Detailed NFA Trust Information

[Pinecone]

for those who have multiple trustees on the trust, when you buy NFA items, do all the trustees need to go sign the forms? or one trustee is good enough? also, what's the best way to add trustees so if something happens to me, my wife or a family member can take care of everything in the trust.

thanks

Nope, only one.

 

[OnTarget]

The main one would be if you would like others (including, say, your wife) to be able to have possession of or use the items outside of your presence and supervision.



I don't think it's an error. Anything that you get paperwork submitted on between now and July whatever it is goes under the current rules, which make it easier for a Trust to purchase than an individual. Buy what you want (or can afford) now as your trust, and it stays relatively easy.

The only increased "hoop jumping" that's going to happen for trusts after July are two things:
1) CLEO notification, which will be the same as for individual purchasers. Just send the letter.
2) Filling out the background check info for all "responsible persons" on the trust. Depending on how your trust is set up, this may not be a big deal. For me, it's just me as Trustee that will have to do that part, as I have no other Trustees.

So that will be two additional small hurdles after July. I just plan on getting most of my purchases done now.

Thanks for reply. One of a few problem areas that need further investigation is that "successor trustees" and " beneficiaries" may have to do finger prints, pics, etc., in certain circumstances as responsible persons, depending how a Trust is setup? The ATF looks at some of these as if they were trustees. How are we supposed to know whether these two parties need to take the same actions as a regular trustee? If the government could ever make anything simple, it would be a miracle! Confusing!

On another note, my wife would be a "successor trustee" as she is not interested in NFA items and my single beneficiary is a firearm organization ( not going to any family or friends). I'm the Settlor and only trustee.

 

[OnTarget]

Once the documents were signed and notarized, the bank let us use there computer to go online and get a Tax ID number.

Which we then used to open teh account.

In the 199Trust there is a paragraph saying that no Tax ID number is needed and that the Social Security number will be used if establishing a trust bank account.

Besides this, I didn't think that NFA Trusts had tax consequences, so why is a Tax ID (EIN) needed?

 

[OnTarget]

As a side not, in some cases the ATF even requires the "responsible party" to send in a not only a copy of the Trust, but also a copy of their Will. That's what I saw when I read 41F.

 

[dontpanic]

As a side not, in some cases the ATF even requires the "responsible party" to send in a not only a copy of the Trust, but also a copy of their Will. That's what I saw when I read 41F.

It does not say that.

Responsible persons are people who are authorized to make changes to the trust. Not successor trustees, and not beneficiaries.

You do not need a bank account for a trust. If you want one, that's fine. If you open it, you should use a Fed tax ID not your SSN.

A bank account really does nothing for you. It just complicates the process.

 

[vgplayer]

As a side not, in some cases the ATF even requires the "responsible party" to send in a not only a copy of the Trust, but also a copy of their Will. That's what I saw when I read 41F.

Could you provide a quote or page?

 

[Sticky]

Thanks for reply. One of a few problem areas that need further investigation is that "successor trustees" and " beneficiaries" may have to do finger prints, pics, etc., in certain circumstances as responsible persons, depending how a Trust is setup? The ATF looks at some of these as if they were trustees. How are we supposed to know whether these two parties need to take the same actions as a regular trustee? If the government could ever make anything simple, it would be a miracle! Confusing!

On another note, my wife would be a "successor trustee" as she is not interested in NFA items and my single beneficiary is a firearm organization ( not going to any family or friends). I'm the Settlor and only trustee.

Most trusts set up the beneficiary or successor trustee as only that. They have no power with the trust, they can't do anything until the trust is executed upon death, therefore they are not required. Only trustees that have the power to manipulate the trust, buy, sell, use, etc those NFA items are subject to the additional requirements come later this year.

 

[anderson76]

Should one use their existing social security number for ID when establishing a checking account for a NFA Trust? Or is a whole new Trust Tax Identification Number needed (from IRS)? My bank is checking, but they seem to think that if the Trust has a name, for example, Smith NFA Trust, that it would need an IRS no., but otherwise, a SS no. could be used. Any clarity on this?

The other matter is how one would record the checking acct. and/or credit/debit card on Schedule A as the funding of the NFA Trust? Then, too, if one deposited $200 into a trust checking account, say, to pay for the tax stamp, would the $200.00 have to also be shown on schedule A. Would a deduction have to be shown on Schedule A when the check was written to ATF for stamp.

