Over the last week, we have had many people asking as series of questions. The have primarily been questions like the following
- What is status of my current Gun Trust?
- Is ATF eliminating Gun Trusts?
- What would happened to my current Form 1 and Form 4 applications that are in process?
- Should I form a Gun Trust now given the recent proposal by the ATF?
- Should I put my regular firearms in my Gun Trust?
This blog will address Gun Trusts and their current use as well as if the ATF implemented the changes as outlined in their Proposal. While we feel that it is unlikely that the ATF will implement everything suggested in their proposal we will use this as a worst case.
What is status of my current Gun Trust?
Your current gun trust is still valid and as of this time nothing has changed. You can still submit Form 4 and Form 1 applications, add and remove authorized users, and add non NFA firearms to your Gun Trust. If fact, if there is anything you are thinking of purchasing, you should do so now. We expect there to be a rush to buy NFA firearms over the next 90 days. To reduce the time associated with approval, you should submit your Form 1’s electronically and you should ask your dealer to submit your Form 4’s electronically.
Is ATF eliminating Gun Trusts?
ATF cannot eliminate gun trusts, only congress would have this power. THe National Firearms Act defines a person as an individual, trust or business entity. A Gun Trust is a special type of trust. While many so called gun trusts are nothing more than traditional trusts, a Gun Trust by a Gun Trust Lawyer® has been rewritten from the ground up to deal with firearms and their unique set of circumstances. While other gun trusts are really a traditional revocable trust, they can also be used to purchase NFA firearms but may place your family and friends of risk of violations of the NFA if they do what the trusts say to do.
What would happened to my current Form 1 and Form 4 applications that are in process?
We expect based on history that the ATF will continue the processing of all applications submitted before changes take place (at least 90 days). Given this, you may want to submit additional applications for purchases you would have made in the next 6-12 months at this time, in case the proposal is approved and requires a CLEO signature in the future as this may be hard to obtain. Remember online sumittions may be as much as 8 weeks faster
Should I form a Gun Trust now given the recent proposal by the ATF?
If you are thinking about buying firearms restricted by the NFA, now may be the time to purchase them. Using a Gun Trust will make the process simpler and currently it does not require a CLEO signature, fingerprints, or photos. If privacy is a concern to you, now may be the last opportunity to obtain Title II firearms under the current regulations.
Should I put my regular firearms in my Gun Trust?
Yes, A properly designed Gun Trust should be able to handle normal firearms without the use of a Schedule A or B. The problem with using Schedules is that ATF requires all schedules mentioned in the trust to be submitted with your trust. This means that you will create a de facto registration of all of your firearms. I have heard that some people with Schedule Bs have been told to send a fake or blank Schedule B to the ATF. I think you face serious consequences if you send an untruthful representation or false documents to the ATF regarding firearms and or the associated taxes. Remember the penalties for violation of the NFA are tax based penalties which are similar to other IRS violations. Our Trust do not use Schedules to list the firearms and as such are fine to use for your regular firearms as well as NFA FIrearms. Many people who do not even own NFA firearms use our trusts to protect and manage their firearms and related items.
Joshua Prince with the Firearms Industry Consulting Group has declared September 3rd the National Firearms Act Day of Reckoning in response to the recent proposal by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) to implement Chief Law Enforcement Officer (CLEO) signatures for fictitious entity applicants, as well as, instituting a Responsible Person (RP) definition applicable to the different roles within those fictitious entities.
They have prepared several sample letters to be submitted to your State and Federal Representatives, as well as letters for FFLs to submit to the US Small Business Administration.
Before simply sending out the sample letters that FICG has drafted and which are downloadable below, we are asking that you take time to review the sample letter and modify it, explaining your own background and circumstances, how this proposed rule, if enacted, would effect you and include other personalization, especially if you have a prior relationship with your Representative. Form letters have very little impact on our Representatives. Therefore, it is imperative that we ALL take the time to ensure that our Representatives are aware that we took time and effort in preparing the communication and expect a coherent and thoughtful response. You should also be extremely clear to all of your Representatives that you are their constituent and their decision on this matter will have an effect on the next election cycle.
For individuals who have been denied a CLEO signature, you can download a sample copy of the letter FICG has prepared for you to submit to the ATF here.
For FFLs, you can download a sample copy of the letter FICG has prepared for you to submit to the SBA here.
To read the entire blog in its entirety click here.
I would suggest that everyone check with their local CLEO and see if they would be willing to sign and submit the appropriate letters once the comment period has begun.
It seems that there has been a lot written about the NFATCA recently because of the recent proposed changes to the way NFATCA wants to deal with Trusts and define responsible parties. While it is clear that the NFATCA did not request the changes that have been proposed, it might be fair to say their efforts opened the can of worms and perhaps given the current political client, it might not have been the best time to try to eliminate CLEO. Imagine the shock to President Obama and the Administration to find out that Machine guns were legal. For years Obama has been stating that everyone knows that Machine Guns are illegal.
