proprietor of the trust, and have full grantor ability, so as long as you maintain the paperwork required that states the NFA firearm is under control of the trust, there shouldn't be a need for much more of a "paper trail" than that. It seems like a bunch of conspiracy theory manufactured by half-told stories with missing details.
There is way too much thinking going on here. The whole "constructive intent/ possession" thing has been discussed so much and it's much ado about nothing.
There is way too much thinking going on here. The whole "constructive intent/ possession" thing has been discussed so much and it's much ado about nothing.
Not playing the blame game or anything, but I wasn't even remotely talking about constructive intent.
I disagree. I've known more than a couple of people who practice what I'm saying, including a good friend that operates under a reputable security contracting company. If you look at it from a business standpoint, rather than a legal document, that essentially what a trust is. When an entrepreneur starts a business, they may have to spend money out of their personal checking account to provide the overhead required to start up their small business. When you start a small business, you don't take out a loan under "XXX Gun shop", you take it out in your name, with the intention of expenditure toward the business that you are creating.
The same principle applies to the trust. You as an individual are a trustee, granted power over said trust to provide material assets as well as financial control. Saying that the trust is only legally able to spend money for itself is asinine, because if you trace that money back far enough, it's going to trace back to you anyway. I'm not saying do or don't create a separate bank account for your trust. All I'm saying is that it's not entirely necessary for all funds to come exclusively from a bank account that is designated as the "trust's" business account. As primary trustee and grantor, you are essencially the CEO of your trust, and take action for the trust on it's behalf, because a legal document can't make it's own decisions and/or decrees. Also, as I stated before, if you do your research, you will find that it is technically supposed to be the seller that pays the tax stamp, not the buyer, which is where it seems most peoples' fears come from, is paying for the tax stamp personally, when the trust is going to own the firearm. The trust that YOU own, owns the firearm.
http://www.atf.gov/firearms/faq/national-firearms-act-firearms.html#transfer-procedure
3rd paragraph: "A check or money order for $200 ($5 for transfer of “any other weapon”) shall be made payable to ATF by the transferor"
Your wrong and so is your friend.
A trust is not a business.
Almost every trust that is done properly, ie education trust, land/real estate trust, NFA trust, has its own bank account with its own checks.
Don't quote me on this, I'm not entirely sure, but I believe you would be able to do a tax exempt transfer, because essentially, you are transfering to yourself. You are an agent for the trust, but you are transfering possession from you as a person, to you as a representative of the trust. Which is the same reason I pose my previous arguement.
You need to quit posting about these matters.
There is no such thing as a tax exempt transfer to yourself from your trust.
viperashes
07-13-11, 23:56
You need to quit posting about these matters.
There is no such thing as a tax exempt transfer to yourself from your trust.
I didn't say from the trust to yourself, I said to the trust. And I very clearly stated at the beginning of my post that I wasn't entirely sure in that aspect. I haven't sat here and preached what I'm saying as God's truth and nothing but. If I've stated something I've been unsure about, I've stated that I wasn't sure, and to ask elsewhere to confirm or deny. Please don't make me out to look like a bad guy.
I have the information I needed and I am closing this down. Thanks
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