Detailed NFA Trust Information

HokieCasey said:

Can anyone recommend a bank for establishing a checking account for my trust? preferably one local to St Mary's?

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The bank you already use can do it.
My credit union established my trust account (savings and checking) for me at no cost.

Tried, that got them to notarize the trust, but got a statement that they can't or won't do NFA trusts. So unless they misunderstood and thought I was asking them to manage the trust vs just issue a bank account to it.

HokieCasey said:

Tried, that got them to notarize the trust, but got a statement that they can't or won't do NFA trusts. So unless they misunderstood and thought I was asking them to manage the trust vs just issue a bank account to it.

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Have you tried Cedar Point? They used to do Living trust, but not wills.

Nope, do not have an account with them. However they are on my short list of alternatives, if my secondary bank appears unable.

I suspect/hope, the answer i got may have been to miscommunication in that they thought I wanted them to manage the trust vs issue an account. And something was lost in translation when application was sent to their trust office which is not local.

My understanding of the trust is as long as you have something on the trust, like another gun or a suppressor you dont need anything else like a bank account for a trust. Was told you just cant have a blank trust. True???

Dave

So who is manning up and naming their trust Operation Gunrunner?

I think that title is taken already. Not sure by who but i think it was used.

I understand the concept behind what they did, but certainly not how it was done.

Dave

ar15dave said:

My understanding of the trust is as long as you have something on the trust, like another gun or a suppressor you dont need anything else like a bank account for a trust. Was told you just cant have a blank trust. True???

Dave

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Re. Funding the Trust & Bank Accounts

Disclaimer: Attorneys and people will disagree on this point and I am only posting what I understand as necessary under Maryland law.

Funding the trust: It is true that a trust cannot exist without some sort of funding and funding a trust merely means placing some item in the trust. HOWEVER, a trust needs cash to operate at some point or another. This is where a trust bank account comes in handy. Moreover, setting up and keeping money is a trust bank account ensures that your trust is ALWAYS funded.

Your trust should have its own bank account for a few reasons:

1. Formalities: Trusts, like any other legal fiction (e.g. LLC/Corp.), require that you maintain the formalities between you and the trust. Otherwise, during litigation, an opponent could attack the trust and point to the lack of maintenance of formalities as evidence that there was no intent to create the trust and seek a court declaration that no trust exists. A bank account is part of the formalities in that it keeps the cash for the trust separate from your everyday operating funds and creates the distinction between settlor and trust.

2. Protection: The government likes to seize things. If the government ever raids your home and seizes your NFA items due to some wrong-doing under the trust, they will likely seize upon or freeze everything having to do with the trust including bank accounts (much like they seize drug-dealers' assets). Having a separate trust account may spare you the indignity of having your general operating accounts frozen/seized in such a situation.

3. Taxes and Accounting: This is an item of debate and since I was talking the topic over with a notable FFL in Maryland last night, I will talk a little bit about it. Folks have said to me, "My trust isn't going to be making money, why do I need a tax identification number and a bank account." My answer is always 1. propriety (see above), 2. you don't know whether your trust will make a profit or not in the future and you may end up having to pay taxes on it. A bank account allows you to better manage the assets in your trust for tax purposes and, if you put other non-NFA items in your trust (a bad idea to begin with), this will help with that also. I am not a tax attorney or accountant but I will tell you this, creating a trust is akin to creating a separate person. If that separate person is making more than whatever the entry level threshold is for paying taxes, you will need to file taxes for that person. A bank account for the trust aids in this process and determining what tax liability you may have. As always, you should consult a tax attorney or accountant to discuss what tax liabilities/effects opening and maintaining a trust brings upon you.

4. Estate Planning Purposes: A bank account helps you separate out cash that is supposed to fund/help operate the trust in the event of your disqualification, disability, resignation, or death as trustee. The bank account serves as a clear demarcation of what funds are to be used for what purposes. If you cannot run the trust as trustee, the ATF will probably frown upon you using your funds to help operate the trust so that your substitute trustee/co-trustees can dissolve the trust or otherwise preserve the trust. Keeping funds in a trust bank account circumvents this sticky situation.

Those are a few good reasons to have a trust bank account. It's really not that hard, don't let your bank sell you on some specialized "trust account." All you need is a free checking account in the name of the trust.

You'll have to buy a trust from me to get more information than this. I've already said too much.

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I was getting ready to PM you about doing just that. Now it would appear I need to research this further. Better to wait and be prepared. I appreciate your posts and information sharing. It definitely keeps us in the right direction. Hope to talk with you shortly.

Thanks

Maybe already mentioned in this thread, maybe not but I get this question a lot when folks ask me about NFA trusts:

Q: What are the benefits of an NFA trust vs. individual registration?

