Detailed NFA Trust Information

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  • JeepDriver

    Self confessed gun snob
    Aug 28, 2006
    5,193
    White Marsh
    From Small Arms Review, as posted on AR15.com

    The Legal Side
    By Bob J. Howell, Esq.


    Several years ago, the author was approached by a friend in the NFA community. His local Sheriff had stopped signing off on any NFA transfers, despite promises to the contrary when he was merely a candidate for the office. This friend, being in the NFA business, was concerned about the effect this would have on his customers. Sure he could tell them to go the corporate route, but he wondered if there was another way. As an estate planning attorney for the last 15 years the author has had the opportunity to assist clients with the disposition of a wide variety of personal assets, including NFA items. Having established a number of Revocable Trusts for past clients with NFA assets, the author told him about the benefits that a Revocable Trust could offer and began doing Trusts for his customers. Word began to circulate about this new way of doing things. In an effort to better answer the flood of questions received on the topic, the author submitted an article for the Legal Side in the March 2007 issue of Small Arms Review, outlining the general concepts behind the use of the Revocable Trust for NFA ownership. From that article the number of individuals using Revocable Trusts for NFA ownership has skyrocketed and whenever a radical change occurs, more questions necessarily follow. This article is a compilation of some of the questions the author has received about the use of the Revocable Trust with respect to NFA ownership and is presented in an effort to further help the NFA community understand the use of this powerful tool. As always, check your local laws as they may vary.


    Q: What is a Revocable Trust?

    A Revocable Trust is a legal entity established under state law. A Revocable Trust can own both real and personal property in its own name and as such is no different than a Corporation holding NFA items. The Code of Federal Regulations (27 C.F.R. Part 179), Section 179.11 specifically defines a Person (i.e. someone who is authorized to purchase NFA) to include Trusts as well as Corporations.


    Q: Does the Trust require a separate tax I.D. number?

    Unlike a Corporation, a Revocable Trust does not need a separate tax ID number (as long as you are the trustee of your own trust).


    Q: Does a Revocable Trust require individual tax returns?

    With a Revocable Trust, if you are acting as your own trustee, there are no separate tax returns. A Revocable Trust is transparent for income tax purposes. Any gains or losses are reported on your own individual returns and no separate tax returns (or the fees associated with their preparation) are necessary. If you use a Corporation to hold title to NFA items, most CPAs will generally advise you to file a federal tax return for the corporation, even if the Corporation has no income. Many states also have their own State Corporate tax return that needs to be filed as well.


    Q: Can I make changes to my Trust?

    The Grantor of the properly drafted Revocable Trust has the power to amend and/or revoke the Trust (hence the name “Revocable Trust”) and the power to add or remove the assets at will. The Grantor of a Revocable Trust should be mindful of the effect that various events in their life may have on their trust and its operation. The death of a beneficiary or successor Trustee, the birth of child, and a recent divorce are some of the things to keep in mind for possible amendments to your Trust.


    Q: What happens if I move to another state?

    Most states follow some form of the Uniform Trust Code which provides that if your Revocable Trust was valid in your state of residence when created, it will be legal in your new state. However, I still advise all clients to have an estate planning attorney in their new state review the trust document to see if any changes are necessary or advisable. Generally it is easier to move with a Revocable Trust than it is to move with a corporation.


    Q: Will a Revocable Trust prevent creditors from reaching my NFA items?

    A Revocable Trust will not generally provide any more protection from creditors than owning the assets individually. I say generally since the assets are held in the name of the trust and not your individual name so a creditor may have trouble finding them or may be unaware of the existence or potential value of NFA assets. A smart litigator may be able to find and reach the trust assets or at least the proceeds from their sale. However, if you hold NFA items in a corporation and someone is injured while you or your friends are shooting them you can probably count on being sued individually regardless of how the NFA assets are held.


    Q: Can a Trust save money over Corporate NFA ownership?

    In addition to the initial set up costs, most states have some sort of Corporate annual fee or tax (in Florida the fee for filing the Corporate Annual Report is presently $150.00). This fee, which is subject to increase as the state sees fit, must be paid every year to keep the corporation active. This can get expensive in the long run and failure to pay the annual fee will result in the corporation being administratively dissolved. If this happens and the corporation owns NFA items then you have a serious legal problem. Reinstating the administratively dissolved corporation, if possible, is generally expensive (in Florida the filing fee alone is $550.00). After the initial cost of establishing a Revocable Trust there are generally no annual maintenance or filing fees. In addition the Revocable Trust can also save money by not having to pay for the preparation of state or federal tax returns which may be required when using a corporate entity.


    Q: What happens to the NFA items in the trust when I die?

