Trust vs Single Shot vs Individual Questions

[bwalker36]

So now that my third stamp is in progress I'm realizing I should probably get on the trust game for when my kids are older and potentially the wife. I have a few questions though:

1. With a regular NFA Gun trust I can add responsible person without fingerprints/photos, but the moment I add a new item to the trust, they will need to submit with me on the form 1/4 correct?
2. Single Shot seems like a nifty idea an allows me to always add people without fingerprint/photos. I just need to pay each time (or buy the unlimited one) as they are specific to each item and I could end up with 20 trusts. I think I understand this correctly
3. Can I transfer the items I currently have to a single shot trust (might have to ask SS this questions). If yes, i would have to the photos/prints/200 again.
4. Like 3 I can transfer my individual items to a traditional trust by doing a form 4 and going the process again right?

My oldest is only 6 so I have a while before he has the combo to the safe (if ever, hell probably just get his own ) so I was thinking It makes the most sense to me to go with a trust since I won't be adding anyone to it for a few years. That gives me time to get some new items and move the 3 items I already have.

I will be submitting another form 1 for an SBR as soon as I make a decision on which way to go, and then I'm ordering a Ghost M. So I know at least two more items I'm getting and don't see it stopping.


EDIT: I guess I have a followup, what are peoples thoughts on trusts from places like Silencershop or national gun trusts. I'm in PA and would take recommendations, my sister is a lawyer but has never done a trust so asking her might be a big ask lol.

 

[dogtown tom]

With a regular NFA Gun trust I can add responsible person without fingerprints/photos, but the moment I add a new item to the trust, they will need to submit with me on the form 1/4 correct?

Correct.
When you submit a Form 1 or 4 as a trust, you are required to include all persons considered as "responsible persons":

...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
enumerated powers or authorities.

Single Shot seems like a nifty idea an allows me to always add people without fingerprint/photos. I just need to pay each time (or buy the unlimited one) as they are specific to each item and I could end up with 20 trusts. I think I understand this correctly

Correct.

Can I transfer the items I currently have to a single shot trust (might have to ask SS this questions). If yes, i would have to the photos/prints/200 again.
Like 3 I can transfer my individual items to a traditional trust by doing a form 4 and going the process again right?

Sure, you just submit a new Form 4 and pay $200 for each item you are transferring to the new trust.

EDIT: I guess I have a followup, what are peoples thoughts on trusts from places like Silencershop or national gun trusts.

The Silencer Shop Single Shot Trust isn't magical, its just a trust for one specific silencer.
Without question it is the most popular silencer trust among my customers because of the price.

 

[bwalker36]

Thanks, I'm thinking about doing their regular trust. I'm having trouble figuring out if I miss anything major doing that.

I'm also thinking that at some point if they ever make it so you can't add someone without fingerprints/photos I don't want to deal with that many individual trusts.

Although at the 130 mark for unlimited its tempting and doesn't require notary.

 

[dogtown tom]

Thanks, I'm thinking about doing their regular trust. I'm having trouble figuring out if I miss anything major doing that.

The best reason for a Single Shot Trust? One name, one background check.
The Form 4's that took the longest for me were submitted in October 2016 and finally approved last June. Yeah.
It was a traditional trust with multiple RP's. One of whom couldn't pass the BG check so the Grantor kept resubmitting, with fewer and fewer names. Each time paying his lawyer to rewrite the trust. It was 8 months from submission to denied each time. Eventually the lawyer removed everyone but the grantor and it was approved. And no, the FBI will not tell you which RP isn't passing the BG check.

To me, this is the #1 reason for a Single Shot vs traditional trust.

I'm also thinking that at some point if they ever make it so you can't add someone without fingerprints/photos.

Thats highly unlikely.

I don't want to deal with that many individual trusts

You have ten silencers? Thats ten tax stamp and ten Single Shot Trusts.........in one ring binder.
vs
Ten silencers, ten tax stamps, one trust and a RP questionnaire, prints and photos on each of your RP's. Every time you buy another NFA firearm via that trust, those RP's will have to complete the RP questionnaire again and if more than a year update their photo. Great if they do so expeditiously, not so great if Uncle Bob can't figure out how to fill out the questionnaire or go get his passport style photo.


