Lawyers for NFA Trusts

[jrswanson1]

Can anyone recommend a lawyer who specializes in NFA Trusts in the Northern Virginia Area? I'm looking to pick up a can or two and possibly a SBS and SBR next year. Thanks.

Jim

[gunderwood]

Diomed will kill me for telling you this, but many dealers have them already drafted for your state and provide them free of charge if you buy from them. Of course, some states you really need a lawyer for, others you may not. Some states have very minimal legal requirements for a valid trust, VA is one of those. You don't have to do anything more than get it certified by a notary republic and address certain legal questions/statements. Unlike some other states (e.g. FL), VA trusts are simple and don't require a lawyer IMHO. Of course, like all things do your own research and this is generic advice, not legal, INAL, etc.

If you want a good place to start, try this: http://www.guntrustlawyer.com/

No matter which way you go, there are potential pitfalls. You will find a lot of disagreement on this subject and generally, each camp stands their ground.

I'm a pessimist when it comes to the BATFE. If they want you, you're toast. No amount of paperwork created by lawyers and signed by the BATFE will protect you. Play by the rules and it is unlikely they will want you specifically. However, there are not guarantees in life.

[jrswanson1]

I would prefer my own trust, as I don't want anything that costs over $800 to be "owned" by someone else, especially a retail store that can close up at any time or be shut down at the whim of a cranky ATF agent. I want a lawyer to check that I dot my i's and cross my t's and everything is on the up and up. That said, is there a lawyer that does this in the area?

Jim

[gunderwood]

The link I posted can get you in touch with VA lawyers. Generally, they have one already drafted up (the NFA lawyer) and simply fill in your info for $600-$1000. The trust is always "yours" either way. A lawyer is just generating the paper work and the same would be true of a retail shop.

You, as the creator of the trust must execute it, no one else can. A notary public must witness this execution in VA.

The only difference between a lawyer and a retail shop is who drafted the paperwork. Most serious NFA retail shops had lawyers draw up a template for a specific state (just like you would be paying the lawyer to do). Neither a retail shop nor a lawyer can execute a trust on your behalf.

Technically, no one owns the trust, someone(s) just control it. Upon execution, the trust is a legal entity not all the dissimilar from a corporation (there are lots of differences, but I'm illustrating the concept of a new legal entity being brought into existence). You must give up all legal rights to the NFA item. It isn't yours anymore with a trust, the trust owns it. Whomever controls the trust, controls the usage of that item, but they do not own it...the trust does.

The granters have no further claim on the property. The trust executor(s) are bound by law and what ever the trust paperwork says, but otherwise may exercise the use and disposition of all property which the trust owns.

Just like a corporation, you may no longer own the property in question, but you do (if you set it up correctly) control the corporation.

[jrswanson1]

Ah, okay. I went to one of the local fun stores that carry cans and asked about a trust and/or a lawyer about trusts. No clue. Hence my query. Thanks for the info.

Jim

[gunderwood]

I figured I would add this for clarification because the process is confusing at first.

I'm going to grossly over-simply this, but there are several aspects to owning something. Most things you buy this happens all at once, but for cars/houses it does not and they make for a proper analogy.

It is important to understand that the only reason the NFA is legal at all, per government lawyers in the 30s, is because it is only a tax on certain firearms. Nothing more...at least that is what they claim. The NFA essentially requires you to register or title our item and pay an associated tax for doing so. Thus, why you get a tax stamp. It does nothing but show you paid the legal tax on an item. You may question the rational for a fixed $200 tax during the Great Depression or the lengthy prison terms for violating just a tax law, but that is another story for another day.

When you buy a car, you fill out paperwork and technical you own the car before the taxes are paid and a title/registration is granted (if you didn't how would you owe taxes on something you don't own and hasn't been bought yet?). If you weren't going to drive on government roads, you don't always need those other things or they are vastly different depending on your state. If you look at the title and such concerning your home, you should notice it was executed after you technically owned the home. Something similar is going on with NFA items.