    A Revocable Trust can provide for the disposition of the NFA assets at the Grantors death, either by liquidating the items and distributing the cash or by distributing the trust assets directly to the named beneficiaries (provided ownership is legal in the beneficiaries jurisdiction and they are not a disqualified person). If the NFA items are individually held or held in a corporation, then they will be subject to the time and expense of Probate at the death of the individual.


    Q: What happens to the NFA items in the trust if I become incapacitated?

    If your Revocable Trust has been properly prepared it may include the ability for the Successor Trustee to manage the assets for your benefit during your incapacity allowing the Successor to sell any assets necessary for the care, support and comfort of the Grantor. With assets owned individually or in a corporation, it may be necessary to appoint a guardian to reach your assets upon your incapacity.


    Q: What do I need to Submit with a Transfer to a Trust?

    There has been much discussion, and well intentioned although uninformed advice, about this on various internet discussion boards. While some have gotten away with sending less, the Author has always advised his clients to attach a photocopy of the entire trust agreement (including the Schedule “A”) to the Form 4 or Form 1 being submitted. In the past some have sent in a “Certificate of Trust” in place of the full trust agreement and received their transfers back approved. The current policy of the NFA branch is to require a copy of the full trust agreement. There are no fingerprints or photos required with a Trust (or a corporation or LLC for that matter) and no LEO signoff is required.


    Q: Do I need to transfer any NFA items I already own individually to my trust?

    Transferring NFA items you already have into your trust is just that, a transfer, and as such it requires a Form 4 and the $200.00 transfer tax. While it is not required to transfer NFA items you already own individually into your trust, doing so will allow you to reap the benefits available under Trust ownership for all the assets.


    Q: How do I fill out the Form 1 or 4 when there is a trust involved?

    You must fill out the Form listing the Trust as the Maker or Transferee (i.e. John Doe Revocable Firearms Trust, John Doe, Trustee) and sign the Form in your capacity as Trustee (i.e John Doe, Trustee).


    Q: Do I need to amend the Trust everytime I buy or sell and NFA item?

    Again, there has been a lot of rumor about this on the internet as well. It is not necessary to amend your Revocable Trust each time you add or remove an asset and you are not required to list each item on your Schedule “A”. The approved Form 1 or Form 4 are the proof of ownership of the NFA item in the Trust.


    Q: What should I name by Revocable Trust?

    You can name your trust anything you want. However the author generally suggests something along the lines of “The John Doe NFA Trust” of “The John Doe Firearms Trust”. Anyone who has been in the hobby for a while has a story of running into a law enforcement official who does not understand the legality of ownership of NFA items. Oftentimes showing them your Form 4 or 1 is all you need to settle the problem. If the name of your trust on the form contains your own name it oftentimes makes it easier for the other party to understand that you are in compliance.


    Q: Should I prepare my own Trust?

    As the old saying goes, you get what you pay for. There is no substitute for competent legal advice, particularly when dealing with Revocable Trusts. It is quite possible to draft a document yourself that will establish a valid Trust. However legally creating it and properly creating it can be two different things. Usually, it is your heirs that find out after your death that there was a problem in your Revocable Trust. The author has personally reviewed a number of trusts created using various fill in the blank forms or over the counter software where there were serious flaws present in the construction of the document or in the disposition of the assets that would not have come to light until the Grantor’s death, when it is too late to fix. Also, don’t think that because a transfer goes through with your Revocable Trust that the it must be O.K. While the attorneys at the BATFE do review your Trust to see if it is a legally established entity, they are not examining it to see if it properly takes care of your beneficiaries, provides for your incapacity, has sufficient provisions for appointment of Successor Trustees, and so forth. For these reasons it is advisable to have an experienced estate planning attorney prepare your Trust. That way you can be assured that it is correctly prepared, executed in accordance with the requirements under your state law and provides for the distribution of the assets in accordance with your wishes at your death.

    For further questions call or email
    Bob J. Howell, Esq.
    8551 W. Sunrise Boulevard, Ste 207
    Plantation, FL 33322
    (954) 424-8889
    bjhowell@att.net
     

    Norton

    NRA Endowment Member, Rifleman
    Staff member
    Admin
    Moderator
    May 22, 2005
    122,847
    Chad,

    Do a lot of people have their spouses as co-grantors as the trust?

    IE "The Norton and Mrs. Norton Firearms Revocable Trust"

    Is that even possible? If the trust is buying the suppressor, do both of the named owners of the trust have to be named on the Form 4 or Form 1?
     