Comparison:https://www.silencershop.com/blog/post/single-shot-trust#versus

 

[bwalker36]

The best reason for a Single Shot Trust? One name, one background check.
The Form 4's that took the longest for me were submitted in October 2016 and finally approved last June. Yeah.
It was a traditional trust with multiple RP's. One of whom couldn't pass the BG check so the Grantor kept resubmitting, with fewer and fewer names. Each time paying his lawyer to rewrite the trust. It was 8 months from submission to denied each time. Eventually the lawyer removed everyone but the grantor and it was approved. And no, the FBI will not tell you which RP isn't passing the BG check.

To me, this is the #1 reason for a Single Shot vs traditional trust.




Thats highly unlikely.




You have ten silencers? Thats ten tax stamp and ten Single Shot Trusts.........in one ring binder.
vs
Ten silencers, ten tax stamps, one trust and a RP questionnaire, prints and photos on each of your RP's. Every time you buy another NFA firearm via that trust, those RP's will have to complete the RP questionnaire again and if more than a year update their photo. Great if they do so expeditiously, not so great if Uncle Bob can't figure out how to fill out the questionnaire or go get his passport style photo.


Comparison:https://www.silencershop.com/blog/post/single-shot-trust#versus

Not sure if its your intention but your convincing me to go Single Shot unlimited. Its on sale right now too hah. They provide free addendums for life too for adding responsible persons, and their customer service on other things has been really good.

To me I was worried about having 10 of them but your binder example put it in perspective. Simple folder structure in the cloud and Binder for my physical copies should be simple.

 

[AlexanderA]

NFA trusts are often used by people who don't understand the full implications. They're not a panacea. If you're thinking about using one, for heaven's sake consult an actual lawyer first.

 

[bwalker36]

NFA trusts are often used by people who don't understand the full implications. They're not a panacea. If you're thinking about using one, for heaven's sake consult an actual lawyer first.

I'm no lawyer, but if I want my children or my wife to be able to use my NFA items without me I need a trust (or a corporation but I'm definitely not doing that). I wasn't aware of any downsides aside from the additional paperwork.

 

[dogtown tom]

NFA trusts are often used by people who don't understand the full implications.

Describe the "full implications" you believe to be less advantageous than submitting as an individual.

They're not a panacea. If you're thinking about using one, for heaven's sake consult an actual lawyer first.

Believe it or not, but a healthy number of attorneys have no clue when it comes to NFA trusts.

 

[dogtown tom]

Not sure if its your intention but your convincing me to go Single Shot unlimited. Its on sale right now too hah. They provide free addendums for life too for adding responsible persons, and their customer service on other things has been really good.

Full disclosure, I've been a SS Powered By Dealer since they started and don't earn a penny off their trust sales. My recommendation on the Single Shot is due to what my customers have experienced.

 

[Elkins45]

I created a trust before 41f primarily to avoid fingerprints and LEO notification. Once that advantage went away I’ve only filed for one more stamp. I filed as an individual because I didn’t want to bug my very busy wife to get printed. Is there much of an advantage of one of the SS trusts over just filing as an individual.

 

[bwalker36]

I created a trust before 41f primarily to avoid fingerprints and LEO notification. Once that advantage went away I’ve only filed for one more stamp. I filed as an individual because I didn’t want to bug my very busy wife to get printed. Is there much of an advantage of one of the SS trusts over just filing as an individual.

As far as I know The big advantage is the Trust is for a single NFA item and since you don't add anything else to it you can add/remove responsible parties without photos/prints. The downside is you need a trust per NFA item. I ended up going with the unlimited since I have 2 more I'm going to do in the next few weeks and don't plan to stop. In fact I'll probably submit my new 9mm lower after I pick it up tomorrow hah.

 

[AlexanderA]

Describe the "full implications" you believe to be less advantageous than submitting as an individual.

