NFA Newby: To Trust or not to Trust?

[bigus_D]

I am very curious about purchasing a suppressor (or two). Specifically, I want to get a supressor for my AR15 (Colt LE6920). I am also curious about getting one for my 10/22 (sounds like a threaded barrel, or modification of the existing barrel would be required).

I'll go ahead and ignore all the questions I have about what model is best, where to purchase it, what adapter might be required, etc. I'm most curious, right now, about how exactly to get started. Should I purchase the item in my own name, or place the item into a trust?

Specific items of interest:
1. What are the costs associated with creating a trust?
2. Are there ongoing (annual) costs related to maintaining a trust?
3. What benefits does using a trust offer?
a. Estate planning: transfer to beneficiary
b. Possesion/Use by another (put wife/child/other family member in the trust)
c. Others?
4. What negatives are associated with using a trust?
5. Is it easier/harder to obtain approval for each purchase when using a trust
a. NOTE: Currently living in Indianapolis... I understand Indy has a special process
b. Curious about how the process works outside of Indy as well, as I may move
6. What if I move? Does the trust have to be re-organized? If it isn't in a trust, is there special paperwork that must be completed?
7. Does anybody have first hand experience using a trust?
a. Would you recommend the attorney that created yours?
8. How does the NFA background check differ from other background checks I've submitted to (standard firearms purchase, Indiana LTCH, Utah CCW)?


OK... that is a pretty good list of questions. I'm sure there are a ton of other issues I haven't yet considered. Any and all input will be greatly appreciated.

 

[CountryBoy19]

Specific items of interest:
1. What are the costs associated with creating a trust? That depends on where/who/what exactly. I got my trust from guntrustlawyer.com It cost me $600 but I know that it's done right, and it includes language that specifically details how assets can be handled, who can handle them etc. You could also use a program called Quicken Willmaker, which will cost you about $30, but I'll address some known issues with that down below.
2. Are there ongoing (annual) costs related to maintaining a trust? Not normally.
3. What benefits does using a trust offer? You can list anybody you want as a trustee, and then those people may possess the NFA items without you being present. In my trust I have listed my dad, my younger brother, myself, and my fiance as trustees. But I gave the other's limited powers. So I'm still in full control of the trust but they can still possess the trust assets because they are trustees.
a. Estate planning: transfer to beneficiary I'm not positive, but I think as long as the beneficiaries are listed your items will transfer to the those beneficiaries tax-free on a form 5.
b. Possesion/Use by another (put wife/child/other family member in the trust) Child must be 18 before they can legally possess I believe. But generally yes, it can be anybody, even your neighbor or a complete stranger if that is what you so desire.
c. Others? You can avoid the hassle of attaching photos to apps (a trust doesn't have a face/photo), no CLEO sign-offs, and no certificate of compliance needed. I was thinking there was one other thing you could avoid but I'm not positive.
4. What negatives are associated with using a trust? The only negative that I can see is the cost of creating a trust, but it is 100% worth it if you'd like to let others possess too, IMHO.
5. Is it easier/harder to obtain approval for each purchase when using a trust Much easier because #1 your trust likely doesn't have a background to be tainted by anything. #2 you avoid all the other things I mentioned above, meaning if your CLEO says he doesn't want you to have NFA weapons, you can say that's tough because I'll get them anyways.
a. NOTE: Currently living in Indianapolis... I understand Indy has a special process You can completely avoid all that with a trust. No local LE is involved period.
b. Curious about how the process works outside of Indy as well, as I may move The only thing that could change that would be if you went individual route, then the CLEO's decision to sign or not would make a difference. That's a moot point with a trust.
6. What if I move? Does the trust have to be re-organized? If it isn't in a trust, is there special paperwork that must be completed? Not typically. The only time a trust may need to be amended is if you move out of state and something in the trust is invalid because of different trust laws in different states. Also regarding moving, if you cross state-lines you have to have ATF approval to move with NFA (even just normally crossing to go shoot at a friend's house etc), but in-state there are no requirement. ATF would still like you to notify them if you move in-state, but not required.
7. Does anybody have first hand experience using a trust? Yes
a. Would you recommend the attorney that created yours? Absolutely! It was well worth the $600 for peace-of mind. They set it up with limited powers for the other trustees etc and to this day I still get email updates from them regarding changes to this and that and pointers and advice. If I ever need my trust amended, it could be done very affordably by going back to them to have it done. Try that with a computer program.
8. How does the NFA background check differ from other background checks I've submitted to (standard firearms purchase, Indiana LTCH, Utah CCW)? It doesn't really differ much at all. It may be a little more in depth, but it's nowhere near that done for a security clearance etc. Basically if you can buy a handgun and pass the check, you'll pass the NFA check.