    Norton

    NRA Endowment Member, Rifleman
    Staff member
    Admin
    Moderator
    May 22, 2005
    122,847
    Think I found the answer to my own question. Owning an NFA item within a trust does not grant the same ability for multiple people to use the item as they would within a corporation:


    http://www.cs.cmu.edu/afs/cs/usr/wbardwel/public/nfalist/atf_letter72.txt
    "As to your second question, the National Firearms Act provides
    that, for any person legally to receive or possess an NFA firearm,
    such firearm must be registered to him in the National Firearms
    Registration and Transfer Record. See 26 U.S.C. section 5861(d).
    The Act also mandates that, for each NFA firearm not in the
    possession or under the control of the United States, the National
    Firearms Registration and Transfer Record must include, among other
    things, the "identification and address of [the] person entitled to
    possession of the firearm." See 26 U.S.C. section 5841, as
    implemented by 27 C.F.R. section 179.101. For purposes of these
    statutory provisions, the term "person" is defined as "[a]
    partnership, company, association, trust, estate, or corporation,
    as well as a natural person. See 27 C.F.R. section 179.11. This
    definition does not include married couple or, for that matter, any
    other dual or multi-party entities with the exception of formally
    established partnerships, companies, associations, and
    corporations. Indeed, there exists no statutory or regulatory
    authority that can be construed to permit the transfer or
    registration of an NFA firearm, on a joint basis, to two or more
    natural persons, including two natural persons constituting a
    married couple. Accordingly, such transfers and registrations
    cannot be approved."
     

    JeepDriver

    Self confessed gun snob
    Aug 28, 2006
    5,193
    White Marsh
    I've always recommemnded to keep it simple, with one person and have their spouse as the benenficiary.

    The trust is a great way to get into NFA, but there are those who want to push it with ATF.
     

    Norton

    NRA Endowment Member, Rifleman
    Staff member
    Admin
    Moderator
    May 22, 2005
    122,847
    I'm trying to wade through the 48 pages of the subject on arfcom as we speak.

    I think I found the important info, that it's OK to have multiple trusts. That way I can have one for the NFA stuff and if I decide to do one later on for long term care or something I can do that.
     

    Norton

    NRA Endowment Member, Rifleman
    Staff member
    Admin
    Moderator
    May 22, 2005
    122,847
    Man, after reading the arfcom thread it seems like there would be a lot of benefit to having a human attorney draft this up.

    Too bad we can't find a pro-gun estate attorney in MD to give us a bulk rate on simple RLTs for the forum.
     

    Falkus

    Dating Scarlett Johansson
    Feb 26, 2007
    2,035
    Undisclosed location
    I have been looking into this trust and based on the AR15.com

    is it pretty simple for me to use ? Willmaker 2008 and just draft it up ?

    I just wanted to see if I can get a supressor without fingerprints :)
     
    B

    bluecollarkid

    Guest
    Man, after reading the arfcom thread it seems like there would be a lot of benefit to having a human attorney draft this up.

    Too bad we can't find a pro-gun estate attorney in MD to give us a bulk rate on simple RLTs for the forum.

    Give me a year or so. Taking the bar this July.
     

    frozencesium

    BBQ Czar
    MDS Supporter
    Feb 5, 2008
    3,430
    Tampa, FL
    Yeah, looking in to setting one up for myself and my wife strictly for NFA items (actual will and what not would be separate)...but so far the price seems astronomical to have a human do one.
     

    Maryland_Shooter

    Banned
    BANNED!!!
    Feb 8, 2008
    917
    Glen Arm
    Why pay a lawyer $500

    From Small Arms Review, as posted on AR15.com

    The Legal Side
    By Bob J. Howell, Esq.


    Several years ago, the author was approached by a friend in the NFA community. His local Sheriff had stopped signing off on any NFA transfers, despite promises to the contrary when he was merely a candidate for the office. This friend, being in the NFA business, was concerned about the effect this would have on his customers. Sure he could tell them to go the corporate route, but he wondered if there was another way. As an estate planning attorney for the last 15 years the author has had the opportunity to assist clients with the disposition of a wide variety of personal assets, including NFA items. Having established a number of Revocable Trusts for past clients with NFA assets, the author told him about the benefits that a Revocable Trust could offer and began doing Trusts for his customers. Word began to circulate about this new way of doing things. In an effort to better answer the flood of questions received on the topic, the author submitted an article for the Legal Side in the March 2007 issue of Small Arms Review, outlining the general concepts behind the use of the Revocable Trust for NFA ownership. From that article the number of individuals using Revocable Trusts for NFA ownership has skyrocketed and whenever a radical change occurs, more questions necessarily follow. This article is a compilation of some of the questions the author has received about the use of the Revocable Trust with respect to NFA ownership and is presented in an effort to further help the NFA community understand the use of this powerful tool. As always, check your local laws as they may vary.


    Q: What is a Revocable Trust?

    A Revocable Trust is a legal entity established under state law. A Revocable Trust can own both real and personal property in its own name and as such is no different than a Corporation holding NFA items. The Code of Federal Regulations (27 C.F.R. Part 179), Section 179.11 specifically defines a Person (i.e. someone who is authorized to purchase NFA) to include Trusts as well as Corporations.


