NFA firearms (also called Title II firearms) are handguns and other items regulated by the National Firearms Act (the “NFA”). Many people mistakenly refer to them as “Class 3” firearms or weapons. The NFA regulates the sale, use, possession and transfer of machine guns, shotguns and short-barreled rifles, silencers, destructive devices and AOWs.
In most states, it is LEGAL to possess some or all of these items. In addition to state regulation, federal law regulates these items under the NFA. Individuals, business entities, and trusts may purchase NFA firearms if permitted by state law. To obtain permission to transfer or manufacture these items, the Bureau of Alcohol, Tobacco, Firearms and Explosives (the “BATFE” or “ATF”) requires the completion of a Form 1 or Form 4 along with payment of $200 per a tax stamp.
While a traditional trust can be used to purchase NFA firearms, there are many problems with using a traditional trust and therefore only an NFA firearms trust should be used. It is best to work with a gun trust attorney to create a valid trust for NFA purchases.
No. CLEO Signature Required
The ATF requires that all persons obtain the approval of their Principal Law Enforcement Officer (the “CLEO”) as part of the application process to obtain a Title II firearm from another person or Class 3 dealer. CLEO’s across the country refuse to sign or even acknowledge ATF forms. There is no legal recourse in most states to force a review of these forms. If you use an NFA firearms trust to purchase a gun, Form 4 does not require a CLEO signature.
No fingerprints or photos are required.
When an NFA firearms trust is used to acquire Title II firearms, fingerprints and photographs are not required. This is a cost savings and can also significantly reduce the time required to take possession of items. Fingerprints often need to be retaken because they are not acceptable to the FBI’s criminal database.
Privacy
People who submit their ATF forms to their CLEO are often concerned about who will have knowledge of their firearms. They also express concern that they will be subjected to additional scrutiny because the police will know that they are in possession of these more restricted firearms. In most states, when an NFA firearms trust is used, neither CLEO nor the police are notified that you will be in possession or ownership of the NFA firearms.
Disability
If you become disabled, your family or friends are the ones who step forward to help you. By doing so, they may come into contact with the restricted items and risk unknowingly violating the NFA. An NFA firearms trust helps protect these individuals from violating the NFA by giving them clear instructions on what they can and cannot do.
Death
When you die, your individually owned firearms will become part of your “estate.” Probate procedures will be necessary to transfer your guns under your will or to your heirs and are part of the public record. Since a family member or friend usually handles probate proceedings, it is important not to put them at risk of unknowingly violating the NFA. With an NFA firearms trust, your firearms are not subject to legalization or public registration. Your beneficiaries will be protected because they will receive guidance on how and under what circumstances items can be legally transferred to others. If you have children, an NFA firearms trust has specific provisions in place to protect them and ensure that they do not receive ownership if they live in a place where it is illegal to possess NFA firearms and, more importantly, they are mature and responsible enough that you would want them to have firearms.
Co-owners and Authorized Users
If a person purchases Title II firearms, then he or she is the only one authorized to use or have access to the firearms. Many people incorrectly believe that it is okay to let others use their NFA firearms when they are in their presence. However, the NFA would consider this a transfer and it would be a violation of the law. When your spouse or someone else knows the combination to your firearms safe, you may be violating the restriction on allowing others to access or possess your firearms. Improper possession through constructive possession is a form of unauthorized possession and a violation of the NFA. If you use an NFA firearms trust to purchase Title II firearms, you can designate additional owners and authorized users. You can eliminate the risk associated with implied improper possession with a simple signature that authorizes that person to be in legal possession of the items. This can help protect you and your family from penalties for violating the NFA.
Reduction of the risk of legal changes
Many groups are trying to limit the ability to transfer firearms to family or friends. With an NFA firearms trust, an adult child, family member or friend can become joint owners of the trust. While ownership of the NFA Firearms Trust may be changed, the NFA Firearms Trust remains the registered owner of the firearms and no transfer has taken place under the NFA.
Penalties for violating the National Firearms Act can be severe.
Each violation of the National Firearms Act subjects the owner to confiscation of all firearms, 10 years in prison, and fines of up to $250,000. An NFA Firearms Trust provides guidance to trust creators, administrators and beneficiaries to help them avoid violating the NFA.
Benefits of an NFA Firearms Trust over a Corporation or LLC
Corporations and LLCs have annual fees associated with them. Business entities are not private, and much information about the people associated with them is in public records. Corporations and LLCs have annual state fees and other costs associated with running the entity. Business entities are often required to file sales and income tax returns. If you already have a business entity that is used to purchase NFA firearms, the business is at risk if managers or anyone else ever misuses a firearm. Every manager of a corporation or LLC can purchase firearms and subject the entity to penalties for violating the NFA. To make a change to the people authorized to use, buy, or possess firearms, the secretary of state needs to be up-to-date with changes in company management. This can cost money and take a long time to complete. Also, business entities do not deal with disability or death like an NFA firearms trust does. Unlike a corporation or LLC, an NFA firearms trust does not require any annual registration fees and no paperwork needs to be filed with the state. To make a change to an NFA firearms trust, you simply change the trust to change who can use, buy, or possess firearms without risk of criminal liability for violating the NFA.
Benefits of an NFA Firearms Trust over a Revocable Trust
There are over 50 differences between a traditional trust and an NFA firearms trust. Only some of the topics will be discussed here. Most trusts do not give instructions on how to buy, who can use, or who can have access to Title II firearms. They also do not provide the people involved in the trust with enough information to properly sell or transfer assets. If you become disabled, it may be necessary to sell some assets. When you die, these restricted firearms should be properly transferred. An NFA firearms trust provides information to determine if:
1. it is allowed to transfer the items;
2. the items are legal in the state to which they will be transferred;
3. the recipient is legally capable of possessing or using the firearms; and more important
4. The successor trustee is given the ability to determine in his or her own mind whether the beneficiary is mature and responsible enough to receive the firearms.
A normal trust allows the trust to be revoked even if its assets become illegal at the time of revocation. Also, a normal trust allows a trustee to resign while still in possession of restricted firearms. A trustee may also find that with a normal trust, an agent acting under a power of attorney may take actions that violate the NFA and subject them to criminal penalties.
Most people who use traditional trusts purchase NFA firearms incorrectly. They usually buy them individually and then transfer the guns to the trust. While ATF can approve a transfer from the dealer to the trust, it has never approved an individual transfer from the dealer or a transfer from the individual to the trust.
Invalid Trusts
Many Free Trusts on the Internet or from other sources have been found to be invalid. Lately we have seen many dealers and manufacturers give trusts to customers or help them fill out trusts to purchase firearms. The problem with using an invalid or not properly signed trust or a trust that is not complete is that the trust does not exist. If the trust does not exist, even if ATF approves a transfer to the trust, you will be in illegal possession of the firearm and subject to NFA penalties. Even valid trusts have substantial problems dealing with incapacity, death, and firearms transfers, directing trustees to take actions that create criminal liability for the beneficiary, put assets at risk of seizure, and put to both trustees. and beneficiary at risk of penalties for violating the NFA.