For one thing, in a trust, there is no "stepped up basis" upon the death of an owner. This could be significant in the case of something that's highly appreciated, such as a machine gun. This will become increasingly important with the expansion of information reporting to the IRS. (This isn't important for something of minimal value like an SBR.)

Maybe you don't want people messing with your guns in your absence. Family fallings-out are not unheard of. I see the exclusivity provided by individual registration as being protective.

Let's remember that the use of trusts started out as a workaround for non-signing chief law enforcement officers. Only later did it become a way for multiple people to have possession.

A possible upside to trusts -- provided a separate trust is used for each item -- is that the interest in the trust could be conveyed instead of conveying the underlying item. No "transfer" of the item and therefore no need to file a Form 4. Just "responsible party" notifications but no tax and no long wait. AFAIK this loophole hasn't been exploited -- yet.

 

[dogtown tom]

For one thing, in a trust, there is no "stepped up basis" upon the death of an owner. This could be significant in the case of something that's highly appreciated, such as a machine gun. This will become increasingly important with the expansion of information reporting to the IRS. (This isn't important for something of minimal value like an SBR.)

Well, being that silencers rarely if ever increase in value, thats not really a worry is it? There is literally no market for used silencers.
And machine guns are such a tiny percentage of NFA transfers it makes this almost inconsequential to the Average Joe.

Maybe you don't want people messing with your guns in your absence. Family fallings-out are not unheard of.

Uhhhh.......nothing requires anyone to list more than themselves on a trust.
If you hate your family, just don't list them on your trust as a responsible person or beneficiary.
If you suddenly dislike your BIL, you can remove him before nightfall.

I see the exclusivity provided by individual registration as being protective.

Maybe the most illogical statement you've written.
Explain the "exclusivity" of an individual vs a trust with one responsible person. Tell us how that is different in supposed protection.

Let's remember that the use of trusts started out as a workaround for non-signing chief law enforcement officers.

Dude, trusts existed before Hiram Maxim invented the silencer. NFA buyers have been using trusts, LLC's and corporations for decades.
Just because YOU think it a "workaround" is immaterial. It's the REASON and specific feature of using a such a business structure to enable multiple members. I know of a group of guys in my city that have multiple machine guns held by their corporation. They didn't form the corporation to avoid fingerprinting or CLEO signoff.....they did it to spread the expense of owning machine guns worth over $100,000.

Sure, trusts became more popular in the last fifteen years because a heck of a lot of first time buyers were completely ignorant of the NFA process and the benefits of submitting a F1 or F4 as anything other than an individual.
It enabled those living in an city with an antigun CLEO to own NFA firearms.

But the CONTINUED popularity of using a trust is because buyers now understand the benefits of a trust vs individual submission. And skipping fingerprints and CLEO signoff ain't one of them is it?

Only later did it become a way for multiple people to have possession.

Nah. It's always been a feature. Just because you didn't know about it doesn't mean everyone else didn't.

A possible upside to trusts -- provided a separate trust is used for each item -- is that the interest in the trust could be conveyed instead of conveying the underlying item. No "transfer" of the item and therefore no need to file a Form 4. Just "responsible party" notifications but no tax and no long wait. AFAIK this loophole hasn't been exploited -- yet.

Sure it has. I know of several instances of that occurring.
Further, if you buy a silencer today, fill out your individual Form 4 and in three months get transferred out of state.....guess what happens? Once approved the dealer cannot transfer to you because you are no longer a resident of his state. The dealer will transfer to a dealer in your new state of residence and he'll start your Form 4 process all over right from the beginning. I've had that happen twice.
But.........fill out that Form 4 as a trust, LLC, corp, etc and if you move out of state any other responsible person (that resides in the dealers state) on that trust can come and pick up the firearm. I've had this happen twice as well.

 

[AlexanderA]

And machine guns are such a tiny percentage of NFA transfers it makes this almost inconsequential to the Average Joe.