    Q: Does the Trust require a separate tax I.D. number?

    Unlike a Corporation, a Revocable Trust does not need a separate tax ID number (as long as you are the trustee of your own trust).


    Q: Does a Revocable Trust require individual tax returns?

    With a Revocable Trust, if you are acting as your own trustee, there are no separate tax returns. A Revocable Trust is transparent for income tax purposes. Any gains or losses are reported on your own individual returns and no separate tax returns (or the fees associated with their preparation) are necessary. If you use a Corporation to hold title to NFA items, most CPAs will generally advise you to file a federal tax return for the corporation, even if the Corporation has no income. Many states also have their own State Corporate tax return that needs to be filed as well.


    Q: Can I make changes to my Trust?

    The Grantor of the properly drafted Revocable Trust has the power to amend and/or revoke the Trust (hence the name “Revocable Trust”) and the power to add or remove the assets at will. The Grantor of a Revocable Trust should be mindful of the effect that various events in their life may have on their trust and its operation. The death of a beneficiary or successor Trustee, the birth of child, and a recent divorce are some of the things to keep in mind for possible amendments to your Trust.


    Q: What happens if I move to another state?

    Most states follow some form of the Uniform Trust Code which provides that if your Revocable Trust was valid in your state of residence when created, it will be legal in your new state. However, I still advise all clients to have an estate planning attorney in their new state review the trust document to see if any changes are necessary or advisable. Generally it is easier to move with a Revocable Trust than it is to move with a corporation.


    Q: Will a Revocable Trust prevent creditors from reaching my NFA items?

    A Revocable Trust will not generally provide any more protection from creditors than owning the assets individually. I say generally since the assets are held in the name of the trust and not your individual name so a creditor may have trouble finding them or may be unaware of the existence or potential value of NFA assets. A smart litigator may be able to find and reach the trust assets or at least the proceeds from their sale. However, if you hold NFA items in a corporation and someone is injured while you or your friends are shooting them you can probably count on being sued individually regardless of how the NFA assets are held.


    Q: Can a Trust save money over Corporate NFA ownership?

    In addition to the initial set up costs, most states have some sort of Corporate annual fee or tax (in Florida the fee for filing the Corporate Annual Report is presently $150.00). This fee, which is subject to increase as the state sees fit, must be paid every year to keep the corporation active. This can get expensive in the long run and failure to pay the annual fee will result in the corporation being administratively dissolved. If this happens and the corporation owns NFA items then you have a serious legal problem. Reinstating the administratively dissolved corporation, if possible, is generally expensive (in Florida the filing fee alone is $550.00). After the initial cost of establishing a Revocable Trust there are generally no annual maintenance or filing fees. In addition the Revocable Trust can also save money by not having to pay for the preparation of state or federal tax returns which may be required when using a corporate entity.


    Q: What happens to the NFA items in the trust when I die?

    A Revocable Trust can provide for the disposition of the NFA assets at the Grantors death, either by liquidating the items and distributing the cash or by distributing the trust assets directly to the named beneficiaries (provided ownership is legal in the beneficiaries jurisdiction and they are not a disqualified person). If the NFA items are individually held or held in a corporation, then they will be subject to the time and expense of Probate at the death of the individual.


    Q: What happens to the NFA items in the trust if I become incapacitated?

    If your Revocable Trust has been properly prepared it may include the ability for the Successor Trustee to manage the assets for your benefit during your incapacity allowing the Successor to sell any assets necessary for the care, support and comfort of the Grantor. With assets owned individually or in a corporation, it may be necessary to appoint a guardian to reach your assets upon your incapacity.


    Q: What do I need to Submit with a Transfer to a Trust?

    There has been much discussion, and well intentioned although uninformed advice, about this on various internet discussion boards. While some have gotten away with sending less, the Author has always advised his clients to attach a photocopy of the entire trust agreement (including the Schedule “A”) to the Form 4 or Form 1 being submitted. In the past some have sent in a “Certificate of Trust” in place of the full trust agreement and received their transfers back approved. The current policy of the NFA branch is to require a copy of the full trust agreement. There are no fingerprints or photos required with a Trust (or a corporation or LLC for that matter) and no LEO signoff is required.


    Q: Do I need to transfer any NFA items I already own individually to my trust?

    Transferring NFA items you already have into your trust is just that, a transfer, and as such it requires a Form 4 and the $200.00 transfer tax. While it is not required to transfer NFA items you already own individually into your trust, doing so will allow you to reap the benefits available under Trust ownership for all the assets.


    Q: How do I fill out the Form 1 or 4 when there is a trust involved?

    You must fill out the Form listing the Trust as the Maker or Transferee (i.e. John Doe Revocable Firearms Trust, John Doe, Trustee) and sign the Form in your capacity as Trustee (i.e John Doe, Trustee).


