This weekend, I was shocked to read an article on Facebook that was from a popular gun website that instructed people that they did not have to engrave a firearms that they “made” using a Form 1 unless they were going to sell the firearm.  This author claims to have asked ATF a question and received a response from an individual who is associated with the ATF.

This is equivalent to asking a police officer to interpret the law.  Not only do they often make mistakes, but you cannot reply on what they tell you, because they are permitted to lie to you.

The biggest issues seems to be the confusion between the definitions for the words “Make” and “Manufacture” as defined in 27 C.F.R. 479.11

Make. This term and the various derivatives thereof shall include manufacturing (other than by one qualified to engage in such business under this part), putting together, altering, any combination of these, or otherwise producing a firearm.

Manufacturer. Any person who is engaged in the business of manufacturing firearms.

Using a Form 1 does not involve manufacturing under a license, but does involve making or manufacturing by one without a license to manufacture.

In other words, we are recommending that our clients continue to engrave when the make a firearm on a Form 1.  Be careful out there, there are lots of things written on the Internet that could cause a loss of liberty and freedom if act on bad information.

41F was published today in the Federal Register.  Here is a Link to 41F as filed which is similar to the draft that has been circulating.

Our Gun Trusts are fully 41P compliant and ready.  If you have a gun trust from a Gun Trust Lawyer® (with our copyright information on it) your trust is fine to use and will not have problems with 41F.

Some people will want to make some changes to their Gun trusts based on the new requirements of 41F.  Contact a Gun Trust Lawyer® to help you amend or amend and restate your current trust to help protect you and your family and deal with 41F in the manner you desire.

Some individuals will want to change their trust to a Gun Trust Lawyer® trust for:

  1. Privacy reasons;
  2. Asset Protection
  3. Protection from having to disclose their Schedule B firearms  or Non NFA firearms to the ATF;
  4. The ability to limit the number of responsible persons;
  5. Multi generational ownership
  6. Proper determination of responsible persons by removing beneficiaries from these who must submit fingerprints;
  7. The ability to clarify who the beneficiaries are to avoid having to submit additional wills or trusts to the ATF;
  8. The ability to easily add and remove trustees or co-trustees or beneficiaries; or to
  9. Clarification on who can use and possess NFA firearms.

41F will become effective 180 days from today or on Wed July 13, 2016.  Applications filed prior to July 13, 2016 will be handled under the old rules and the NICS check requirement.  Applications filed with the ATF after July 13 will have the CLEO notification, fingerprint and photograph requirement for responsible persons.

The biggest change for Gun Trusts and other legal entities between 41P and 41F is the change from the CLEO certification to a CLEO Notification for each responsible person.  In addition ATF significantly limited the definition of a “responsible person” as compared to what was originally presented in 41P.  The CLEO notification in 41F appears to be limited to trustees and co-trustees in most trusts, but can be expanded because of the terms of the trust to also include beneficiaries and others with the ability to manage and possess the NFA firearms.  These changes happened after more than 9500 comments  were received in response to 41P. – For links to the major comments see our 41P page.

The final rule attempts to clarify the definition of “responsible person” for trusts and legal entities but a lot of ambiguity because of the way it that it was written.   While it is clear that a trustee or co-trustee is a responsible person, many other trusts will create responsible parties by giving individuals the power to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearms for, or on behalf of the trust.

The important part here, is that if your trust gives the power to receive, or possess (hold or use) a firearm regulated by the NFA, those individuals will be considered a responsible person under 41F and be subject to CLEO notification and the other requirements.

In a gun trust a beneficiary or successor trustee would not normally be considered a Responsible person, but in many of gun trusts I have reviewed, the trust permits beneficiaries or others named in a trust or will or separate document to have possession and use the firearms.  These people, in my opinion, would be responsible persons under the the  Definition found in 27 CFR 479.11

The ATF has indicated that if a trust references another document, schedule or exhibit it will need to be submitted along with the trust when the application to make or transfer a NFA firearm is submitted. (After 180 days)

Some lower priced Gun Trusts seem to refer to beneficiaries named in your will or some other document outside of the trust.  This would mean that you would have to submit your will  or the other documents along with your trust for approval.  If you do not have a will, your trust may not be valid or your application may not be approved.  If your Gun Trust names another document for your beneficiaries, you may want to amend your trust to list your beneficiaries.

As additional form are released by the ATF, we will update our example pages and provide instructions and examples on how to fill out the forms.  Links to the current forms for a Form 1, 3, 5, 20 and other useful information on additional configurations and engraving can be found on https://www.guntrustlawyer.com/signing

This rule adds a new section to 27 CFR part 479 to address the possession and transfer of NFA items registered to a decedent but this does little other than to codify how the ATF previously dealt with estates.  To learn more about Gun Trusts from a Gun Trust Lawyer® complete the information request at the top right of this page.

Modify my gun trust?

Given the pending 41P/F implementation in the next year, we have been getting a lot of questions.

As with all legal answers, the answer is “IT DEPENDS“.  Let me clarify how 41P/F will impact an existing Gun Trust.