Seems to me that the check book itself, if you decide to establish checking account, would be enough to establish funding and disbursements. Reading around the web, it seems like there is a 50/50 split on whether a separate checking account is needed.

Do yourself a favor and forego the headache of using a separate bank account for your firearms trust. Is your goal simply to lawfully acquire, own, and possess NFA toys? Then, in this context, the establishment and maintenance of separate trust account is wholly unnecessary.

In different estate planning contexts, the use of separate trust bank accounts allows the trust vehicle to be used to achieve the following objectives: (1) lower the tax burden on the grantor or beneficiary, and (2) shielding the trust property for the creditors of the grantor or beneficiary. The reason why this is the case, is that there is generally some particular statute, regulation, or court opinion directly on point which calls for the use of a separate trust account in order to achieve the desired planning objective. The objective here is to separate the trust property from the domination and control of the grantor. The use of separate trust accounts is a small component to this. The principle means by which the trust property is separated from the grantor's control is by making the trust IRREVOCABLE. Failure to use separate trust accounts will: (1) NOT cause the trust to fail, (2) NOT prevent property from being placed in trust, and (3) NOT cause property held in trust to fall out of the trust. The only consequence is that certain objectives cannot be achieved, principally among them: (1) paying less in taxes, and (2) providing asset protection. Stated differently, the consequence is greater exposure to certain CIVIL LIABILITIES.

Separate trust accounts are used because they create and maintain separation between the grantor and control over the trust property when used in conjunction with REVOCABLE TRUSTS. Your typical NFA trust is a grantor REVOCABLE living trust. You are the grantor and you are the initial trustee or co trustee (who holds legal title to the trust property and manages the property for the benefit of beneficiary pursuant to the terms of the trust agreement). And as grantor you can amended the trust agreement as you see fit. In a revocable NFA trust the grantor retains complete domination and control over the trust property. The use of a separate trust account does not alter this equation.

Some gun trust “experts” advanced the argument that the use of a separate trust account will shield you from criminal liability because it demonstrates that you are treating the trust as separate entity. What underlies this reasoning is the legal concept of “piercing the corporate veil”. The principle benefit afforded by Corps and LLCs is that they shield the stakeholder from the civil liabilities of the entity. However, if the stakeholder fails to treat the entity as separate, then a potential creditor, in a civil action, might be able to “pierce” the corporate veil and hold the stakeholder personally liable for the liabilities of the Corp. I suppose some gun trust experts reason that if you do not treat the trust as separate, then the government might be able to use these corporate piercing concepts to “declare” the trust invalid or something (this is idiotic on so many levels). When a corporate veil gets pierced the Corp will: (1) Not cease to exist, (2) Not be prevented from lawfully conducting business, and (3) NOT prevent the Corp form owning or acquiring property. All that occurs is that the stakeholder is exposed to the CIVIL LIABILITIS of the Corp.

What objectives do you want to achieve with your NFA trust. Is it asset protection from a potential civil law suits? Do you want to remove these assets from your gross taxable estate upon your passing in order reduce the amount of death taxes to be paid? If these are your objectives then your revocable NFA trust won’t get you there because it revocable by the grantor (even if you are using separate trust accounts).

What we are concerned with is CRIMINAL LIABILITY. Never assume that the concepts applied to mitigate a CIVIL LIABLTIY have any applicability in mitigating a CRIMINAL LIABILITY. If you do this, then you are playing checkers while the prosecution is playing chess. I think that a lot of gun trust experts conflate these concepts, hence the dumbass recommendation to use separate trust accounts.

With a NFA trust you are worried about 2 things: (1) properly forming the trust, and (2) properly placing the NFA item into the trust. This is a very simple task which does not require the use of a separate trust account. The only utility of using a separate trust account is that it will provide some evidence that the grantor intended to create the NFA trust and intended that the NFA item be placed in that trust. Ask yourself this question: After (1) drafting a trust agreement to evidence the grantor’s intention to create the NFA trust, (2) after submitting the application to the BATF in the name of the trust, (3) after listing the NFA item on the schedule of assets, and (4) after engraving name of the trust on the NFA item – Is there any doubt as to the grantor’s intention in forming the trust and what property is being placed in trust? If you answer this question in the negative, then the use of separate trust account is of no benefit to you.

 

[Hawkeye]

Everything in Anderson76's post is good information and matches up with my understanding of the entire situation.