OK... that is a pretty good list of questions. I'm sure there are a ton of other issues I haven't yet considered. Any and all input will be greatly appreciated.

Regarding quicken willmaker. IMHO stay far, far away from that and other "fill-in-the-blank" trusts. #1 State laws vary and change for trusts etc. Quicken has been proven inaccurate on specific state-laws several times, I wouldn't trust something like this to a $30 computer program. Quicken even says in their terms of use that they aren't responsible for their mistakes. #2 Quicken doesn't allow you to make a trust with multiple trustees, so you would have to modify the quicken trust anyways. If you can properly modify the trust yourself, then you likely know a lot about trust law etc and you could just write your own trust. This takes away the prime advantage of a trust. #3 there is nobody to fall back on for legal advice and amendments. #4 Quicken trusts state in the language that trustees must manage the assets to provide the most financial gain etc, and it's pretty clear that shooting guns isn't providing financial gain, so that language needs modified etc. The list goes on for the things that need changed. #5 (the most important in my mind) is what most people use to argue that quicken trusts are perfectly fine, but I argue the opposite point, a quicken trust has never been "tested" in a legal situation that I know of. There is one such incident that has never been proven, only speculated where a guy bought 2 items on a quicken trust (or similar fill in the blank trust) and when he went for a 3rd item ATF discovered his trust wasn't valid and requested that he forfeit all NFA assets that his trust owned. He lawyered up very quickly and fixed the problems before ATF could act and saved his butt, but caused himself a lot of grief, and he ended up paying for the cost of a lawyer-written trust anyways when it was all said and done. IMHO, you get what you pay for. Anyways, back to not being tested. A lot of the problems with a Quicken trust seem to be with trustee powers, heirs, etc. and most of those issues won't be uncovered until the grantor dies and the assets are transferred to heirs (possibly illegally given the language of the Quicken trusts). I have a feeling that we will see lots of problems in the coming decade or 2 where a disgruntled heir sues the estate because the collectible machine-gun in the trust was fired and the trust language specifically said the trustee had to do things for financial gain etc. There will be lots of problems rising about this in the future. Sure, the quicken trust may work for now, and gets the job done, but why not just pay the money and get it over with and have the peace-of-mind that it's right and that transfers to the beneficiaries etc will be done properly when you die?

BTW, I bought quicken, and I made a trust, and realized that it wouldn't let do multiple trustees so I changed that myself, then I found other bad things in the language so I started changing things as I saw fit, and I tried to write things in with language that sounded as legal as possible etc. When I got done going through the trust, it was so chopped up and it no longer even resembled the quicken one so I decided that I needed a lawyer to review it. After waiting for the lawyer for over 2 months (he said he was pretty busy), I decided to just scrap that and pay $600 to get it over-with. It was the best decision I made. Don't waste your time with other trusts.

 

[praff]

Great information on the answers...thanks a bunch. This might turn into a sticky thread on trusts if we can get enough information down. Here are a couple more questions.

1. How long does it take to create a trust?

2. If I purchase nfa items on form 4's now, can I later put them in my newly created trust. If so, do you still pay the transfer fee and what form does it go on?

