Gun/NFA trusts

[jnojr]

I've been doing some reading and searching. Looks like I have two options:

1) Do an "online" trust. It costs $60, $100, whatever. Trusts are just boilerplate language. Oh, but they're all garbage, it's far too risky, I should get a REAL trust!

2) Pay an attorney. It costs much more, but it's worth it! Oh, except you get exactly what you'd get online, just pay hundreds or thousands more for the same thing.

The more I look, the more I see those two points battled back and forth, and it's frustrating. There's a well-regarded attorney near me who does trusts, but they start at $250 for something that's extremely limited. If I want more trustees, now it's $600. And both of those will be delivered "in minutes"... which means they're boilerplate. An in-person consultation and "unlimited" trust is $1200+ And no, I did not add the +

So, it looks like no matter what, I'm a sucker... either I pay waaaaay too much, or I get a piece of garbage that's going to land me in Federal PMITA prison forever.

 

[dogtown tom]

$24.99 Single Shot Trust from Silencer Shop is the best bargain in trusts.

https://www.silencershop.com/blog/post/a-buyer-s-guide-individual-vs-trust

 

[Elkins45]

IMO the advantage of a bespoke trust from a lawyer is that you have someone to sue/blame/recover damages from if there’s a serious issue. That said, I’m unaware of any instance where someone has ended up in the jackpot over a poorly-worded trust.

I have some pre-41F items on my trust but since then I just filed as an individual. My main reason for the trust was just the convenience of not having to do prints and avoiding LEO sign off. All that went away with 41-F.

 

[AlexanderA]

Actually drawing up the trust document is the (relatively) easy part. The hard part is deciding whether a trust is appropriate in the first place. (My personal feeling is that trusts are oversold, and the disadvantages are not thoroughly considered.) That's the main reason you need to consult with an attorney. You need someone to give you a reality check.

 

[dogtown tom]

..... trusts are oversold, and the disadvantages are not thoroughly considered.....

Such as?

 

[rust collector]

As a retired attorney, I always asked my clients to make sure the benefits of a trust outweighed the drawbacks. Benefits included extended control over assets, clarity in administration and, in the case of NFA trusts, avoidance of some qualification requirements such as print cards, photos etc. Costs included fees, but also the formalities, record keeping, time spent in determining succession, and more recently the issue of potential disqualification of successor trustees due to unforeseen events. These factors continue to change, but trusts are a useful tool if used thoughtfully. They can create problems if there is a lapse in succession or laws change and there is no way to amend to mitigate adverse effects.

 

[CapnMac]

Before 41F, the NFA Trust was the workaround to living someplace where the CLEO was a "will deny" type for NFA applications. It was slightly easier for not having to submit photos and fingerprints. (Only slightly.) It was also an advantage for large extended groups of enthusiasts/relatives to be able to have access to items commonly held.

Since 41F, the usefulness of NFA Trusts (other trusts have other uses) has declined considerably.

Since the CLEO sign-off is removed, and the corporeal members of the trust do need to submit fingerprints and photos, the labor/hassle difference between Individual and Trust has flip-flopped.

Barring other needs--estate planning, family complications, etc.--there's little need to dissolve existing Trusts, but there's scant need to create new ones.

That does not mean that there are no reasons to choose to create one. And only an attorney acting in your, specific, interest can evaluate that. We are just rando voices on the innerwebs, and do not count as legal representation. The costs associated with hiring competent legal help are what they are. And, you often get what you pay for, too.

This being Legal, it's probably germane to point out that NFA is Federal; your State may have other restrictions and requirements.

 

[AlexanderA]

[Disadvantages] Such as?

Here's one just off the top:
Where you have assets with large unrealized appreciation (such as machine guns bought before 1986), normally there's a "stepped up basis" at death, so that the heirs can sell without incurring capital gains tax. In a trust, there's no "inheritance," so that the original basis carries over. The dollar amount of this difference could be significant.

 

[Frank Ettin]

..... Looks like I have two options:

....I'm a sucker... either I pay waaaaay too much, or I get a piece of garbage....

What kind of trust you will want depends on (1) what you want to accomplish; and (2) what your situation is. A trust is:

• Nolo Press:

  ...A trust is an arrangement under which one person, called a trustee, holds legal title to property for another person, called a beneficiary. You can be the trustee of your own living trust, keeping full control over all property held in trust....

  
  
• Wikipedia:

  In common law legal systems, a trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a settlor, who transfers some or all of his or her property to a trustee. The trustee holds that property for the trust's beneficiaries. Trusts have existed since Roman times and have become one of the most important innovations in property law....