Machine guns are the only NFA things that I have. And the capital gains hit would be so severe that it's one of the main reasons why I'm not selling. I'm leaving detailed instructions to my wife so she can sell without taking a tax hit after I'm gone. Obviously people's mileage will vary -- which is precisely why I'm saying that trusts are not a panacea.

Uhhhh.......nothing requires anyone to list more than themselves on a trust.

In that case, why have a trust at all? (And, btw, if the same person is both the sole trustee and sole beneficiary, the "doctrine of merger" kicks in and the trust becomes a nullity. This is why you need a lawyer when you get into this stuff. The average layman has no idea what he's getting into.)

If you suddenly dislike your BIL, you can remove him before nightfall.

And if you remove everybody except yourself, you have just dissolved your trust.

Sure it has. I know of several instances of that occurring.

I would expect the ATF to fight this tooth and nail. Their first argument would be that this is "tax evasion." However, the tax is imposed on a transfer, and no "transfer" has taken place when the trust personnel have changed, but the item is still held by the same trust.

 

[dogtown tom]

Machine guns are the only NFA things that I have. And the capital gains hit would be so severe that it's one of the main reasons why I'm not selling. I'm leaving detailed instructions to my wife so she can sell without taking a tax hit after I'm gone. Obviously people's mileage will vary -- which is precisely why I'm saying that trusts are not a panacea.

Which does not apply at all in any shape manner or form with the OP does it?

dogtown tom said: ↑
Uhhhh.......nothing requires anyone to list more than themselves on a trust.

In that case, why have a trust at all?

Because you have the choice to add or remove RP's as you wish at anytime.
You claimed an individual submission somehow offers better protection, yet have failed to describe what additional protection that would offer.

(And, btw, if the same person is both the sole trustee and sole beneficiary, the "doctrine of merger" kicks in and the trust becomes a nullity.

Uhhh.....so? This isn't a question of who owns the property, but who is the lawful possessor. Someone can have an ownership interest in an item that they do not lawfully possess. In any event it is perfectly legal to have a trust with no beneficiaries.

This is why you need a lawyer when you get into this stuff. The average layman has no idea what he's getting into.)

Well, who the hell do you think wrote the Single Shot Trust that Silencer Shop has been selling for over a decade with ZERO problems?

And if you remove everybody except yourself, you have just dissolved your trust.

Horsehockey.

I would expect the ATF to fight this tooth and nail. Their first argument would be that this is "tax evasion." However, the tax is imposed on a transfer, and no "transfer" has taken place when the trust personnel have changed, but the item is still held by the same trust.

You crack me up.
ATF doesn't regulate trusts, LLC's or corporations. In fact all they do is use a checklist of what constitutes a legal trust in the transferees state of residence.
And oh my gosh.....ATF has happily approved tens of thousands of Form 4's to Single Shot Trusts WITH ONE MEMBER AND NO BENEFICIARY!!!!
'Splain that Lucy!

 

[Elkins45]

So what I'm seeing as the big advantage of trusts is the ability to add a responsible party after the fact. And potentially as a way to execute a de facto transfer without incurring the transfer tax.

Correct?

 

[dogtown tom]

So what I'm seeing as the big advantage of trusts is the ability to add a responsible party after the fact. And potentially as a way to execute a de facto transfer without incurring the transfer tax.

Correct?

Almost.
The trust, LLC or corporation remains the lawful possessor.
Members of trusts, LLC's and corporations can change at any time.

 

[bwalker36]

So out of pure curiosity because I'm dumb and don't understand the whole governing law change for the single shot trust I started looking for a lawyer to potentially review and potentially set up a real one. Really just testing the waters, however the top results in google both have the claim that trusts allow you to get NFA items without photos/fingerprints/cleo signature. I was like ummm pretty sure you always need the first two no matter what and don't need the third at all, just a notification.

 

[dogtown tom]

So out of pure curiosity because I'm dumb and don't understand the whole governing law change for the single shot trust I started looking for a lawyer to potentially review and potentially set up a real one. Really just testing the waters, however the top results in google both have the claim that trusts allow you to get NFA items without photos/fingerprints/cleo signature. I was like ummm pretty sure you always need the first two no matter what and don't need the third at all, just a notification.

