Selling NFA on a trust

[Beowulf]

I was talking to my dealer about this exact thing when these "one shot" trust deals came out from Silencer Shop. If that was the case, the dealer could essentially file them and then have them at the ready at a higher price for people who were willing to pay more not to wait. He said he wouldn't be doing it but we were simply discussing the legalities of it. I've never talked to a lawyer about it, but it should would be kind of nice really. One time stamp and essentially no wait for things down the road.

I just pinged the question to a buddy of mine who is a lawyer down in Florida. We'll see... I've learned that lawyers are the cagiest people when asked to give professional advice. Usually, when asking folks in other professions, you can't get them to shut up about it.

 

[Bfish]

I just pinged the question to a buddy of mine who is a lawyer down in Florida. We'll see... I've learned that lawyers are the cagiest people when asked to give professional advice. Usually, when asking folks in other professions, you can't get them to shut up about it.

Very true hahahaha well let us know what he says!

 

[chezuki]

I've learned that lawyers are the cagiest people when asked to give professional advice. Usually, when asking folks in other professions, you can't get them to shut up about it.

Key word “give”... lawyers are paid good money to provide legal advice.

Would you ask a mechanic friend to fix your car for free?

 

[jagee]

Key word “give”... lawyers are paid good money to provide legal advice.

Would you ask a mechanic friend to fix your car for free?

I have an HVAC friend that fixes stuff for free.

 

[Fargo]

I understand what you're saying about contract law but their is no technical legal transfer of possession until the new stamp is approved. The trust still owns it at that point and trusts are typically written in a way that gives the grantor full authority and discretion to make amendments as they see fit. I don't see how a trustee or even lesser responsible person could petition to remain on the trust against the grantor's will

There are two parallel bodies of law involved in this, the NFA and the contract laws of whatever jurisdiction you are operating in. It is important that you keep both of them in mind and consistent in making a transaction. Otherwise, you could end up with a contract that basically grants a lease or rental to a person of an NFA weapon via your trust, even though they are not able to get a stamp them self. By taking their money, and especially by not giving it back, they are almost certainly going to have potential contractual rights they can sue to enforce against you.

When you take money as part of an agreement that involves you putting someone on your trust, they most certainly can file an action against you to prevent removal if they believe that you are violating the contract or that provisions of the contract you are relying on unenforceable. The ATF might also be concerned about such a practice, but I don't know.

What I do know, is that it looks like a really risky way of doing business with a great deal of likelihood of litigation if the deal falls apart.

 

[Beowulf]

Key word “give”... lawyers are paid good money to provide legal advice.

Would you ask a mechanic friend to fix your car for free?

Hell, family and friends ask me to fix their computers for free all the time (and just for the record, just because I'm in IT in general doesn't me doing desktop repair is my idea of a good time). I guess I could use my corporate hourly rate and bill myself out at $250 an hour (maybe a bit of a discount, cause it's not like I get any of that $250 when I do it for work since I'm salaried).

 

[Beowulf]

So, here is the exchange with my lawyer friend. He's based out of Miami, FL (which is why he throws in the caveat about Indiana law):

Me: Random trust question. Can you replace the grantor and main trustee on a trust as a means of transferring ownership of a trusts property?

For example, I create XYZ Trust and put a piece of property into it. I'm the grantor and sole trustee. But then I sell the property to Jim Bob down the road. Can I add him as a trustee to the XYZ Trust and then remove myself entirely, so Jim Bob is now the sole trustee of XYZ Trust?

Lawyer: This isn’t my area of expertise but I don’t see a problem with that. It’s no different than selling the assets of company a to b and winding down a vs sale of all shares of a to b and keeping a going. That said, the law on trusts varies from state to state so you need an Indiana lawyer to ask to be sure

Me: Sure. It was a hypothetical question I saw posited on transferring an NFA item via a transfer of the trust itself to avoid the year+ wait for the ATF to process the paperwork

Lawyer: I would want to see the ATF rules as it pertains to trusts. This reminds me of what some City’s here do with zoning entitlements for bars. If the operator changes the operator must come back before the zoning board and acknowledge all the operational conditions of running the bar. Miami Beach deems the 50%+ transfer of stock in the operator to be a change of operator. If ATF has a similar rule or interpretation you could be SOL on that strategy

So, there you have it. A qualified "maybe". So who knows. ​

 

[Bfish]

Well thanks for letting us know anyhow! I am curious still for sure.

 

[Nicu757]

Sounds a little scary to me. So can you add people to a trust with them needing finger prints and what not? But once added if another item is purchased and added to trust everyone needs to submit correct???