 

[CountryBoy19]

Great information on the answers...thanks a bunch. This might turn into a sticky thread on trusts if we can get enough information down. Here are a couple more questions.

1. How long does it take to create a trust? It depends on the lawyer. For me it was between 1 & 2 weeks because the lawyer tried to email but it bounced, so he snail-mailed it. Then you have to notarize it (your bank should have somebody with a notary there). Overall, the process isn't long at all.

2. If I purchase nfa items on form 4's now, can I later put them in my newly created trust. If so, do you still pay the transfer fee and what form does it go on?You can transfer them into the trust later, but unfortunately, the trust is a separate entity from yourself, and therefore you DO need to pay tax on those transfers.

I think a trust sticky would be great!

 

[CountryBoy19]

More Q&A from a PM I received from another member. I thought it would be informative.



Now when did you get your trust - How long ago? I think it was about 1 year ago

I believe the web site you mentioned is out of Florida. Do they send it to an IN attorney for review? Correct, they have a form trust that they've made for the purpose of NFA ownership in general. They will then tailor it to your needs etc, with most "customization" options being included in the price of the trust. I had them add multiple trustees and give those trustees limited power which was all included. I'm sure if you have a lot of changes/specializations they may charge more, but I'm not positive. After that they send it to an IN attorney to have it checked.

How long did it take for them to put it all together from the day you called? or emailed? website fill in? till the day it was set up? When you get it, it will actually look as if it was created by the Indiana attorney, with their cover-sheet etc because they are the actual ones that are practicing law. (It all goes back to being licensed in the proper state etc). I should have gotten it within a week, but for some reason the attorney's email version bounced back so they printed it and mailed it snail mail so it took between 1 & 2 weeks to get mine. Still pretty quick. Given that the email doesn't bounce and the IN attorney isn't too busy to look at it, it should be less than a week. And they use the same IN attorney as far as I'm aware so it a pretty routine process for them to review one of the trusts so even if they are busy it shouldn't take long for them to quickly look it over and send it on.

How soon after you set it up did you wait to send in your NFA paperwork? Just about right away because I was waiting on the trust to be finished before sending my forms in, and thats why I quit waiting on the lawyer to review my one trust and just decided to do the guntrustlawyer one. I actually think I had the forms all filled out and everything, and so on my way back from the bank from getting it notarized we stopped to make copies of the notarized trust, then we dropped it all off at the post-office.

 

[Scutter01]

I bought my first can without a trust because the can was only $200. I didn't see any point in spending $600 for the trust, as my $200 can would have cost me $1000. If I purchase any additional NFA items, I'll most likely go the trust route.

 

[alfahornet]

Personally I don't see the point of going the trust route unless you can't get CLEO sign off or want different family members to be able to use the items w/o you present. Additional cost, additional hassles and now additional scrutiny on transfers from what I've heard.

All my NFA items are in my name and sheriff had no problems signing off on them not being illegal in IN.

 

[bigus_D]

For me, the primary reason to consider a trust is estate planning. If I'm going to put good, hard earned, money into an asset that will likely hold its value, I want that item to pass to my beneficiaries (easily and without additional cost if possible).

It sounds like, so long as my intended beneficiaries are part of the trust, then there would be no difficulty for them to legally own the items after I pass.

I guess having the ability to allow others to posses the item legally (for instance if my wife wants to shoot... or even just bring it to me sometime) is a pretty big benefit as well.

I'm curious about what "additional scrutiny on transfers" may exist...

 

[CountryBoy19]

Personally I don't see the point of going the trust route unless you can't get CLEO sign off or want different family members to be able to use the items w/o you present. Additional cost, additional hassles and now additional scrutiny on transfers from what I've heard.

All my NFA items are in my name and sheriff had no problems signing off on them not being illegal in IN.