The simplified process from a dealer is:

1. Buy the NFA item. This includes paying for it in full, including all taxes except the NFA.
2. Fill out the paperwork and mail in your check.
3. Receive appropriate paperwork with the tax stamp.
4. Take possession of the NFA item.

Technically, when you buy the item you now own it. You just can't possess it legally yet. However, if the dealer were to sell your property to someone else you would have legal recourse against them as the rightful owner. Only once your tax stamp/title/registration (call it what you want) comes back can you (or your entity such as a trust) take possession of the NFA item. Just like a car, you must keep your registration with the item at all times. Failure to do so may have stiff penalties. You may question why it takes 3-6 months for the BATFE to register/title a NFA item when you can do a car in minutes, but... Note: the background check, if required isn't done during this period. It is done in step 4 and is the same form you fill out to purchase any firearm. I.e. 4473.

When using a trust, there is a step between #1 and #2...call it 1A. You execute paperwork, in front of a notary public, which transfers all legal ownership to the trust. I.e. you no longer own it. Now if you are an executor of the trust you can perform the rest of the process on the trusts behalf. Note that the trust property schedule will need updated, which is easy to do, but a lawyer will charge you an hour or something outrageous.

Once you execute the trust, neither any lawyer or retail shop has anything to do with possession of the NFA item. They own nothing.

[Diomed]

Gunderwood's covered it pretty well. One thing I'd note is that if you want to really have all your "i"s dotted and "t"s crossed, you'll need to make sure the trust itself buys the firearm(s). That means a bank account for the trust.

It's not really necessary for you to have a local lawyer do the trust, as long as they're licensed to practice in Virginia and know what they're doing with trusts. Everything can be done by email or over the phone. Many people have been satisfied with Hank Marx in Norfolk (http://www.millermarx.com/Attorneys/). A friend of mine had one done through Lenden Eakin (http://www.roanokevirginialaw.com/) and was satisfied.

Personal ownership is much less complicated but if you know what you're getting into, have at it. I am reluctant to suggest people use trusts because most have little conception of what they're signing up for, they just want to get around a stubborn CLEO. Nothing wrong with that, but ignorance can hurt in this arena. Gunderwood's one of the few people I've encountered (other than lawyers) who know the score in terms of the reality of trusts.

[user]

Agree with Diomed, particularly as to Gunderwood's analysis.

I'd add that you really need to know why you want your property to be transferred to the trust in the first place. It's not a dodge that everyone needs. A big reason for doing it is that if you kick off leaving NFA firearms in your estate, no one can take possession of them until they register as the owners themselves. As Gunderwood pointed out, title to property is different from ownership of property (that's why convicted felons can own guns but the guns have to stay in someone else' possession). And, as he also pointed out, a trust is a different "legal person", separate and distinct from you. So, the big advantage of the trust, as I see it, is that when you die, the trust lives on, and still owns the property it owned before you died. It's just that someone else will be the executor and/or beneficiary of the trust (and thus able to use the firearms they don't own).

Oh, and one other thing. You create a trust (and can, in theory, do so without any paperwork at all), by conveying property to the trust for the benefit of someone else. You can do that with your lawyer without having to have a bank account by giving the lawyer the money. Lawyers in Virginia are required to keep a special bank account for storing other people's money called an "attorney escrow account" (before certain recent Supreme Court rule changes, these were called, "trust accounts" - you may notice a connection there - the lawyer becomes the trustee for funds deposited with him for the benefit of other persons - no special paperwork required). Anyway, when you want to buy the gun and you know how much the check has to be for, the lawyer can write the check as a draft against his trust account, made out to the dealer, and you can take that to pay for the guns, silencers, or whatnot.

