Lesser trustee type for 41F?

[Arizona_Mike]

Several sites have hinted that it may be able to define a lesser type of trustee who can possess but not authorize others to possess, purchase or sell NFA weapons, analogous to a lesser employee of a corporation, that would not fall under the new definition of a "responsible person".

Does anyone know how far people have gotten on this?

From 41F (emphasis mine):

DOJ has also clarified that the term "responsible person" for a trust or legal entity includes those persons who have the power and authority to direct the management and policies of the trust or legal entity to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of, the trust or entity. In the case of a trust, those 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.

Mike

 

[Aaron Baker]

I don't know that anyone has had any luck. Frankly, I can't imagine they will. Exact wording aside, their intention was clearly to require fingerprints and photographs from anyone with the legal authority to possess the trust's firearms.

Generally, administrative agencies are given great latitude in interpreting their own regulations.

Aaron

 

[Arizona_Mike]

I don't know that anyone has had any luck. Frankly, I can't imagine they will. Exact wording aside, their intention was clearly to require fingerprints and photographs from anyone with the legal authority to possess the trust's firearms.

Generally, administrative agencies are given great latitude in interpreting their own regulations.

Aaron

True but it does not seem that far fetched when you consider the corporation analogy. I'm sure there are only a few employees who can make decisions about the disposition of firearms but a much larger number of employees who can possess them temporarily.

Mike

PS. And then there are shareholders who can collectively exercise indirect control . . .

 

[Aaron Baker]

Fair points. Here's the deal, though: if the ATF does turn out to allow a sort of "limited trustee" class that isn't a "responsible person," then ALL trusts in the future will have ONLY that type of trustee.

Because basically then only the grantor will have to submit fingerprints and photographs. And, well, we know the ATF doesn't want that.

I guess we'll see, but I'm not counting on it. I'm going to assume that all trustees will be considered responsible persons.

Aaron

 

[pintler]

Something I've wondered about 41F: my trust, and I think most of them, makes it easy to add or delete trustees. It came with a sample addendum where I can say 'Fred Smith is a trustee, for the purpose of using suppressor #ABC-1234 from Mar01 until Mar15', etc, etc.

Does 41F affect that? My sense is that once the stamp is granted, I can still designate new trustees.

Someone who wanted to skate closer to the line than I do could presumably delete trustees (or clone a new trust for each item), get the stamp, then add new trustees at will. That would defeat the purpose of 41F. Does 41F address that? I haven't seen anything about that, but might have missed it.

 

[Aaron Baker]

Someone who wanted to skate closer to the line than I do could presumably delete trustees (or clone a new trust for each item), get the stamp, then add new trustees at will. That would defeat the purpose of 41F. Does 41F address that? I haven't seen anything about that, but might have missed it.

41F/P doesn't forbid that. Frankly, in my opinion, it isn't a line to skate close or far from. The law absolutely allows you to add trustees after you've gotten an approved tax stamp. If the ATF had wanted to regulate newly-added trustees, they could have tried. (They did, in fact, solicit opinions on doing just that, but the final rule didn't do it.)

I fully believe that after the regulation takes effect, there will be people who remove trustees before applying for stamps, and then add them back after the stamp is approved. That's a bit inconvenient, though, since your trustees wouldn't be able to possess the trust's property in the interim.

What I expect will happen is that some people will use "serial" trusts to avoid submitting fingerprints and photographs for trustees. By that, I mean one trust for each NFA item. Form a trust, submit a tax stamp application, get approved, then add the trustees. Form another trust for the next item, submit a tax stamp application, get approved, then add the trustees. It's a bit more paperwork to keep track of, but a valid way to get avoid fingerprints and photographs for trustees.

Finding a way to avoid onerous laws is practically the American way.

Aaron

 

[yugorpk]

Finding a way to avoid onerous laws is practically the American way.

Amen

 

[pintler]

Aaron - thanks!

 

[Ryanxia]

Now if only we could find a legal way not to have to submit fingerprints/pictures for the Grantor of the Trust...

Can't mess with postmarks (legally) I don't think so that probably won't help. Hmm..

 

[Aaron Baker]

I'm afraid, that as a minimum, photographs and fingerprints for grantors is here to stay.

 

[Ryanxia]

I know it depends on the language of the Trust but in a revocable living Trust can you change the Grantor? Whether that HAPPENED to be after an NFA item is approved would be completely coincidental.

 

[pintler]

" there will be people who remove trustees before applying for stamps, and then add them back after the stamp is approved. That's a bit inconvenient, though, since your trustees wouldn't be able to possess the trust's property in the interim."

I don't understand the inconvenience.

If I submit a pre 41F Form 4 today, I can add a new trustee next week without any problem, as I understand it. The trust copy just has to be accurate when submitted; it isn't frozen until approval.

If so, post 41F, what's to stop someone from deleting all the other trustees an hour before sending the Form 4, and restoring them an hour after?


BTW, by way of explanation of my 'skating close to the line' comment, I once got some fatherly advice that went something like 'Son, whenever you're wondering what the right thing to do is, imagine explaining whatever you did while sitting in the witness chair'. And if, God forbid, the ATF and I ever disagreed with the interpretation of something [1], I'd prefer to not explain why I was deleting and adding trustees like that; some people on the jury might take it the wrong way. And, from a practical POV, we're retired and have open schedules, so we can just ride down to get printed together; doing both isn't any harder than doing one. Other's people's situations can differ, of course.

