Anybody ever acquire an NFA item via a Trust?

[Sig_Dude]

Just curious, and if so, do you have a atory to tell? How did it go? Thanks for any replies!

[GunLawyer001]

The test of a trust is not whether the NFA examiner approves the transfer and you can take delivery of the toy. The true test of a trust is when someone challenges its validity.

If the trust is held to be invalid after one or more NFA items have been transferred into it, those items are in legal limbo, owned by nobody, and possessed unlawfully. You as the trustee are only allowed to possess the registered item by virtue of being an agent of the trust, so if the trust is defective, your authority is nonexistent, and you're committing a felony. At best, the items will be seized and forfeited as contraband. At worst, you'll be prosecuted personally.

This applies just as well to defective corps and LLC's, but corps and LLC's are created by the state, and if the state says you're in good standing, then you're in good standing. Trusts don't have that stamp of approval.

[Sig_Dude]

So I guess the next question is: what is the proper way to go about a trust? Get an experienced lawyer?

edit: I actually meant to say LLC: "living revocable"

[GunLawyer001]

An LLC is a Limited Liability Company, which is a hybrid of a corporation and a partnership. It can be owned by one person, there's limited liability just like a corp, and the taxes can be arranged like a C-corp. LLC's are easy to operate, easier than corps.

I don't recommend trusts for NFA holding, I recommend LLC's or corps. Partly it's just my gut instinct, I think trusts will blow up as an issue and be a problem in the future. Partly it's because trusts are easier to handle incorrectly, even if they're set up right.

[Sig_Dude]

Originally Posted by GunLawyer001

An LLC is a Limited Liability Company, which is a hybrid of a corporation and a partnership. It can be owned by one person, there's limited liability just like a corp, and the taxes can be arranged like a C-corp. LLC's are easy to operate, easier than corps.

I don't recommend trusts for NFA holding, I recommend LLC's or corps. Partly it's just my gut instinct, I think trusts will blow up as an issue and be a problem in the future. Partly it's because trusts are easier to handle incorrectly, even if they're set up right.

Is it possible for a non-layer to set up an LLC himself using say Quicken Willmaker or is that best left to an attorney?

[GunLawyer001]

Originally Posted by Sig_Dude

Is it possible for a non-layer to set up an LLC himself using say Quicken Willmaker or is that best left to an attorney?

I'm obviously biased in favor of using lawyers, but in this case you really need a good lawyer to set it up right, with the associated documentation.

There are a number of things that I tell people who call my office to do themselves, without paying me the money to do it for them. Filing challenges to PICS denials, obtaining their own criminal history reports, things like that. But creating a new LLC & operating agreement, then modifying it from its intended use as a for-profit business into a non-income-generating holding entity whose intent is to put NFA weapons into the hands of a natural person... that one I really recommend investing in competent advice. Lots of ways that you can screw up and have it bite you in the ass down the road, either with taxes or the ATF, just by checking the wrong box on the forms.

[Sig_Dude]

Where are you located and how many years of "gun" experience do you have? I'm in Delaware county. How much does it cost for a lawyer to set up a trust?

PM me if you don't want all details public.

[GunLawyer001]

Originally Posted by Sig_Dude

Where are you located and how many years of "gun" experience do you have? I'm in Delaware county. How much does it cost for a lawyer to set up a trust?

PM me if you don't want all details public.

I don't solicit business directly from the PAFOA site, but there are several gun-friendly attorneys that DanP can point you to.

[SigForLife]

Sig_Dude: I am not sure if you are following but an LLC (Limited Liability Corp), a Corp, and a Trust are completely different animals. Gunlawyer was explaining that his preferred method is the LLC or Corp. LLC and Corps are more flexible than a trust, but they require more work (annual tax return filing). Also, in the past, there have been yearly fees associated with some forms of Corps, which currently there is not, but could come back into play. I have spent a lot of time in the Trust realm, and if properly drafted, are a once and done legal entity. However, if you are planning on buying and selling a lot of NFA firearms, I would have to agree with GunLawyer that they are NOT the way to go. My understanding is that the BATFE is preparing some new regs on Trusts but what they will be and what, if any, limitations will be included, has yet to be seen.

P.S. One other possible benefit to a Corp is the ability to transfer ownership in the Corp to another person without incurring "transfer" fees of the NFA weapons. There is the *possibility* that if the ability to transfer NFA weapons was limited (AKA became illegal by law) that the Corp could be sold to someone else, where the weapons would continue to be an asset of the Corp, where the Corp never dies (if properly handled). However, while in the past I have proposed this idea, I find it very hard to believe that the BATFE would overlook this issue in any legislation that is passed.

[ungawa]

Originally Posted by SigForLife

Gunlawyer was explaining that his preferred method is the LLC or Corp. LLC and Corps are more flexible than a trust, but they require more work (annual tax return filing).

LLCs do not require any tax filing at all if you do not have a profit to declare and if you are not declaring a loss. I don't expect a NFA LLC to ever file taxes unless you have a profit selling a firearm. Then use a Schedule C. Obviously, I can't give legal or tax advice so contact your accountant. I've never paid more than $200 per year to get my entire return done with far more complex LLCs, corps always cost more.

Also, in the past, there have been yearly fees associated with some forms of Corps, which currently there is not, but could come back into play.

Very true. There used to be fees for LLC, too, I think, but they were pretty small. Always a possibility.

P.S. One other possible benefit to a Corp is the ability to transfer ownership in the Corp to another person without incurring "transfer" fees of the NFA weapons. There is the *possibility* that if the ability to transfer NFA weapons was limited (AKA became illegal by law) that the Corp could be sold to someone else, where the weapons would continue to be an asset of the Corp, where the Corp never dies (if properly handled). However, while in the past I have proposed this idea, I find it very hard to believe that the BATFE would overlook this issue in any legislation that is passed.

Now you are both using my idea without proper credit. Please show me your post on this forum prior to 2008 where you proposed this.