 

[Nicu757]

Sorry with out them doing the ATF dance

 

[CountryBoy19]

Only when transferring the item to the trust. Once the item is on the trust, you can add and remove people all you like.


...yeah, it’s stupid.

This ^^^ is why any/all future NFA purchases will be done on single-item trusts. I'm the grantor, I file the paperwork, and after it's filed I'll add the other trustees. Or, I'll add the single-item trust to the Schedule A of my original trust...

 

[comm2679]

Does this not leave your trust open to the purchaser pillaging the trust if something were to happen to you?

I wonder this myself. I wouldn't want anybody associated with my trust who I wouldn't trust taking possession of everything when I'm gone.

 

[Hotrod29]

You don't have to add them as a trustee, just a responsible person.

 

[ol' poke]

You don't have to add them as a trustee, just a responsible person.

Just curious, but if the person isn't a trustee or grantor, how do they have access to items in the trust?

 

[Hotrod29]

A responsible person is not necessarily a trustee. A trustee is someone that can execute the estate after the grantor's death. A competent attorney can draw it up however you want

 

[CountryBoy19]

A responsible person is not necessarily a trustee. A trustee is someone that can execute the estate after the grantor's death. A competent attorney can draw it up however you want

You can also have trustees that have limited powers/authority while the grantor is alive. That is how my trust is written. I have several trustees (all related) but none of them have the power to sell assets of the trust until after my death. They can purchase on behalf of the trust though; my brother has used that one while I was working overseas (he picked up my suppressor when the forms came back approved while I was gone).

 

[rrschooter]

This ^^^ is why any/all future NFA purchases will be done on single-item trusts. I'm the grantor, I file the paperwork, and after it's filed I'll add the other trustees. Or, I'll add the single-item trust to the Schedule A of my original trust...

Question on this: doesn't adding the item to the schedule A of your original trust constitute a new transfer, kicking in the requirement for an additional form 4 and $200? Or are you adding the original trust as the grantor and trustee of the single-item trust, and a generalized "assets of single-item trust XYZ" to the schedule A of the original trust?

 

[rrschooter]

Follow-up question, if a trust can be the grantor and/or trustee on a second trust, does the requirement for responsible parties stretch back through the whole chain, or is it nullified by the responsible party on the second trust being an artificial entity? In lay terms, if I create a trust, ABC, with me as the sole responsible party, then create a single-item NFA trust, XYZ, with trust ABC as the sole responsible party; when I file a form 4 to transfer something into XYZ, would I (as the responsible party for ABC) be required to submit fingerprints with that form, even though my name appears nowhere in the documentation for trust XYZ?

I know it's weird, I'm just wondering how far down the rabbit hole these things go.

 

[CountryBoy19]

Question on this: doesn't adding the item to the schedule A of your original trust constitute a new transfer, kicking in the requirement for an additional form 4 and $200? Or are you adding the original trust as the grantor and trustee of the single-item trust, and a generalized "assets of single-item trust XYZ" to the schedule A of the original trust?

To start off, I'm not even sure that it's a viable option. There are a lot of nuances I'm not familiar with because IANAL. That being said, IF adding "Trust 2" to the Schedule A of "Trust 1" is a viable option, "Trust 2" still owns the NFA firearm, it just so happens that somebody else owns Trust 2 now. IE, I can sell my entire business as a whole, which will include ALL business assets and liabilities etc. The assets of the business do not change ownership, the business is what changes ownership.

Follow-up question, if a trust can be the grantor and/or trustee on a second trust, does the requirement for responsible parties stretch back through the whole chain, or is it nullified by the responsible party on the second trust being an artificial entity? In lay terms, if I create a trust, ABC, with me as the sole responsible party, then create a single-item NFA trust, XYZ, with trust ABC as the sole responsible party; when I file a form 4 to transfer something into XYZ, would I (as the responsible party for ABC) be required to submit fingerprints with that form, even though my name appears nowhere in the documentation for trust XYZ?

I know it's weird, I'm just wondering how far down the rabbit hole these things go.

That is a good question, one I'm not comfortable answering because IANAL. I only pretend to be one online.

I believe Marc Halata weighed in on some of my initial thoughts of "bypassing"* 41f in a thread here a while back, he said it wouldn't work but didn't elaborate; he wanted me to call him, life got busy, and I never did. You could possibly call him and ask. He seems friendly. I just didn't have the motivation to track down the answer because I have nothing I intend to buy/make in the short-term so it hasn't ranked a priority for me.

*I put "bypassing" in quote because you aren't bypassing the actual requirements, but it's a way of making them less-burdensome to those with a trust.