    Q: Do I need to amend the Trust everytime I buy or sell and NFA item?

    Again, there has been a lot of rumor about this on the internet as well. It is not necessary to amend your Revocable Trust each time you add or remove an asset and you are not required to list each item on your Schedule “A”. The approved Form 1 or Form 4 are the proof of ownership of the NFA item in the Trust.


    Q: What should I name by Revocable Trust?

    You can name your trust anything you want. However the author generally suggests something along the lines of “The John Doe NFA Trust” of “The John Doe Firearms Trust”. Anyone who has been in the hobby for a while has a story of running into a law enforcement official who does not understand the legality of ownership of NFA items. Oftentimes showing them your Form 4 or 1 is all you need to settle the problem. If the name of your trust on the form contains your own name it oftentimes makes it easier for the other party to understand that you are in compliance.


    Q: Should I prepare my own Trust?

    As the old saying goes, you get what you pay for. There is no substitute for competent legal advice, particularly when dealing with Revocable Trusts. It is quite possible to draft a document yourself that will establish a valid Trust. However legally creating it and properly creating it can be two different things. Usually, it is your heirs that find out after your death that there was a problem in your Revocable Trust. The author has personally reviewed a number of trusts created using various fill in the blank forms or over the counter software where there were serious flaws present in the construction of the document or in the disposition of the assets that would not have come to light until the Grantor’s death, when it is too late to fix. Also, don’t think that because a transfer goes through with your Revocable Trust that the it must be O.K. While the attorneys at the BATFE do review your Trust to see if it is a legally established entity, they are not examining it to see if it properly takes care of your beneficiaries, provides for your incapacity, has sufficient provisions for appointment of Successor Trustees, and so forth. For these reasons it is advisable to have an experienced estate planning attorney prepare your Trust. That way you can be assured that it is correctly prepared, executed in accordance with the requirements under your state law and provides for the distribution of the assets in accordance with your wishes at your death.

    For further questions call or email
    Bob J. Howell, Esq.
    8551 W. Sunrise Boulevard, Ste 207
    Plantation, FL 33322
    (954) 424-8889
    bjhowell@att.net

    Document already in use in MD- all here for free. :lol:
    Contactetd the poster above - he wanted $500 :sad20:

    Declaration of Trust

    Part 1. Trust Name
    This revocable living trust shall be known as the Name of your trust Revocable Living Trust.

    Part 2. Declaration of Trust
    Your Name, called the grantor, declares that he has transferred and delivered to the trustee all his interest in the property described in Schedule A attached to this Declaration of Trust. All of that property is called the "trust property." The trustee hereby acknowledges receipt of the trust property and agrees to hold the trust property in trust, according to this Declaration of Trust.
    The grantor may add property to the trust.

    Part 3. Terminology
    The term "this Declaration of Trust" includes any provisions added by valid amendment.

    Part 4. Amendment and Revocation
    A. Amendment or Revocation by Grantor
    The grantor may amend or revoke this trust at any time, without notifying any beneficiary. An amendment must be made in writing and signed by the grantor. Revocation may be in writing or any manner allowed by law.
    B. Amendment or Revocation by Other Person
    The power to revoke or amend this trust is personal to the grantor. A conservator, guardian or other person shall not exercise it on behalf of the grantor, unless the grantor specifically grants a power to revoke or amend this trust in a Durable Power of Attorney.

    Part 5. Payments From Trust During Grantor's Lifetime
    The trustee shall pay to or use for the benefit of the grantor as much of the net income and principal of the trust property as the grantor requests. Income shall be paid to the grantor at least annually. Income accruing in or paid to trust accounts shall be deemed to have been paid to the grantor.

    Part 6. Trustees
    A. Trustee
    Your name shall be the trustee of this trust.
    B. Trustee's Responsibilities
    The trustee in office shall serve as trustee of all trusts created under this Declaration of Trust, including children's subtrusts.
    C. Terminology
    In this Declaration of Trust, the term "trustee" includes successor trustees or alternate successor trustees serving as trustee of this trust. The singular "trustee" also includes the plural.
    D. Successor Trustee
    Upon the death or incapacity of Your name, the trustee of this trust and of any children's subtrusts created by it shall be Name of secondary trustees. Each successor trustee has full and independent authority to act for and represent the trust. If Name of secondary trustees are unable or unwilling to serve as successor trustee, Name of successor trustees shall serve as trustee. Each of them has full and independent authority to act for and represent the trust.
    E. Resignation of Trustee
    Any trustee in office may resign at any time by signing a notice of resignation. The resignation shall be delivered to the person or institution who is either named in this Declaration of Trust, or appointed by the trustee under Section F of this Part, to next serve as the trustee.
    F. Power to Appoint Successor Trustee
    If no one named in this Declaration of Trust as a successor trustee or alternate successor trustee is willing or able to serve as trustee, the last acting trustee may appoint a successor trustee and may require the posting of a reasonable bond, to be paid for from the trust property. The appointment must be made in writing, signed by the trustee and notarized.
    G. Bond
    No bond shall be required for any trustee named in this Declaration of Trust.
    H. Compensation
    No trustee shall receive any compensation for serving as trustee, unless the trustee serves as a trustee of a child's subtrust created by this Declaration of Trust.
    I. Liability of Trustee
    With respect to the exercise or non-exercise of discretionary powers granted by this Declaration of Trust, the trustee shall not be liable for actions taken in good faith. Such actions shall be binding on all persons interested in the trust property.