The proposed changes are not in anyones best interest. I do expect to see changes to what we have seen and the NFATCA will be active in helping to justify the absurdity of the current proposal. In addition, we will be working on proposed actions and responses to the ATF once the comment period opens.
It looks like an attempt to remove the CLEO certification by the NFATCA which began in 2009 has backfired and now the ATF is wanting a modified CLEO signature, NICS check, fingerprint cards, photograph, certificate of citizenship for every responsible party of a fictitious entity. You can obtain a copy of the proposed rule here
While ATF already has a definition of responsible party for dealers, they are proposing the following for fictitious entities:
Depending on the context, the term “responsible party” includes any individual, including any grantor, trustee, beneficiary, partner, member, officer, director, board member, owner, shareholder, or manager, who possesses, directly or indirectly, the power or authority under any trust instrument, contract, agreement, article, certificate, bylaw, or instrument, or under state law, to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of the entity.
As far as the modified CLEO, the ATF seeks public comments regarding whcther it is feasible to ask CLEOs to certify that they are satisfied that the photographs and fingerprints match those of the responsible person.
For example, some responsible persons may bring their fingerprint cards to the CLEO once already stamped, and some legal entities may have the paperwork, fingerprint cards, and photographs for each of their responsible persons couriered to the CLEO office. In such instances, ATF seeks comments on whether CLEOs will have enough information to certify that they are satisfied that the photographs and fingerprints match those of the responsible persons, or if changes are needed to this proposal.
If you plan on submitting comments the ATF, the Prince Law Firm has a good guide and recommendations that they have posted. It might be a good idea to see if your CLEO would sign such a document, perhaps enough comments indicating that their CLEO would not sign such a document may make a difference.
Remember the ATF has not yet changed the rules and is only at the beginning stages of changing the rules and forms.
If you are considering purchasing a Title II firearm, you might want to do so before any changes are implemented. Several times in the past there have been proposed changes that were not implemented but it does seem likely that there will be some changes in the future.
If and when changes are made and implemented, we will be able to address them in our documents appropriately. Our ArmsGuard Protector allows us to make these types of changes even if your trust is irrevocable. If your trust does not have an ArmsGuard Protection you may want to contact us about adding one.
Below is what was posted on the whitehouse.gov website. It is clear that the whoever wrote this does not understand the law and you will notice a lot of anti firearms language and an anti gun rights slant to the message.
Closing a Loophole to Keep Some of the Most Dangerous Guns Out of the Wrong Hands
- Current law places special restrictions on many of the most dangerous weapons, such as machine guns and short-barreled shotguns. These weapons must be registered, and in order to lawfully possess them, a prospective buyer must undergo a fingerprint-based background check.
- However, felons, domestic abusers, and others prohibited from having guns can easily evade the required background check and gain access to machine guns or other particularly dangerous weapons by registering the weapon to a trust or corporation. At present, when the weapon is registered to a trust or corporation, no background check is run. ATF reports that last year alone, it received more than 39,000 requests for transfers of these restricted firearms to trusts or corporations.
- Today, ATF is issuing a new proposed regulation to close this loophole. The proposed rule requires individuals associated with trusts or corporations that acquire these types of weapons to undergo background checks, just as these individuals would if the weapons were registered to them individually. By closing this loophole, the regulation will ensure that machine guns and other particularly dangerous weapons do not end up in the wrong hands.
First I will address what was posted.
- The NFA imposes a restriction on the transfer and possession of certain firearms. Not all prospective buyers must undergo a fingerprint-based background check.
- Most people using Gun Trusts are purchasing suppressors, these are not dangerous weapons, in fact a suppressor is not a weapon unless you hit someone with it. Most suppressors are round and do not have a sharp edge. A butter knife is more of a weapon than a suppressor
- Next, prohibited persons and felons cannot easily evade the requirement of a background check to gain access to machine guns anymore than they can with a regular firearm. Most dealers will do a NICS check on anyone purchasing a Machine Gun. As far as transfers from non firearms dealers, there are stricter requirements on transfers to individuals and the same requirements as regular firearms to trusts or corporations. No criminal would subject themselves to notifying the ATF of their intent to purchase a machine gun, wait 6-12 month to be able to receive the firearm, pay a $200 tax, and pay an extra $10,000 – $20,000 to purchase a legal machine gun when illegal machine guns can be purchased or made easily without waiting or notifying the ATF. This logic is flawed.
- There is a process where the ATF can change the rules and requirements in the procedure for purchasing these items. This is not a done deal and as of now what might be proposed is unknown but it will likely include something similar to a NICS check or fingerprint cards.
So what does this mean for your current Gun Trust or one you are ready to create?
This does not mean Gun Trusts are dead or useless. NO. In fact, today many people who only own regular firearms use Gun Trust to manage their firearms. It is the responsible way to own firearms to prevent your family and friends from being subjected to an accidental felony.
Current estate planning and state laws are flawed when it comes to the disposition of firearms to those who survive you. They treat a firearm the same as a bank account. Firearms owners are generally very responsible people and would not want to put their family or friends at risk because of their death.