[gunderwood]

Technically, there is no such thing as a "NFA Trust." All NFA Trusts are really just Living Revokeable Trusts with a few special tweaks depending on your state (you may need a lot of changes depending on your state so don't download a generic Internet template and talk to someone who knows what they are doing). However, it is highly recommended you only ever put NFA items into that trust! If you need to put anything else in there, get another trust. Use that trust only for NFA items.

The dealer/trust route saves you a lot of money, but requires that you know what you are doing. Think of it like legalzoom. They provide low cost assistance and templates, but you must make sure of the details.

Diomed is right. You need to understand what you are doing or else you could get yourself in serious trouble. IMHO, that goes for any NFA item regardless of how you transfer it (trust or personal).

[Diomed]

A big reason for doing it is that if you kick off leaving NFA firearms in your estate, no one can take possession of them until they register as the owners themselves.

This is not true. In the case of individual ownership, the estate executor/administrator is authorized to possess the firearm(s) until they can be properly transferred to the legal heir. The executor is acting on behalf of the deceased. With a trust it is only slightly murkier, with the designated successor trustee possessing the firearm(s) until they can be lawfully transferred to the beneficiary, assuming that the trust is not perpetual (Virginia, as far as I know, does not permit perpetual trusts; other states, like Pennsylvania, do).

So, the big advantage of the trust, as I see it, is that when you die, the trust lives on, and still owns the property it owned before you died. It's just that someone else will be the executor and/or beneficiary of the trust (and thus able to use the firearms they don't own).

With a non-perpetual trust, once the grantor dies the assets of the trust are supposed to be distributed to the named beneficiaries. The trust is, after all, an estate planning tool, as a will is. Aside from cases of underage beneficiaries and the like, it would not be proper for the successor trustee to retain the firearms and prevent the beneficiary from obtaining them.

[zephyp]

Trusts actually are a decent idea for several reasons...makes for a nice way to manage your estate and avoid probate among others issues for those you will one day leave behind...just make sure your wife and kids know they can up and hold a garage sale that includes your class 3 weapon collection...

[user]

A big reason for doing it is that if you kick off leaving NFA firearms in your estate, no one can take possession of them until they register as the owners themselves.

This is not true. In the case of individual ownership, the estate executor/administrator is authorized to possess the firearm(s) until they can be properly transferred to the legal heir. The executor is acting on behalf of the deceased. With a trust it is only slightly murkier, with the designated successor trustee possessing the firearm(s) until they can be lawfully transferred to the beneficiary, assuming that the trust is not perpetual (Virginia, as far as I know, does not permit perpetual trusts; other states, like Pennsylvania, do).
....

I reckon it depends on how it's written. I don't know spit about Pennsylvania law (and don't want to). But under the Virginia implementation of the Uniform Trusts Act, it can be done the way I said. Why would you want to use a revocable trust for NFA firearms, anyway? I think a couple of things confuse people about this issue both of which already been discussed, one is the possession v. ownership issue; the other is the difference between the settlor (or creator of the trust, and the person who transfers property to the trust) and the trust itself (as a separate legal person). There is no reason to create a trust, in my mind, the purpose of which is to own NFA firearms, if it's going to die when the settlor dies. I suppose there are people who want to eat their cake and have it, too, but this isn't an area in which one ought to be trying to do so. You ought to pick one option: individual ownership or trust, and go with what you pick.

By the way, the person who creates the trust, transfers property to it, acts as trustee, and is a beneficiary, can all be different "persons" and can be any kind of legal person, including other trusts, corporations, etc.

[user]

...(Virginia, as far as I know, does not permit perpetual trusts; other states, like Pennsylvania, do). ...With a non-perpetual trust, once the grantor dies the assets of the trust are supposed to be distributed to the named beneficiaries. The trust is, after all, an estate planning tool, as a will is. Aside from cases of underage beneficiaries and the like, it would not be proper for the successor trustee to retain the firearms and prevent the beneficiary from obtaining them.