    Part 7. Trustee's Management Powers and Duties
    A. Powers Under State Law
    The trustee shall have all authority and powers allowed or conferred on a trustee under Maryland law, subject to the trustee's fiduciary duty to the grantors and the beneficiaries.
    B. Specified Powers
    The trustee's powers include, but are not limited to:
    1. The power to sell trust property, and to borrow money and to encumber trust property, including trust real estate, by mortgage, deed of trust or other method.
    2. The power to manage trust real estate as if the trustee were the absolute owner of it, including the power to lease (even if the lease term may extend beyond the period of any trust) or grant options to lease the property, to make repairs or alterations and to insure against loss.
    3. The power to sell or grant options for the sale or exchange of any trust property, including stocks, bonds, debentures and any other form of security or security account, at public or private sale for cash or on credit.
    4. The power to invest trust property in every kind of property and every kind of investment, including but not limited to bonds, debentures, notes, mortgages, stock options, futures and stocks, and including buying on margin.
    5. The power to receive additional property from any source and add it to any trust created by this Declaration of Trust.
    6. The power to employ and pay reasonable fees to accountants, lawyers or investment experts for information or advice relating to the trust.
    7. The power to deposit and hold trust funds in both interest-bearing and non-interest bearing accounts.
    8. The power to deposit funds in bank or other accounts, whether or not they are insured by the FDIC.
    9. The power to enter into electronic fund transfers or safe deposit arrangements with financial institutions.
    10. The power to continue any business of the grantor.
    11. The power to institute or defend legal actions concerning this trust or the grantor's affairs.
    12. The power to execute any documents necessary to administer any trust created by this Declaration of Trust.
    13. The power to diversify investments, including authority to decide that some or all of the trust property need not produce income.

    Part 8. Incapacity of Grantor
    If the grantor becomes physically or mentally incapacitated, whether or not a court has declared the grantor incompetent or in need of a conservator or guardian, the successor trustee named in Part 6 shall be trustee.
    The determination of the grantor's capacity to manage this trust shall be made by those of the people listed here who are reasonably available when the successor trustee (or any of them, if two or more are named to serve together) requests their opinion. These people are: Three people you trust that can rule if you are crazy or not. If a majority of them state, in writing, that in their opinion the grantor is no longer reasonably capable of serving as trustee, the successor trustee shall serve as trustee.
    In that event, the trustee shall manage the trust property. The trustee shall use any amount of trust income or trust property necessary for the grantor's proper health care, support, maintenance, comfort and welfare, in accordance with the grantor's accustomed manner of living. Any income not spent for the benefit of the grantor shall be accumulated and added to the trust property. Income shall be paid to the grantor at least annually. Income accruing in or paid to trust accounts shall be deemed to have been paid to the grantor.
    The successor trustee shall manage the trust until the grantor is again able to manage his affairs. The determination of the grantor's capacity to again manage this trust shall be made in the manner specified just above.

    Part 9. Death of a Grantor
    When the grantor dies, this trust shall become irrevocable. It may not be amended or altered except as provided for by this Declaration of Trust. It may be terminated only by the distributions authorized by this Declaration of Trust.
    The trustee may pay out of trust property such amounts as necessary for payment of the grantor's debts, estate taxes and expenses of the grantor's last illness and funeral.

    Part 10. Beneficiaries
    At the death of the grantor, the trustee shall distribute the trust property as follows:
    1. Person who gets your stuff when you dieshall be given all Your name interest in the trust property. If Person who gets your stuff when you die does not survive Your name, that property shall be given to Backup person who gets your stuff when you die.
    All distributions are subject to any provision in this Declaration of Trust that creates a child's subtrust or a custodianship under the Uniform Transfers to Minors Act.
    A beneficiary must survive the grantor for 120 hours to receive property under this Declaration of Trust. As used in this Declaration of Trust, to survive means to be alive or in existence as an organization.
    All personal and real property left through this trust shall pass subject to any encumbrances or liens placed on the property as security for the repayment of a loan or debt.
    If property is left to two or more beneficiaries to share, they shall share it equally unless this Declaration of Trust provides otherwise. If any of them does not survive the grantor, the others shall take that beneficiary's share, to share equally, unless this Declaration of Trust provides otherwise.