Within that framework there are a lot of ways someone can set up a trust, and of course what will decide how someone should set up a trust are (1) what he wants to accomplish; and (2) what his situation is. So if someone hires a lawyer to prepare a trust, he is paying the lawyer to --

• understand what he (the client) intends to accomplish; and
  
  
• exercise his professional judgment to, given the law and his (the client's) situation, set up the trust to best accomplish his (the client's) purpose.

If you buy a generic trust form, you're not getting those professional services -- whether the "off-the-rack" form meets your legal needs is going to be up to you. If your situation is simple (for example: few assets, no or only one or two dependents) your "guess" might be [almost] as good as a good lawyer's professional assessment. If your situation is complex, the likelihood increases that you'll make a mistake that winds up being costly for your estate.

For a deeper dive see this post by one of our members (who is also a lawyer): The Difference Between Generic Gun Trusts and Lawyer-Drafted Gun Trusts.

 

[dogtown tom]

Here's one just off the top:
Where you have assets with large unrealized appreciation (such as machine guns bought before 1986), normally there's a "stepped up basis" at death, so that the heirs can sell without incurring capital gains tax. In a trust, there's no "inheritance," so that the original basis carries over. The dollar amount of this difference could be significant.

Thats it?
Other than appreciation on transferrable machine guns.............what else?
The overwhelming majority (80-90%) of NFA transfers are silencers which rarely appreciate in price.

 

[Jerry M]

Suppressor are cheap and more available compared to machine guns. Why put it in a trust at all? Just to let someone else use it? I'm curious as to the reason?

 

[Swing]

clarity in administration and, in the case of NFA trusts, avoidance of some qualification requirements such as print cards, photos etc.

Sadly, this has not been the case since 41F. The change has made Trust filings mildly more annoying since. Not knocking trusts, after all our family has had one for years for for many NFA items (from every category sans DD), so I know there are real benefits.

 

[rust collector]

This has not been the case since 41F. The change has made Trust filings mildly more annoying since.

Not knocking trusts, after all our family has had one for years for for many NFA items (from every category sans DD), so I know there are real benefits. But the pics, cards, and some other advantages (e.g., CLEO sign off) has not been a factor for a few years now.

Please note that I used past tense. As others have noted, things change. That's why it is good to balance pros and cons at the time you are considering a trust, and recognize that things will likely change in the future.

 

[dogtown tom]

Suppressor are cheap and more available compared to machine guns. Why put it in a trust at all? Just to let someone else use it? I'm curious as to the reason?

The link in post #2 offers a longer better explanation than what follows:
NFA firearms registered to an individual can be used by anyone not otherwise prohibited by law....but you have to be present while they use it. Your wife can't bring it to the gun range for you. Your father/wife/brother/son/next door neighbor can't take it squirrel hunting without you. On your death, the firearm would pass to your heirs via a tax free Form 5.

NFA firearms registered to a trust can be used by anyone not otherwise prohibited, but can also be possessed, transported or stored with those named as a "responsible person" on the trust. On your death, the trust continues to possess the firearm and no transfer or additional paperwork is needed. Trust members are easily added or deleted as the grantor sees fit.

 

[AlexanderA]

NFA firearms registered to a trust can be used by anyone not otherwise prohibited, but can also be possessed, transported or stored with those named as a "responsible person" on the trust. On your death, the trust continues to possess the firearm and no transfer or additional paperwork is needed. Trust members are easily added or deleted as the grantor sees fit.

This has the potential to bypass the whole NFA transfer process. Set up a trust, and then add and delete beneficiaries / trustees in exchange for payment. Once the initial transfer to the trust is made, subsequent changes in possession never need to get ATF approval as long as the trust is properly amended. Arguably, this can be seen as evasion of the $200 transfer tax, but arguably not, since a "transfer" has not taken place. I'm surprised this "advantage" of trusts has not been more widely touted.

 

[dogtown tom]

This has the potential to bypass the whole NFA transfer process. Set up a trust, and then add and delete beneficiaries / trustees in exchange for payment. Once the initial transfer to the trust is made, subsequent changes in possession never need to get ATF approval as long as the trust is properly amended. Arguably, this can be seen as evasion of the $200 transfer tax, but arguably not, since a "transfer" has not taken place. I'm surprised this "advantage" of trusts has not been more widely touted.

It's one of the reasons the Single Shot Trust is so popular.

It's not unusual for several people to share the expense of a machine gun, possessed by a trust, LLC or corporation.

 

[Arkansas Paul]

either I pay waaaaay too much, or I get a piece of garbage that's going to land me in Federal PMITA prison forever.

If those are your 2 options, $600 seems like a bargain to me.