Thanks for reply. One of a few problem areas that need further investigation is that "successor trustees" and " beneficiaries" may have to do finger prints, pics, etc., in certain circumstances as responsible persons, depending how a Trust is setup?

The part that I italicized is the important thing. In 41P, the ATF defines "responsible persons" as follows (P238 - 239 of the pdf document):

Responsible person. In the case of an unlicensed entity, including any trust, partnership, association, company (including any Limited Liability Company (LLC) ), or corporation, any individual who possesses, directly or indirectly, the power or authority to direct the management and policies of the trust or entity to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of, the trust or legal entity. In the case of a trust, those persons with the power or authority to direct the management and policies of the trust include any person who has the capability to exercise such power and possesses, directly or indirectly, the power or authority under any trust instrument, or under State law, to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of, the trust. Examples of who may be considered a responsible person include settlors/grantors, trustees, partners, members, officers, directors, board members, or owners. An example of who may be excluded from this definition of responsible person is the beneficiary of a trust, if the beneficiary does not have the capability to exercise the powers or authorities enumerated in this section.

I bolded the important part as regards trusts. The way that most NFA trusts are written (and specifically the 199Trust.com one, as that's where mine is from) neither successor trustees nor beneficiaries have any of the powers enumerated above which are required in order to be "responsible persons." As long as you, as the settlor and trustee, are still alive and not incapacitated, the successor trustee and beneficiaries (if any) have no legal power over any of the property of the trust, and are thus not "responsible persons" and so don't need to be listed for purchase purposes. Only full trustees are "responsible persons." On my trust, that is only me.

On another note, my wife would be a "successor trustee" as she is not interested in NFA items and my single beneficiary is a firearm organization ( not going to any family or friends). I'm the Settlor and only trustee.

That is similar to how mine is set up (except that my beneficiary is my son, who is a minor). Neither of us have anything to worry about as far as having anyone other than ourselves, as full trustees, do any of the extra stuff after 41P takes effect.

In the 199Trust there is a paragraph saying that no Tax ID number is needed and that the Social Security number will be used if establishing a trust bank account.

You may have bought a different product than I did, because there is nothing anywhere in the actual trust itself about a bank account. Are you sure that's not in another piece of documentation from them?

There is a two sentence paragraph in the Certification of Trust / Declaration of Trust section that says:

As long as the Settlor is a Trustee of the Trust no Taxpayer Identification Number is required. Current Internal Revenue Regulations provide that the Settlors’ Social Security Number may be used.

That's just making clear that as long as the Settlor is alive, the trust does not need a tax ID number.

As a side not, in some cases the ATF even requires the "responsible party" to send in a not only a copy of the Trust, but also a copy of their Will. That's what I saw when I read 41F.

No. That is nowhere in the Final Ruling section of 41P. The thing to remember with that document is that everything before page 238 is just discussion - some of it is discussion of things that were proposed and later rejected. The actual amended regulation (i.e. the part we need to worry about) doesn't start until P238. Nowhere in the actual amended regulation does it say anything about a will.

 

[OnTarget]

Could you provide a quote or page?

See paragraphs 6,7 and 8.:

https://www.floridaestateplanninglawyerblog.com/2016/01/41f-published-today-gun-trusts.html

Note: I would copy text, but it is from a lawyer. Also, Norton, in the past, has indicated several times that he does not want us to copy and paste other's materials, even smaller sections thereof for fear of copyright violation.

 

[dontpanic]

See paragraphs 6,7 and 8.:

https://www.floridaestateplanninglawyerblog.com/2016/01/41f-published-today-gun-trusts.html

Note: I would copy text, but it is from a lawyer. Also, Norton, in the past, has indicated several times that he does not want us to copy and paste other's materials, even smaller sections thereof for fear of copyright violation.

The 199trust does not reference a separate will. Nor does it allow use of the items to anyone but the trustees, without the trustees presence.

I read that article you linked, pretty good info about how not to write a trust.

 

[vgplayer]

Summary don't put &%$ in your trust that you don't want or need to give to the ATF or gun dealer.

 

[OnTarget]

Everything in Anderson76's post is good information and matches up with my understanding of the entire situation.