    Part 11. Custodianships Under the Uniform Transfers to Minors Act
    1. Any property to which Name of person who gets yor stuff when you die (if under 21) becomes entitled under Part 10 of this Declaration of Trust shall be given to Custodian of trust for those under 21 (I used my wife), as custodian for Name of person who gets your stuff (if under 21) under the Maryland Uniform Transfers to Minors Act, until Name of person who gets your stuff (if under 21) reaches the age of 21. If Custodian of trust for those under 21 (I used my wife) is unable or ceases to serve as custodian, Backup custodian of trust for those under 21 shall serve as custodian.

    Part 12. Grantor's Right to Homestead Tax Exemption
    If the grantor's principal residence is held in trust, the grantor has the right to possess and occupy it for life, rent-free and without charge except for taxes, insurance, maintenance and related costs and expenses. This right is intended to give the grantor a beneficial interest in the property and to ensure that the grantor does not lose eligibility for a state homestead tax exemption for which he otherwise qualifies.

    Part 13. Severability of Clauses
    If any provision of this Declaration of Trust is ruled unenforceable, the remaining provisions shall stay in effect.



    ______________________________page break_______________________________________

    Certification of Grantor
    I certify that I have read this Declaration of Trust and that it correctly states the terms and conditions under which the trust property is to be held, managed and disposed of by the trustee, and I approve the Declaration of Trust.

    _____________________________________Dated: ______________
    Your name, Grantor and Trustee

    _____________________________page break______________________________________



    CERTIFICATE OF ACKNOWLEDGMENT OF NOTARY PUBLIC

    State of Maryland )
    ) ss.
    County of )
    On ____________________, __________ before me, _____________________, a notary public in and for said state, personally appeared Your name, personally known to me (or proved on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument, and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
    WITNESS my hand and official seal.

    Notary Public for the State of Maryland
    [NOTARIAL SEAL]My commission expires:

    _____________________________page break____________________________________


    SCHEDULE A

    1. Stuff you put in the trust
    2. Stuff you put in the trust

    _____________________________page break_____________________________________


    Assignment of Property

    I, Your name, as grantor of the Name of the trust Revocable Living Trust dated ____________________, __________, hereby assign and transfer all of my rights, title and interest in the following property:
    1. Stuff you put in the trust
    2. Stuff you put in the trust
    to Your name, as trustee of the Name of trust Revocable Living Trust dated ____________________, __________.

    Executed at ____________________, _______________, on ____________________, __________.

    ___________________________________________
    Your name, Grantor and Trustee
     

    dmgwork

    Member
    Jan 12, 2009
    9
    Problems with Quicken for estate planning and NFA purchases.

    Althought the same or different issues may exist in each state. This article may be useful to those of you using Quicken


    Using Quicken to prepare a trust: The good, the bad, and ugly!

    I recently receive a copy of Quicken Willmaker 2009. I have previously written about many articles about the unintended results that occur with Do It yourself and Free Estate Planning Documents created by individuals without the advise of council and the problems with online document preparation services like LegalZoom and RocketLawyer.

    I decided to try out a few of the documents in Quicken to see if they had improved the quality and accuracy of their Florida documents. Last week I wrote about problem with the Quicken Willmaker 2009 Durable Power of Attorney. This week I will be looking a the Revocable Living Trust. I have previously written about the many problem is using Quicken to create a Firearms Trusts but for this article I will be focusing on the typical issues with regular estate planning and living trusts.

    1. No free updates and old language, in order to keep your trust up to date, you need to purchase the software every year and hope they have dealt with changes in your state laws. Quicken seems to be slow at incorporating small or significant changes in the law. The changes in the new trust code from Florida in the years 2006 and 2007 have not been incorporated into the software. Quicken does not let you know what years statutes its language is based upon. Quicken states that when their users report problems they try to fix the program. Unfortunately, their users are not lawyers, and their users never find out about the problems. Their family may find problems when it is to late to make changes, but they have no way to ask, nor to they attempt to ask the beneficiaries to report problems.

    2. Review your document is advise given to the users by Quicken. Quicken's instructions also state to make sure that your document says exactly what you want it to. Although Quicken recommends that you have your document reviewed by an attorney, they neglect to mention that useful advise in their instructions under the review section. Living trusts are complicated documents, how the state law interprets the language you choose is complicated. Lawyers have differing interpretations, how can a non-lawyer pretend to understand what the outcome of the language they choose will be. Want proof of this, check out Do It yourself and Free Estate Planning Documents and see some of the results that have occurred when users attempted to make their own trusts and wills.