IMHO, the only "additional hassles" are with individual transfers (the hassles being pictures, fingerprints, CLEO signoff, and Certificate of Compliance). Once the trust is created there are no more hassles. I haven't even got my trust out of the safe in over a year now. And IMHO, creating the trust itself wasn't even a hassle. I called them and spent less than 5 minutes on the phone, then when I got it me and the 3 other trustees all went to the bank and signed and had it notarized. End of story.

I'd be interested to hear the stories of "additional scrutiny" as well because those rumors have been floating around since trusts started being accepted by the ATF but nothing has come of this "scrutiny" yet.

As a matter of fact, for a while trust transfers were quicker than individual transfers because they didn't have to send the fingerprints to the FBI to have them processed. The FBI was WAY behind on processing fingerprints and a lot of individual transfers were held up because of that, and the trusts moved on through.

For me, the primary reason to consider a trust is estate planning. If I'm going to put good, hard earned, money into an asset that will likely hold its value, I want that item to pass to my beneficiaries (easily and without additional cost if possible).

It sounds like, so long as my intended beneficiaries are part of the trust, then there would be no difficulty for them to legally own the items after I pass.

I guess having the ability to allow others to posses the item legally (for instance if my wife wants to shoot... or even just bring it to me sometime) is a pretty big benefit as well.

I'm curious about what "additional scrutiny on transfers" may exist...

As far as passing to beneficiaries goes, if your items are owned individually then they can still pass tax-free to your legal heirs (children, wife etc). They may also pass tax-free to somebody that is not a legal heir if they are listed in a will, but I'm not positive on that part.

 

[alfahornet]

I'd be interested to hear the stories of "additional scrutiny" as well because those rumors have been floating around since trusts started being accepted by the ATF but nothing has come of this "scrutiny" yet.

From what I've heard is that ATF is now having a closer look at transfers involving a trust. My dealer told me that his transfers going to an individual are generally speaking faster approved than tose going to a trust. Now I don't know what sampling pool he had to compare.

My NFA transfer have all taken less than 2 months door-to-door (2 different dealers) except for one. I've been waiting since first week of November for ATF to clear a transfer from an out-of-state trust to my dealer (SOT holder). The transfer has been pending since December and neither side (dealer or current owner) have been contacted by NFA branch. My dealer as well as the owner have called to inquire without having obtained any specifics. Item in question is on a form 4 currently.

 

[bigus_D]

As far as passing to beneficiaries goes, if your items are owned individually then they can still pass tax-free to your legal heirs (children, wife etc). They may also pass tax-free to somebody that is not a legal heir if they are listed in a will, but I'm not positive on that part.

Interesting. In that case, perhaps I don't need to worry about setting up a trust.

Now to start my search for the hardware!

 

[CountryBoy19]

Interesting. In that case, perhaps I don't need to worry about setting up a trust.

Now to start my search for the hardware!

The MAIN 2 advantages of a trust are getting around the fingerprints and CLEO signoff, and allowing family members etc to have possession without your presence. If you don't need or desire either of those options then the trust route isn't very beneficial. But once you decide one way you can't go back without paying tax to transfer those items into a trust or vice-versa.

 

[bigus_D]

The MAIN 2 advantages of a trust are getting around the fingerprints and CLEO signoff, and allowing family members etc to have possession without your presence. If you don't need or desire either of those options then the trust route isn't very beneficial. But once you decide one way you can't go back without paying tax to transfer those items into a trust or vice-versa.

Does anybody have input related to getting this sign-off in Indianapolis?

It sounds like the process is a little different in Indy, but I'm unclear on if there is actually any difficultly actually getting approved. I understand, without a trust, fingerprinting and background check will take place. But does local Indianapolis LEO ever block the approval, or is it just time delay while they sit on the paperwork?