The part that I italicized is the important thing. In 41P, the ATF defines "responsible persons" as follows (P238 - 239 of the pdf document):



I bolded the important part as regards trusts. The way that most NFA trusts are written (and specifically the 199Trust.com one, as that's where mine is from) neither successor trustees nor beneficiaries have any of the powers enumerated above which are required in order to be "responsible persons." As long as you, as the settlor and trustee, are still alive and not incapacitated, the successor trustee and beneficiaries (if any) have no legal power over any of the property of the trust, and are thus not "responsible persons" and so don't need to be listed for purchase purposes. Only full trustees are "responsible persons." On my trust, that is only me.



That is similar to how mine is set up (except that my beneficiary is my son, who is a minor). Neither of us have anything to worry about as far as having anyone other than ourselves, as full trustees, do any of the extra stuff after 41P takes effect.



You may have bought a different product than I did, because there is nothing anywhere in the actual trust itself about a bank account. Are you sure that's not in another piece of documentation from them?

There is a two sentence paragraph in the Certification of Trust / Declaration of Trust section that says:



That's just making clear that as long as the Settlor is alive, the trust does not need a tax ID number.



No. That is nowhere in the Final Ruling section of 41P. The thing to remember with that document is that everything before page 238 is just discussion - some of it is discussion of things that were proposed and later rejected. The actual amended regulation (i.e. the part we need to worry about) doesn't start until P238. Nowhere in the actual amended regulation does it say anything about a will.

Hawkeye: Yes, "As long as the Settlor is a Trustee of the Trust no Taxpayer Identification Number is required. Current Internal Revenue Regulations provide that the Settlors’ Social Security Number may be used" is located on p.14 of Certification of Trust / Declaration of Trust. I assumed this to be an integral part of the Trust and would also go to ATF as part of a transfer. Also, I have 15 pages total to Trust, not including the Assignment and Schedule of Beneficiaries sheets.

 

[Pinecone]

In the 199Trust there is a paragraph saying that no Tax ID number is needed and that the Social Security number will be used if establishing a trust bank account.

Besides this, I didn't think that NFA Trusts had tax consequences, so why is a Tax ID (EIN) needed?

Another point for getting a real lawyer trust.

Did you see the posts about separating the trust and you as an individual? Same thing, using your SSN, is the same as not having a bank account and just buying everything with checks drawn your personal account.

Can you use your SSN? Yes,. Can you use your personal bank account? yes. Can you buy a trust that will not stand up to any challenges? yes. Can you make it less likely that your trust will not stand up? Yes.

And I am not saying that spending more makes the trust better. But it does mean the trust comes with legal advice, that is familiar with MD law and cases.

Do what you like, but I go with the legal advice of the lawyer who did my trust.

 

[Pinecone]

As a side not, in some cases the ATF even requires the "responsible party" to send in a not only a copy of the Trust, but also a copy of their Will. That's what I saw when I read 41F.

Are you reading the actual proposed 41P or the preamble that discusses the original language, and all comments?

Only the very last part is the actual 41P.

 

[Pinecone]

Nor does it allow use of the items to anyone but the trustees, without the trustees presence.

That is because that is the Federal law on NFA items.

The "owner" must be present any time the NFA is out of the safe.

The difference is, all trustees are "owners." If individually owned, then there is only one "owner."

 

[OnTarget]

Everybody has been very patient with me today and been kind enough to take their time to answer questions.

Let's close out the day with one last question (hypothetical):

A Trust is established tomorrow and the single trustee applies for tax stamp for silencer and eventually gets one from dealer. Trustee gets this before July 13. Sometime after July 13, when the new ATF law 41P has gone in effect, this same person (a trustee) wants to buy a Class III item, but does not want it for the Trust, but for himself (buying as an individual). Is this legal to buy some items for the Trust and some for yourself, or must it be one or the other?

 

[Hawkeye]

Is this legal to buy some items for the Trust and some for yourself, or must it be one or the other?

Absolutely. If you want to buy it as you, you put yourself down on the Form 4. If you want to buy it for the trust, you list the trust on the Form 4. That's the same way it is now, actually.

 

[OnTarget]

Absolutely. If you want to buy it as you, you put yourself down on the Form 4. If you want to buy it for the trust, you list the trust on the Form 4. That's the same way it is now, actually.

Have a good week. Appreciated your replies. Thinking that I'm close to having a decent knowledge as to how to proceed, thanks to you and the others here.
Will probably get Trust notorized tomorrow.

 

[dontpanic]

Have a good week. Appreciated your replies. Thinking that I'm close to having a decent knowledge as to how to proceed, thanks to you and the others here.
Will probably get Trust notorized tomorrow.

enjoy