[1]I try hard to keep up, but what if, for example, I was on a 2 month vacation when they changed their mind about the Sig brace or Can Cannon. I might come home and not be aware things had changed.

 

[Aaron Baker]

Ryanxia -- you can't change the grantor. It's the grantor's trust. The best analogy that might help you understand why is to imagine asking the question about a will: can you change the person whose stuff the people get when they die?

Like wills, trusts are estate planning devices for the person who creates it. In fact, and this gets into stranger legal territory, the traditional view of trusts is that they aren't a separate legal entity, but instead merely a legal relationship (like a contract, for instance) between the grantor and the trustee(s). In that view, the trust itself doesn't own property. Instead, the trustees hold the property in trust for the grantor. This whole use of trusts for NFA ownership, and the ATF considering trusts as entities that can own things, is actually kind of novel.

But trusts are nevertheless creatures of state trust law, and so it's not a legal entity that you can change the ownership of.

pintler -- well... actually, arguably (and the ATF probably would argue this), the trust needs to be in the same format when you apply and when the ATF approves transfer. They're regulating the approval process, and so I think they can require you to keep them up-to-date about the state of a trust during that entire process. (Yeah, it's not fair that they can cause the process to take 8 months or a year instead of a weeks or a month, but hey, that's a different conversation.) So, in that view, your trust must either stay the same while a tax stamp application is pending, or you need to update them if there's a change before your stamp is approved. I believe that is (or will be) the ATF's position.

Now, would they know? No, I guess they wouldn't. And since legally you could add a trustee the day after the stamp is approved, then it's not like adding them before you can even possess the item matters. Whether you add them when the stamp is pending or right after approval, they won't be in possession until after the stamp is approved, so your addition of them doesn't cause any laws to be broken.

But the ATF wants fingerprints and photographs of every trustee on a trust at the time that they approve a stamp. That is an area where I'd take your father's advice and not screw around with the ATF.

But removing trustees is perfectly legal. And adding trustees after a stamp is approved is unquestionably legal. So I would say that, while I can see how trying to explain why that doesn't look strange if you were in a witness chair would be awkward, you would never end up in a witness chair because there's no law against following the letter of the law rather than the spirit of the law. (Again, that's the American way.)

To quote a bureaucrat from the cartoon Futurama, "You are technically correct--the best kind of correct."

So, while it would be inconvenient to remove trustees for 6+ months at a time, you'd be legally permitted to do so. If you're inclined to do that many trust amendments, that's when I think a new trust for every item would be the best solution. Also perfectly, technically legal.

Aaron

 

[pintler]

Aaron:good explanation, thanks again!

 

[Txhillbilly]

That's what I plan on doing in the future,just start a new trust for any new items I want,and add the trustee's that I want after the stamp gets approved.
I also informed the trustee's on my current trust to do the same,then there will only be a grantor and the beneficiaries listed on the trust,and only the grantor will have to supply prints & photographs.

 

[Arizona_Mike]

41F got me off the fence with my integral and 40mm launcher. I'd like to have a neat AOW for my collection but have not found one. I have to many other priorities in my life right not to afford a M1919 Browning or a breech loading cannon before 41F. Have to see what the next occupant of the White House does.

Mike

 

[theshephard]

Bad faith

My sense of this is that if you were shown to be removing a trustee before an application and adding them after approval you would not be in the most defensible position. While being technically correct sounds nice, I think the law has the means to review and criticize your intent. Looking at timeliness of the changes relative to the application process, and showing a lack of other externalities driving the change - I'm certainly no expert or even a lawyer, but I wonder if this scenario (as just described) wouldn't cross into criminal conspiracy, as in title 18, section 371, conspiracy to commit offense or defraud the United States:
"If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both."
Maybe that's not the best citation but you get the idea. The burden in criminal cases, "beyond a reasonable doubt", is often not the firewall we think it is, especially when your initials aren't O.J. and you're relying on a jury. You're probably relying more on avoiding the eye of the law in the first place with this reasoning than you are on the solidity of your legal standing. And so.. You get back to the question of whether it's worth the risk.
One of my parents said, "just because you can rationalize it doesn't mean it's correct."

 

[Aaron Baker]

I'm certainly no expert or even a lawyer

With all due respect, that's the issue with your analysis. This isn't a question of whether something is morally correct. It's a question of whether it's legally allowed.

You are legally allowed to add or remove trustees from a trust. There is no law or regulation against doing so, either under state law or the National Firearms Act.

It's not like the ATF isn't aware that people might change their trusts. From the Final Rule, 41F:

"In the proposed rule, ATF recognized that the composition of the responsible persons associated with a trust, partnership, association, company, or corporation may change over time. As a result, ATF stated that it was considering a requirement that new responsible persons submit Form 5320.23 within 30 days of such a change. ATF sought comments on this option and solicited recommendations for other approaches."

Ultimately, they decided not to include such a requirement in the new rule:

"After receiving several public comments on this issue, the Department is not requiring in this final rule that new responsible persons submit a Form 5320.23 within 30 days of any change in responsible persons."

It's my opinion that they decided against it primarily because they don't actually have authority to require updates to trusts to be communicated to them when it's not as part of the tax stamp application process. But that's just my opinion. The fact, on the other hand, is that the ATF has explicitly stated that they considered regulating the addition and removal of trustees from trusts, and declined to do so.

No one is going to jail for conspiracy for following the letter of the law.

Aaron

 

[theshephard]

Thanks Aaron.