A: The benefits of a Trust for NFA items vary but there are a few generally applicable benefits:

1. You avoid CLEO sign-off. The BATF requires that individuals purchasing NFA items secure the signature of the chief law enforcement officer (CLEO) prior to submitting their registration forms to the BATF for approval. Trusts and Business entities avoid this sometimes tricky requirement because the law does not require CLEO sign-off for these entities. The reason the requirement is considered "tricky" is due to some CLEOs' reluctance to sign-off on such paperwork.

2. You avoid the fingerprint and picture requirements. At the risk of sounding shady, this is considered a benefit by some (a shortcoming by others). Its one less expense and step in the process.

3. Time. I have been told that processing trust registrations through the ATF takes less time than that of individual registrations. Moreover, you save time in the process by not having to get CLEO sign-off (which may take weeks or months) and getting fingerprints and pictures done.

4. Control. A NFA trust actually allows you to more thoroughly control your NFA items. Through a trust you can allow multiple individuals access to your NFA items whereas, as an individual, only you are allowed to possess the NFA items. A trust also allows you to bequeath your NFA items directly to named individuals upon your death without going through the probate process. Moreover, in the event of your disability or incapacitation, the trust contains automated procedures on how to handle your NFA items. A properly drafted trust will address these and many more issues.

The above are some of the primary benefits of creating a trust for the purposes of "stamp collecting."

If anyone has a different opinion or would like to add, I'd be more then happy to discuss these issues.

Rusty Shackleford said:

Maybe already mentioned in this thread, maybe not but I get this question a lot when folks ask me about NFA trusts:

Q: What are the benefits of an NFA trust vs. individual registration?

A: The benefits of a Trust for NFA items vary but there are a few generally applicable benefits:

1. You avoid CLEO sign-off. The BATF requires that individuals purchasing NFA items secure the signature of the chief law enforcement officer (CLEO) prior to submitting their registration forms to the BATF for approval. Trusts and Business entities avoid this sometimes tricky requirement because the law does not require CLEO sign-off for these entities. The reason the requirement is considered "tricky" is due to some CLEOs' reluctance to sign-off on such paperwork.

2. You avoid the fingerprint and picture requirements. At the risk of sounding shady, this is considered a benefit by some (a shortcoming by others). Its one less expense and step in the process.

3. Time. I have been told that processing trust registrations through the ATF takes less time than that of individual registrations. Moreover, you save time in the process by not having to get CLEO sign-off (which may take weeks or months) and getting fingerprints and pictures done.

4. Control. A NFA trust actually allows you to more thoroughly control your NFA items. Through a trust you can allow multiple individuals access to your NFA items whereas, as an individual, only you are allowed to possess the NFA items. A trust also allows you to bequeath your NFA items directly to named individuals upon your death without going through the probate process. Moreover, in the event of your disability or incapacitation, the trust contains automated procedures on how to handle your NFA items. A properly drafted trust will address these and many more issues.

The above are some of the primary benefits of creating a trust for the purposes of "stamp collecting."

If anyone has a different opinion or would like to add, I'd be more then happy to discuss these issues.

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Rusty,

Ill be giving AR15 Classes in the near future. I will be discussing SBR Options and Suppressors. Of course people are going to want NFA after the get to handle them. Can I use the Above along with you current info I give out? I will be recomending you exclusively in my classes for NFA Trusts. I have almost 100 people lined up when I get rolling. I guarantee 1/4 of my students will spring for Trusts.

clandestine said:

Rusty,

Ill be giving AR15 Classes in the near future. I will be discussing SBR Options and Suppressors. Of course people are going to want NFA after the get to handle them. Can I use the Above along with you current info I give out? I will be recomending you exclusively in my classes for NFA Trusts. I have almost 100 people lined up when I get rolling. I guarantee 1/4 of my students will spring for Trusts.

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Sure. Go right ahead.

Has anyone else used this trust listed above and succeeded? I had a MSP Trooper email me his and it worked but I did not keep a copy. Deleted all my messages and it went too. Darn it.

Thanks

Jack schnaitman
J & S Gun Sales

zombiehunter said:

I'm still trying to figure out what the benefit of it is. Can anyone opine?

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Generally, see here: Benefits of an NFA Trust

JeepDriver said:

Eliminates state police/CLEO sign off as well as finger prints and photograph.

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This is true. Instead of getting fingerprinted, photographed, and procuring an LEO sign-off for each NFA item you purchase, with a trust you avoid all of this.

Bigpapa said:

As JeepDriver stated it does save you time in by-passing the State, but it also allows you or your co-trustees to be in possession of the NFA items. In the event something was to happen to you the trust clearly states the disposition of the NFA items and do not get held up in your estate deliberations.

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+1. This is something I've had folks remark upon and there is a lot of misinformation out there on the internet regarding possession and use of NFA items in relation to a NFA trust. The short and sweet of it is, Trustees/Co-Trustees are allowed individual access to the items in the trust; Beneficiaries receive the property upon death or disability (most likely scenario). Beneficiaries cannot have access to the items in the trust outside the presence of a Trustee/Co-Trustee.