So... if I decide NOT to use a trust, here are my next questions:

1. How does the local sign-off process work in Indianapolis vs. other parts of the state?
2. What constitues "possesion"? i.e. I keep my guns in locked cabinet at home, with the key in a keypad locked nightstand safe. My wife can open the nightstand safe. If I'm not home and she is, would she illegally in possession of my NFA item?
3. What else am I not thinking about???

 

[mjrducky]

I just finished doing INDY paperwork:

Does anybody have input related to getting this sign-off in Indianapolis?



1. How does the local sign-off process work in Indianapolis vs. other parts of the state?
The sign-off itself is the same, must be signed off by a CLE. The part with Indy is that you have to leave it to have them sign it and then in a few days to a week they will call you to pick it up. Some leave an envelope to have them mail it back to you. So other smaller cities the person doing the signing may just do it right then while you wait, or have it ready within the day. You will do two finger print cards and they will return those to you to hold, until your paperwork is signed. You'll get the paperwork back as long as you don't have anything on your record from the background check they will do.


2. What constitues "possesion"? i.e. I keep my guns in locked cabinet at home, with the key in a keypad locked nightstand safe. My wife can open the nightstand safe. If I'm not home and she is, would she illegally in possession of my NFA item?
If they wanted to get that technical, then yes many of us probably would be in trouble, however I think common sense prevails here and consider my house my possesion and I am not in it while at work.. So same would apply to me, its my gun and I'm at work.

3. What else am I not thinking about???

You find your class 3 item and pay for it through whichever dealer - they will start your paperwork for you. They will provide you the Form 4, 2 print cards, and a Certifacation form. You fill out the remainder of form 4, get two passport photos and attach to the form 4. Drive downtown, pay 6.00 for both finger print cards. Get the cards back from them and leave form 4 to be signed, keep the citizens certification paperwork they could care less about it. They will call you to pick them up in a week or so and make sure that BOTH pages are signed and they didnt miss one. Then mail everything and a check for 200.00 to the BATFE and wait.

Hope I didnt loose you.

OH YA if you dont type it (use the links in the sticky above and you can) make sure you fill it out in black ink, especially the finger print cards.. Don't ask ....

 

[praff]

Awesome thread....I have always heard about trusts, but never knew the advantages/disadvantages well enough to make an informed decision. My main concern is passing along my nfa stuff to my son when i pass.

Is it a fact that willing my items to my son will allow him to transfer the items to himself tax free?? If that is the case, I dont see a lot of advantages to the trust route.

 

[chipdog4]

The MAIN 2 advantages of a trust are getting around the fingerprints and CLEO signoff, and allowing family members etc to have possession without your presence.

So, with a trust, could the nfa item be kept at different addresses of the family members? Depends on how it's set up, I'd guess.

Hmm, does anyone know of any websites that explain trusts for nfa. I'd like to do some more reading.

 

[bigus_D]

So, with a trust, could the nfa item be kept at different addresses of the family members? Depends on how it's set up, I'd guess.

Hmm, does anyone know of any websites that explain trusts for nfa. I'd like to do some more reading.

From my understanding (NOTE: I'm the newby here asking questions), whoever is in the trust (and can legally possess firearms) should be fine possessing the items in the trust. So... if I put Joe Blow in my trust, he can have the NFA item at his house or I can have it at my houst, or either of us can take it to the range...

This is the top benefit of the Trust (from my updated understanding). The second benefit being the lack of fingerprinting and background checking (but that doesn't seem like a huge concern so long as your history is clear).

 

[CountryBoy19]

So, with a trust, could the nfa item be kept at different addresses of the family members? Depends on how it's set up, I'd guess.

Hmm, does anyone know of any websites that explain trusts for nfa. I'd like to do some more reading.

Yup. I live 3 hours from my parents, and currently my fiance lives 30 minutes from them. They can be kept anywhere as long as they're not accessible to somebody that isn't a trustee. So my NFA items could be at my house, her, house, my parents house, or any other place we are (or where we even are NOT, as long as they're locked up).