Should I modify my gun trust? The first thing you must determine is who is a responsible person under your trust.  In general all trustees and co-trustees will be considered responsible persons under the new definition for Gun and NFA trusts.  The draft of 41F which is expected to be published soon states that the DOJ has 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.   The primary issues here discussed in this article regard the right to possess or have an NFA firearm in their possession, even if supervised.

If your trust was designed by a Gun Trust Lawyer® then the trustees and co-trustees are generally the only responsible parties in your trust. If you trust is not from us, then it may include the people near your trustees and / or beneficiaries named in the trust.  In an effort to be more flexible, some trusts have been written to give non-traditional powers to beneficiaries and even other classes of people like bystanders.  This can create problems for several reasons including when 41F is implemented because you many not be able to get a fingerprint card for a 2 year old, or beneficiaries who ma be overseas, or it may be expensive and time consuming to obtain these for all the people who you might decide to let use your NFA firearms.  If you have one of these trusts, you may want to amend your gun trust prior to your next purchase (after 41F is implemented) to avoid the inability to make purchases because you have a trust which creates these powers.  I have had many discussions with lawyers around the country about why this was a bad idea in the past, and now it may up hurting the individuals and families who unknowingly acquired these.  In addition, in my opinion, it is a poor idea to include these types of powers because there is generally no way to bind a beneficiary to the terms of the gun trust.  In addition, a beneficiary may not be mature, responsible, or old enough to be bound even if they are of legal age.

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Tonight we found a copy of the proposed final rule for 41P.  It can be downloaded from this link 41P final.pdf

In general, most of what the public was concerned about was removed from 41P by changing the CLEO Certification requirement that was proposed for trusts to be a CLEO Notification.

It will not take effect until 180 days after publication in the Federal Registry so there is still time to purchase items under the existing rules and more reason than ever to create your Gun Trust now.

When 41F the new name for 41P takes effect it will not be retroactive.  That is all applications submitted under the current rules will continue to be processed. In addition, there is no requirement to comply with the new rules for previously approved applications or legal entities like Gun Trusts.  On page  198 ATF states “The final rule is not retroactive and therefore the final rule will not apply to applications that are in ‘pending’ status, or to previously approved applications for existing legal entities and trusts (Gun Trusts) holding NFA items.”

While I am still reading the 248 pages, so far here are the highlights.

  1. The final rule only requires that the applicant maker or transferee, including each responsible person for a trust or legal entity, provide a notice to the appropriate State or local official that an application is being submitted to ATF
  2. The final rule also adds a new section to ATF’s regulations to address the possession and transfer of firearms registered to a decedent. The new section clarifies that the executor, administrator, personal representative, or other person authorized under State law to dispose of property in an estate may possess a firearm registered to a decedent during the term of probate without such possession being treated as a “transfer” under the NFA. It also specifies that the transfer of the firearm to any beneficiary of the estate may be made on a tax-exempt basis.

Amendments to§ 479.62 proposed to change the following for Trusts:
1. Provide that all information on the Form 1 application must be furnished for each responsible person of the applicant;
2. Each responsible person must comply with the identification requirements prescribed in the proposed§ 479.63(b); and
3. Require the applicant (including, if other than an individual, any responsible person), if an alien admitted under a nonimmigrant visa, to provide applicable documentation demonstrating that the applicant falls within an exception to 18 U.S.C. 922(g)(5)(B) or has obtained a waiver of that provision.

 

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Many of our Gun Trust clients and readers have asked what they can do to help prevent the implementation of 41P.

As you may be aware, Firearms Industry Consulting Group®  has reported that the Administration is working through the Holiday Season on new regulations to limit our Second Amendment rights and that ATF intends to move forward with ATF-41p in the New Year.

The efforts to strip funding for 41P have been removed from the latest budgets and as a result will have no effect on implementing 41P.  What will be implemented and when it will be effective is still unknown, but it looks like that there will need to be an appeal.  Below are the two amendments that were removed that were designed to be an end run around 41P.

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Recently the ATF updated their final action date from December 2015 to January 2016.  For a complete list of articles and issues on ATF-41P see our 41P update page.

The most significant comments are listed on the 41P page link above.  What does the update mean? We believe that ATF will attempt to move forward with changes sometime within the next few months.  If you are considering forming a Gun Trust for NFA purchases, now may be the time to create your gun trust before changes are made.

Many people have been reporting that 41P will end the opportunity to take advantage of the benefits of a Gun Trust.  This is simply not true, it will not end gun trusts nor do away with many of the advantages of a gun trust.  ATF is talking about making responsible parties provide a modified CLEO authorization and other information, but this proposal was made prior to the ATF stating that the person purchasing an item with a Gun Trust sill needs a NICS check. The new position on the NICS requirement seems to do away with the CLEO certification as it is more comprehensive.

Joshua Prince has written a review of many of the issues which can be found here.

His summary states

Hence, all information currently suggests that if your application is pending at the time any new regulation goes into effect, your application will be grandfathered, as it complied with the regulations, when it was submitted. Obviously, everyone will want to know what constitutes pending (e.g. mailing, receipt or cashing of one’s check). Again, unfortunately, we don’t know; however, there are pretty good arguments that it should be triggered upon ATF’s receipt. For this reason, if you’re planning to file a Form 1, you may want to do such electronically through the eForms system and as soon as possible.