Lets put this in another perspective so that its easier to understand. Let's say that someone created a trust to handle a large sum of money. The Settlor (the person creating the trust) deposits the money into the trust bank account. The cash the Settlor deposited is no longer the property of the Settlor, it is now considered Trust property. The trustees of the trust are endowed with the powers to manage, invest, distribute, and withhold (generally speaking, that is; each trust is different) the funds for the benefit of some person (Beneficiary). The Beneficiary does not gain access to the money in the trust until either the trust terminates or the Trustee distributes the property therein.

The same principles apply to NFA items with the exception that NFA items are not as freely distributable as cash is.

Jack said:

While I agree with you, who wqants to pay a lawyer 300.00 for 1 NFA item.

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While I can certainly see your argument, and it has merit to an extent, you're missing the point. You aren't paying the lawyer $300 for one NFA item; you're paying the lawyer for his/her expertise in trust and estates law which he/she will use to craft a NFA trust that - even today - is still a fairly rare commodity/service and therefore requires some skill in drafting. NFA trusts are just like all other LRTs in some respects but much different in others. If an attorney is unfamiliar with firearms, the NFA, the GCA, and/or state/local firearms ordinances, then he/she can get the Settlor in a lot of trouble if they draft the NFA trust incorrectly. To conclude, you're looking at it like you're paying for a Trust for only one item and comparing the cost as if you were judging two equally comparable items when really you should be looking at the expertise employed in creating the trust, the quality of the trust overall, and the service provided by the attorney because you are purchasing a service, not an item.

Jack said:

Yes i have been talkin at him. I will use him as a customer referral however, I don't think none of my poor working waterman friends are going to pay that fee vs. a 200 tax stamp. It is good for someone who can afford class 3 items and multiple ones at that

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Happy to help when and where I can.

Maryland_Shooter said:

Came up with a sample Trust for all to use. I am not a lawyer and didn't even get a good night's rest at a Holiday Inn Express

http://marylandshooter.com/ar15/trust/trust.asphttp://www.elibrill.com/maryland_shooter/sampletrust.doc​

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I used this but added a couple paragraphs referencing NFA- specific language I found elsewhere. Picked up my cans yesterday. Only took 5 months which seems to be a month sooner than personal transfers, but I saved the trip to reisterstown, fingerprinting, MSP delay and "not disapproval" BS.

Thank you.

normbal said:

I used this but added a couple paragraphs referencing NFA- specific language I found elsewhere. Picked up my cans yesterday. Only took 5 months which seems to be a month sooner than personal transfers, but I saved the trip to reisterstown, fingerprinting, MSP delay and "not disapproval" BS.

Thank you.

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I am going to say this and I am not picking on normbal but there is more to trusts then just purchasing NFA items. There are longer term consequences to trusts that, if you don't know what you're doing or what to look out for, can get you and/or your family members in plenty of trouble. While Maryland Shooters trust looks professional and may serve its purpose for purchasing NFA items, in my opinion, it is NOT comprehensive enough or specific enough in the details.

Rusty,

Thanks for your input. As your sig states, I'm wanting to ask you about an NFA Trust. Please PM your info so I can get right with G.. er.. BATF.


Thanks

Chromantix said:

Rusty,

Thanks for your input. As your sig states, I'm wanting to ask you about an NFA Trust. Please PM your info so I can get right with G.. er.. BATF.


Thanks

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PM sent. Respond at your leisure.

Schedule A Tutorial

Every so often, a thread pops up in this subforum discussing the Schedule A. Most folks wonder what is it, how they should fill it out, when should they send it to the ATF, etc. so I thought that I would give a brief tutorial/FAQ on the Schedule A of a NFA trust, what it is, and how you use it.

What is a Schedule A?

The Schedule A is merely an exhibit or attachment to a trust agreement that lists ALL property held by the trust. It is usually incorporated into the trust via language in the trust agreement.

What information is listed on the Schedule A?

The Schedule A usually describes the property held by the trust with sufficient particularity so that each piece of property is separately identifiable. In the context of NFA trusts, the Schedule A should at minimum list: the manufacturer and serial number of the item. The Schedule A I use for my trusts also lists the storage location of the item and the Tax I.D. number (in the event that you use a Form 1).

How do I use my Schedule A?

As stated, you use your Schedule A to list property owned by the trust. In the context of NFA items, you should NOT list your NFA item on your Schedule A until you have processed your paperwork with the ATF and have been approved.

What do I do with my Schedule A?

Speak with your Class III FFL/SOT and determine whether you need to submit a copy of your Schedule A with your trust. It is my understanding that the ATF desires this and it is not common practice to include it with your registration forms.

ar15dave said:

My understanding of the trust is as long as you have something on the trust, like another gun or a suppressor you dont need anything else like a bank account for a trust. Was told you just cant have a blank trust. True???

Dave

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I submitted my trust with ONLY the two cans I bought and was registering on Form 4s listed. The purpose of the trust was for NFA items, why put anything else on it? Worked no problems. Am resubmitting it this month with another can on it. Here's to another 6 month wait...