General Categories > The NFA Corner
NFA Cleo signatures going away but Trusts and Corps get some changes
dkarp:
So even when a bg check is not done on trust "responsible persons", (under current rules) they could still (theoretically) get caught by lying on a 4473 form....that is, if the BATFE has time to enforce an existing law....
Now what did Biden say about that.....??? Not enough manpower to enforce that particular law.....???
CitizenClark:
--- Quote from: dkarp on February 13, 2013, 11:56:43 AM ---Or do I not understand the difference between a trust, as a legal entity, vs an individual? Please enlighten me!
--- End quote ---
Are you asking (1) how a trust is different from an individual, or (2) how they are treated differently for purposes of the NFA?
(1) A trust is a relationship as to property in which a settlor transfers a legal property interest to a trustee who then manages the property for the benefit of a beneficiary or beneficiaries who have an equitable interest in the property. The usual trust agreement goes something like this: A (settlor) to B (trustee) for the benefit of C (life estate holder), and then to D (beneficiaries who take free and clear of trust). In most gun trusts, A, B, and C are probably the same people, and then D is probably a descendant or descendants. (NB: A, B, C, and D cannot all be the same person, or else you run afoul of the merger doctrine.)
(2) See this post for a good short list of some of the differences between registering NFA firearms to a trust instead of as an individual taxpayer: http://www.702shooter.com/community-awareness/advantages-nfa-trust/
Phantom:
--- Quote from: CitizenClark on February 13, 2013, 09:35:01 AM ---Forming a trust does not make it legal (or "semi-legal") for a prohibited person to acquire NFA firearms or any other type of firearm.
--- End quote ---
Isn't it possible to hide ownership in a trust though
Aren't NICS checks only done on the trust it's self and not the trustees currently or did i misunderstand the process ?
or was it Trustees added after the trust was all ready in place?
CitizenClark:
--- Quote from: Phantom on February 13, 2013, 05:45:59 PM ---Isn't it possible to hide ownership in a trust though
Aren't NICS checks only done on the trust it's self and not the trustees currently or did i misunderstand the process ?
--- End quote ---
I think you've misunderstood the process. See Chapter 9 of the ATF's NFA Handbook, especially 9.12.1:
--- Quote ---9.12.1 NFA Transfers to other than individuals.
Subsequent to the approval of an application requesting to transfer an NFA firearm to, or on behalf of, a partnership, company, association, trust, estate, or corporation, the authorized person picking up the firearm on behalf of, a partnership, company, association, trust, estate, or corporation from the FFL must complete the Form 4473 with his/her personal information and undergo a NICS check. See also, question P60 in the ATF FAQs.
--- End quote ---
In a trust the trustees are the legal owners of the trust property, though the powers normally associated with legal ownership are limited by the fiduciary duties owed by the trustee to the beneficiaries, who each have an equitable interest in the trust property. (The distinction between legal and equitable interests in property is an arcane one going back to the days when English courts of law and the Court of Chancery were separate institutions.)
This issue of a prohibited person potentially taking possession of an NFA firearm under the terms of a trust is why it is important that your trust make it clear that no prohibited person may be a trustee, and that no transfer of the trust property to a beneficiary should occur until after the appropriate paperwork has been filed and the transfer is approved by ATF. If your trust directs the trustee to transfer an NFA firearm to a prohibited person, that provision of the trust would be void as against public policy, but that doesn't mean it won't confuse the heck out of your successor trustee and potentially cause some real headaches down the road.
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