That was true prior to July 13, 2016.
ATF Rule 41F took effect that day and required fingerprints, photos and the RP questionnaire on all RP's at the time of submission.
For Individual submissions it eliminated the CLEO signoff.
Both require CLEO notification only.

 

[bwalker36]

That was true prior to July 13, 2016.
ATF Rule 41F took effect that day and required fingerprints, photos and the RP questionnaire on all RP's at the time of submission.
For Individual submissions it eliminated the CLEO signoff.
Both require CLEO notification only.

That's what I figured but it was kinda funny to see the advertisements as top trust lawyer's with their website out of date. Through work I have access to legal services, one of them is document review and another is Trusts without tax planning. I know NFA trusts are not normal trusts but they would fall under without tax planning IMO so i'm gonna see if maybe I can get it covered by work. My SF headquartered company is probably gonna love footing the bill for an NFA trust it works out haha.

 

[AlexanderA]

In any event it is perfectly legal to have a trust with no beneficiaries.

We have to step back and look at the theory behind trusts. The whole idea is to separate the "legal" from the "equitable" ownership. "Legal" title is held by the trustees, who hold for the benefit of the beneficiaries, who have an "equitable" interest. If you have no beneficiaries, or if the beneficiaries are exactly the same as the trustees, you have a "merger" of interests and the trust fails (becomes a nullity). If such a purported trust holds an NFA item, the item automatically reverts to individual ownership. It may take a while for the ATF to become aware of the change in status.

You also have to be aware of the "rule against perpetuities." A trust must, by its terms, have a finite ending. Generally, the maximum term of a trust is "a (named) life or lives in being, plus periods of gestation, plus 21 years." This has often been modified by statute, for example, by having a flat 90-year cutoff (Wyoming has a 1,000-year cutoff). "Measuring lives" can be chosen at random. They don't have to be anyone personally involved with the trust.

This is a minefield. That's why I personally tend to avoid trusts.

 

[dogtown tom]

We have to step back and look at the theory behind trusts. The whole idea is to separate the "legal" from the "equitable" ownership. "Legal" title is held by the trustees, who hold for the benefit of the beneficiaries, who have an "equitable" interest. If you have no beneficiaries, or if the beneficiaries are exactly the same as the trustees, you have a "merger" of interests and the trust fails (becomes a nullity). If such a purported trust holds an NFA item, the item automatically reverts to individual ownership. It may take a while for the ATF to become aware of the change in status.

You also have to be aware of the "rule against perpetuities." A trust must, by its terms, have a finite ending. Generally, the maximum term of a trust is "a (named) life or lives in being, plus periods of gestation, plus 21 years." This has often been modified by statute, for example, by having a flat 90-year cutoff (Wyoming has a 1,000-year cutoff). "Measuring lives" can be chosen at random. They don't have to be anyone personally involved with the trust.

This is a minefield. That's why I personally tend to avoid trusts.

You know the law better than ATF and the attorney that wrote the most popular NFA trusts in the history of NFA trusts..

 

[AlexanderA]

You know the law better than ATF and the attorney that wrote the most popular NFA trusts in the history of NFA trusts..

1. I don't want to belabor this. You're a nice guy.
2. Trust law is full of traps for the unwary. Boilerplate, "one size fits all" solutions are especially dangerous.
3. I think I know something about this stuff. Graduated January 1969 from the University of Texas Law School and was a member of the Texas Bar for years (before I let the membership lapse because I wasn't using it).

 

[dogtown tom]

2. Trust law is full of traps for the unwary. Boilerplate, "one size fits all" solutions are especially dangerous.

No doubt. And the trusts sold by Silencer Shop are clearly not valid in two states and they make that clear to buyers.

I think I know something about this stuff. Graduated January 1969 from the University of Texas Law School and was a member of the Texas Bar for years (before I let the membership lapse because I wasn't using it).

I have several active Texas attorneys buying the Single Shot Trusts with every silencer they buy. None has mentioned anything that may be a problem.