 

One of the great things about a well written gun trust is that it can be created to deal with multi state issues.  Many people move and even include co-trustees or authorized users who move or are in other states. If your gun trust is only written to deal with your state laws, the chance that it will provide incorrect or misleading advice to others involved with your trust is increasing.  We see these issues with many online trusts.

An ATF Form 20  is not required when you move states.  A Form 20 is only required for Title II firearms other than suppressors.  That being said, I recommend completing a Form 20 even for suppressors. For those of you who have our gun trusts, we include a section in our instructions that goes into detail on this topic.   Most police officers do not know that suppressors are legal (yes, I know this is hard to believe). Given that, I would much rather have a document from the federal government (the form 20) stating that I or other members of my trust are permitted to be in a state.  It is much easier and less expensive to have these issues resolved before you are detained than after your items are taken or you are detained.

With this in mind, you may also want to get a Form 20 approval for traveling to states and not just for a change of address to another state.  A Form 20 is not required if you are staying within the same state, even if you move within the state.  A well written gun trust will include information like this and on other common topics that come up over time.

If you would like to create a multi state gun trust or upgrade your current gun trust contact us using the form on this page and we will work with a Gun Trust Lawyer® in your state.

Can_Cannon_Production_2Many of our Gun Trust Clients have purchased a Can Cannon.  Previously the use of a Can Cannon was not regulated by the NFA, but recently the ATF determined that the use of the Can Cannon in conjunction with a receiver or a pistol creates an item regulated by the NFA.  This may be problematic if the NFA item is not legal in your state, but if they are legal there may be a relatively inexpensive way to solve the problem for those who already have an SBS.

X Products warned their customers that the ATF evaluated the Can Cannon and determined that it would be considered an SBR if placed on a rifle receiver, and an AOW if used on a pistol AR. See the ATF letter on the Can Cannon. The ATF has defined the Can Cannon as a shotgun. However, the device by itself is not a firearm and is perfectly legal to own. Attaching it to a firearm is illegal unless the user has the proper federal licenses.

If you have an SBS, you can add the Can Cannon as an additional configuration to your SBS by using this Additional Configuration Form we have prepared for use with our Gun Trusts, SBSs and multiple configurations.  Here is a link to using multiple configurations with a Form 1 for those not familiar with it

X Products claim to be working on a modification which may eliminate this need, but for now we would recommend that any of our clients using a Can Cannot by X products either use a Form 1 to build the appropriate NFA item or add it as an additional configuration to an existing SBR to be used with an SBR that has already been registered.  If you do not have a Gun Trust, contact us for more information on how forming a well drafted Gun Trust can permit you to legally use your Can Cannon and protect others from potential violations of the NFA.

David McCleary a Michigan Gun Trust Lawyer written about the problems he  has seen with the so called EasyTrust Gun Trust by Silencerco.  Today I received an email from him stating that in his opinion the trust is “horribly drafted” and “has many problems including improper legal advice”.  One example cited is the mistake that a Trust in Michigan must be registered.  This is simply not true and is misleading to consumers. A Gun Trust or other Michigan NFA Trust does not need to be registered  in Michigan.  While they can be, they do not need to be registered and Attorney McCleary recommends not registering them.  For those of you who have not heard about other problems with the Easy Trust, you may review them below or follow this link https://www.guntrustlawyer.com/2015/04/atf-statements-at-the-nra-firearms-law-seminar.html.

Back in April after the NRA convention, the ATF was commenting about some of the poorly written trusts and the problems and opportunities they would create for lawyers in the future.  Here is an excerpt from the Article in April.

With the recent increase in poorly written online trusts that have become available, ATF feels there will be a big business in fixing them down the road for those who have unknowingly received the free or fill in the blank trusts.

In my opinion, one of the worst examples of an online trust we have seen is the Easytrust being promoted by Silencerco.  According to them, there may be as many as 1000 people who have already received this trust which contains numerous problems. For a trust that is only 4.5 pages long, it appears to have even more problems than a Gun Trust drafted from Quicken.  The list of problems is huge, but the biggest problems include:

  • The trust permits a trustee to easily violation the NFA  throughout the document by not clearly prohibiting these violations.
  • The trust permits any trustee to sell your guns without your consent.
  • The Trust permits trustees to take away your gun rights, (from within the trust) if in their opinion you can’t handle your own affairs. Of course, your legal gun rights under the 2nd Amendment will not be removed, but your ability to use and have access to the guns in your trust can.
  • The trust directs distribution to beneficiaries upon your death without any written permission (a violation of the NFA)
  • The instructions incorrectly state that the trust needs to be registered in many states where it does not (seems to be similar to the problem we reported with the quicken trust)
  • Directs you to obtain an EIN number for their trust when it is not necessary, if requested from your bank. The instructions should state why an EIN number is not required and direct you on a proper response to provide the bank or how to deal with this common misunderstanding to tax law that many banks can initially make

(Updated 4/19/15 for a clarification). Continue reading

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