1) The rule against perpetuities has been drastically changed in Virginia by statute.

2) The rule against perpetuities applies only to contingent or unvested interests in real property.

3) A trustee, including successor trustees can be a beneficiary as well.

4) The trust does not have to be revocable, nor does it have to transfer property to beneficiaries at any time prior to termination; and termination of an NFA trust can be designed to take place only when all NFA property has been converted to cash by transfer or sale.

[Diomed]

Why would you want to use a revocable trust for NFA firearms, anyway?

Because it's important to be able to change the trust, both in terms of beneficiaries and trustees, and in terms of being able to move property in and out. The attorneys who pioneered this application determined that the revocable trust is the best way to do it, so I'm not going to go about reinventing the wheel.

There is no reason to create a trust, in my mind, the purpose of which is to own NFA firearms, if it's going to die when the settlor dies. I suppose there are people who want to eat their cake and have it, too, but this isn't an area in which one ought to be trying to do so. You ought to pick one option: individual ownership or trust, and go with what you pick.

In my case, the reason is twofold: it's an estate planning tool, meaning I want the beneficaries to get what they're supposed to get when I kick it, and also because I cannot do individual ownership where I am, as the CLEOs are opposed to private ownership of NFA items. For most people, the reason is the latter, mixed with not wanting to do fingerprints or pictures for each application (laziness).

The other alternative, incorporation, carries with it another set of burdens and costs. In discussing it with my attorney we agreed that in my position a trust would be a better vehicle.

By the way, the person who creates the trust, transfers property to it, acts as trustee, and is a beneficiary, can all be different "persons" and can be any kind of legal person, including other trusts, corporations, etc.

Depending on the particulars, that means more taxable events.

1) The rule against perpetuities has been drastically changed in Virginia by statute.

When did that happen? My attorney advised me I couldn't do a perpetual trust.

2) The rule against perpetuities applies only to contingent or unvested interests in real property.

Most NFA trust lawyers seem to think otherwise. I state that only to note that there is a difference of opinion within the profession, to discuss it further would require one of them to pipe in.

3) A trustee, including successor trustees can be a beneficiary as well.

Yes, but they can't be grantor, trustee and beneficiary; in order to establish the trust and move assets into it they have to be the grantor, in order to lawfully possess its assets they have to be the trustee, and if they're also the beneficiary the ATF will reject the application as invalid.

4) The trust does not have to be revocable, nor does it have to transfer property to beneficiaries at any time prior to termination; and termination of an NFA trust can be designed to take place only when all NFA property has been converted to cash by transfer or sale.

If one can design it that way and that's what one wants, and can get that by ATF, then great. In my case, it's not really what I want so it's academic.

In any case, I'm looking at this through the prism of what ATF does, because that's my principal hurdle. Unless they're satisfied, the NFA trust I have is useless. I've tried arguing that they're wrong on certain matters of law, doesn't matter. It boils down to, do it our way or do without whatever you're trying to get.

[gunderwood]

In any case, I'm looking at this through the prism of what ATF does, because that's my principal hurdle. Unless they're satisfied, the NFA trust I have is useless. I've tried arguing that they're wrong on certain matters of law, doesn't matter. It boils down to, do it our way or do without whatever you're trying to get.

Generally good answers, but I wanted to really second the underline.

I too would be interested in anything about a perpetual NFA trust. I've never heard of anyone actually creating such a vehicle for NFA items in VA. Not saying it can't be done.

[user]

I'll check up on the BATFE regulations as soon as I get time and let you know. As I recall, there's no problem, but that's just memories, right now. I always have to double check the regs before I do anything.

[jdonovan]

Can anyone recommend a lawyer who specializes in NFA Trusts in the Northern Virginia Area? I'm looking to pick up a can or two and possibly a SBS and SBR next year. Thanks.

I used the Apple law firm out of Florida. They have a local 'associate' who does the paper work in VA so the trust has been reviewed by a lawyer who is able to practice in VA.