    3. Register your trust with the court? Quicken incorrectly advises that you must register your living trust with your local court. Although there are some states that do require this they state that it is a requirement in Alaska, Colorado, Florida Hawaii, Idaho Maine, Michigan, Missouri, Nebraska, and North Dakota.

    4. Quicken WillMaker Doesn't Provide legal Advise. The instructions state later that Quicken published legal forms that are useful in many situations but they can not tell you whether or not a form is right for you, given your circumstances. Only a lawyer can do this and you should consult a licensed attorney in your state.

    The Trust

    5. Part 2 of the trust declares that the assets mentioned in the trust have been delivered. While this may work for an assignment of interest, anything requiring a deed can not be transferred by this language. Individuals should not rely on this misleading statement and believe that their assets are transferred because they sign a sheet of paper that states that they have.

    6. Revocation and Amendments: The Quicken trust allows revocation after one of the grantor's dies. Typically a revocable trust becomes irrevocable and cannot be changed once a settlor or grantor dies. Quicken does make this distinction when dealing with an amendment and states that the trust cannot be amended once a Grantor dies. I am not sure why or how they allow a trust to be revoked by not amended after the death of a Grantor.

    7. Amendment by power of attorney: Florida case law states that a trust must specifically allow for amendment by a durable power of attorney, and the durable power of attorney must authorize the act specifically. The quicken trust includes language that the trust shall not be amended by an agent unless the document creating that power authorizes the amendment. This may or may not comply with the case law. It would be simple to ensure that it did comply compared to the language that is used.

    8. Income. The Grantors are required to take all income from the trust at least annually. It would seem that this creates assets that are subject to probate and may not be what the individuals desire.

    9. Successor Trustee. The successor trustee is chosen automatically but there does not appear to be an ability for someone else to choose a more appropriate trustee at the time one is needed. Quicken does give the last serving trustee the ability to appoint a new trustee if the successor trustee is unable or unwilling to serve. What happens if the trustee ceases serving because of death, who would have the power to appoint a new trustee? Quicken leaves this question unanswered.

    10. Compensation. While Quicken allows for several choices for compensation, their no compensation choice does not contemplate the need to have a professional or corporate trustee.

    11. Powers. The Quicken trust states that the trustee has all the authority and powers allowed or conferred on a trustee under Florida law. They do not tell you what these powers or authorities are or where to find a list of them. Also are they the powers granted when the document was signed, or when one goes to use the powers. While this may not seem important one should consider the substantial changes made in the area of a trustee's powers within the last 2 years in Florida.

    12. Incapacity: Quicken gives the power to determine incapacity to a person, rather than a court conservator or guardian, or physicians. Under this trust it would be very easy for your children or whom ever you select to declare you incapacitated, remove you a trustee, and appoint a successor trustee of their choice.

    13. Beneficiaries. Although quicken does appear to do a better job of checking the names of a beneficiary to make sure it is not a grantor, they only look for an exact match and do not question names that are close or provide a warning for any name. I found that it was possible to name yourself as your own beneficiary using a slightly different name, misspelling, or middle initial. This creates several problems and can void the trust.

    14. Survivorship. The quicken trust voids a gift to a beneficiary if that beneficiary dies within 120 hours. This can cause some big problems when there are large unpaid medical bills related to the death of a beneficiary. To deal with this issue completely you should contact an estate planning lawyer.

    15. Spendthrift provisions. Quicken does not make a mistake in this area because they do not address the concept.

    16. Property transfer. Quicken does not address the potential for a re-evaluation of property taxes upon the transfer of a piece of property into the trust when the names on the trust are different than the current title on the property. Nor does quicken address the requirement that taxes may be assessed.

    17. Choice of law, venue, arbitration, required notices under Florida Trust code. Quicken does not address these, perhaps they are not important. Whether that is true depends on your circumstances and what happens in the future, where you live when you die, where your beneficiaries live when you die. I personally feel that every trust should address these issues including the requirements of the new Florida Trust code, but if you use Quicken you will not have the benefit of these provisions either.

    There are many mistakes in the Quicken documents, most disturbing might be some of the things that are not included in a Quicken trust. Quicken gives none of the flexibility to a trust that make it useful for the common person. A trustee under a Quicken trust could not do anything without creating liability to a beneficiary because by default they must act as a prudent trustee. If you have a trust created by Quicken 2009, 2008, 2007 or a previous version, you should have it reviewed by an estate planning lawyer.
     

    Maryland_Shooter

    Banned
    BANNED!!!
    Feb 8, 2008
    917
    Glen Arm
    Chad,

    Do a lot of people have their spouses as co-grantors as the trust?

    IE "The Norton and Mrs. Norton Firearms Revocable Trust"

    Is that even possible? If the trust is buying the suppressor, do both of the named owners of the trust have to be named on the Form 4 or Form 1?

    Mine is ME, wife is a trustee.
     

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