It was very easy to get setup, and very reasonable in price.

The ATF has recently been reviewing trusts in more detail and has alerted many folks that their trusts are invalid. This has occurred in some cases years after the trust was established. The interesting problem is if the trust is invalid, then the trust can't be in possession of any assets. This leads to the situation of illegal possession. To the best of my knowledge they haven't prosecuted anyone....yet.

The 2 big wins in my mind on the trust are:
1) no CELO sign off.. .not a problem in my county, but is for some.
2) possession by more than one person is permissable.

just make sure your wife and kids know they can up and hold a garage sale that includes your class 3 weapon collection...

True... unless you reserve that power for yourself.

My trust specifically says no-one but the grantor(ME!) may sell. The co-trustees may buy, conduct business with the ATF or other LEO's, make/take for repair, use etc... on behalf of the trust.

[Diomed]

I'll check up on the BATFE regulations as soon as I get time and let you know. As I recall, there's no problem, but that's just memories, right now. I always have to double check the regs before I do anything.

ATF's not going to care, at least not in published regulation, ruling, or Q&A. The perpetual Pennsylvania trusts I mentioned earlier go through with no problems.

I'm not sure how familiar you are with the workings of the NFA Branch, but the principal part of application processing involves the application being checked by employees with the title of Legal Instruments Examiner; it's about one step above entry level and essentially a clerk position, no legal education necessary. When a trust application hits their desk, they pull out a checklist: they flip to the relevant state's part and go down it. Any time something is in disagreement with the checklist, processing of the application stops and the trust itself is forwarded to the legal department where all of the actual lawyers live. They then give it a thumbs up or down (the impression I get is that it's usually a thumbs down). Issues have been raised about whether they have lawyers who are actually licensed to practice in every state, among other things. But anyway, what you're having to do with trusts is get by that checklist.

I've thought of tilting at that windmill and filing a FOIA for it, but I figure since no one seems to have done it it probably gets stonewalled.

Trusts are a critical issue in the NFA world at ATF. I think it's fair to say they've reached critical mass - the number of trust applications they get now is huge, possibly the majority of non-governmental applications they receive now. Add in that trusts can and have been used by prohibited persons to attain NFA items, and it is not a happy bunch in Martinsburg. There is serious momentum to eliminate the CLEO certification to try to get things back under control, since that can be done without congressional involvement (versus excluding trusts, which would require a rewrite of the statute).

[zephyp]

Ok, a couple of questions...

1. Can I set up an NFA trust without specifying any items? That is, set up the trust first, then acquire controlled items...or not...
2. Do I understand correctly that a valid trust does not require local LE approval to acquire items?
3. So I set up a trust and get a controlled item. Are there any special storage requirements?
4. Is there a dummy's guide for setting up trusts and using it to acquire controlled items...
5. So now I'm the happy owner of a fully auto suppressor equipped SBR. Where can I go play with it?

[jdonovan]

1. Can I set up an NFA trust without specifying any items? That is, set up the trust first, then acquire controlled items...or not...

yes. If you wanted to trasfer items from you to a trust it would be another $200 per .

2. Do I understand correctly that a valid trust does not require local LE approval to acquire items?
correct

3. So I set up a trust and get a controlled item. Are there any special storage requirements?

Yes, all NFA items must be stored/controlled in a manner that prevents access by non-authorized possessors.

4. Is there a dummy's guide for setting up trusts and using it to acquire controlled items...

Use a lawyer. $600 for the lawyer, vs a felony conviction for doing it wrong... no contest.

5. So now I'm the happy owner of a fully auto suppressor equipped SBR. Where can I go play with it?

Most of the local indoor ranges will allow it if pistol caliber. I think Blue Ridge will allow FA rifles, and I've never checked with SEG.

If you really want to air it out I goto hite hollow or west side out in the Shenandoah valley.