Our Gun Trusts deal with these issues and allow those who survive you to make smart and intelligent decisions based on the geographical, legal, and emotional issues that will be unknown until you die.
In addition, our Gun Trusts can be setup to last from generation to generation while providing asset protect for your firearms. Yes it is possible to protect your firearms from creditors, divorce, divorce of a child or grandchild, and even from the creditors of your descendants.
Any new requirements will likely slow down the process of obtaining approval from the ATF and may make the new electronic filing that the ATF introduced obsolete. If you are thinking of getting a gun trust to purchase a Title II firearm, now may be the time to do so before new regulations are enacted which change the way they work.
As we have not seen any of the proposal and once it is published there will be a 90 day comment period prior to the introduction of any changes, it is hard to speculate on how or what may be changed.
We do not think this will significantly make a difference to our typical gun trust client as we do not provide gun trusts to felons, domestic abuser, or other prohibited persons. In fact, our trust would not be valid if used by a prohibited person.
Our Gun Trusts are created so that if the law changes we can address the changes in law by changing the trust. It is likely that most if not all changes can or will be addressed as they are made known.
Today there has been much news about an action or executive order to help ensure that people who should not be able to own NFA firearms are not permitted to do so using a Trust.
First, our Gun Trusts, have never allowed a prohibited person to legally purchase, or be authorized to use firearms or ammunition. This is one of the significant differences between a real Gun Trust from a Gun Trust Lawyer® like we provide, and other so called gun trusts or regular estate planning Trusts.
If you are a criminal, addicted to drugs, a user of illegal drugs(under federal law including medical marijuana), or prohibited to own firearms under local, state, or federal laws, you cannot use our documents to create a valid trust. In addition, any co-trustee or authorized users who are prohibited cannot be added and any attempt to do so is void.
In regards to what is being reported in the news today, at this time we have not seen anything in writing to indicate what was done, what will change, or how it or when any changes will be implemented. At this time, some reports indicate they are proposed changes that will go through a 90 day review at ATF, prior to ATF making any decision to implement any changes. Once we have seen the documents we will be in a position to comment.
The Prince Law Firm has a good article on the ATF Rulemaking Process and potential implications for Gun Trusts.
If you want to keep up to date on any changes or updates to this issue, you should watch this blog or subscribe to it by using the subscribe function in the upper right under the state map or clicking on the subscribe image below.
Last Updated 8/29
In Ohio a NFA Trust or Gun Trusts can own all types of firearms including those regulated by the NFA.
There are several type of Class 3 items that are restricted by the National Firearms Act.
Each state can impose additional restrictions on the sale, purchase, and transfer of Title II firearms – (Those sold by FFLs with a Class 3 SOT) in addition to the compliance that is required with the National Firearms Act.
In Ohio you can own the following items that are regulated the the National Firearms Act
Any Other Weapon (AOW)
Destructive Devices (DD)
Short Barreled Shotguns (SBS)
Short Barreled Rifles (SBR)
Follow this link to find out more about Ohio and NFA restrictions on Title II Firearms
If you would like more information on What a Gun Trust is and why you might need one as well as how to identity bad gun trusts you can contact us.
Updated Aug 29, 2013
Yesterday, I decided to try out the ATFonline.gov Eforms submission. I found the process very easy to do and while a little confusing the first time, it seems rather intuitive. Below are the steps I followed:
- Register for an account at ATFonline.gov. The system is very picky and must be used with IE 8 or a recent version of Safari on OS X. Sorry no Firefox, Chrome, or even IE 7.
- Log in.
- Select the Form 1. Better to use the bar and move it with the mouse, it is very difficult to scroll through the forms. ATF needs to switch this to a drop down menu.
- Application – this is where you state whether you are tax exempt or will be paying a tax.
- Applicant – Select that you are not a FFL and then complete your information. You should list the Trust name as the Licensee / Permitee Name.
- Add line items. You can use one application for multiple items. I choose to only do one SBR. It walked me through the process of selecting the manufacture from a list.
- Upload electronic documents. This is where I uploaded my scanned Gun Trust Documents.
- Certify that Under Penalties of Perjury, I Declare that I have examined this application, including accompanying documents, and to the best of my knowledge and belief it is true, accurate and complete and the making and possession of the firearm described above would not constitute a violation of Chapter 44, Title 18, U.S.C., Chapter 53, Title 26, U.S.C., or any provisions of State or local law.
- Enter credit card payment information
- Sign and Submit. By clicking a check box, your application will be submitted.
Within a few minutes I received a confirmation email showing that I had submitted my application and it was Pending Research because the manufacture I had selected was not listed in their database. This morning I received a new update saying that my status was changed to Submitted/In Process. I will keep updating this blog as I receive more information but it already feels faster than the paper system.
It was interesting to see that there was no certification of citizenship that was required my many ATF agents in the past. We had always taken the position that a Trust is not a person and as such cannot have a citizenship. If you are submitting the paper forms, we still recommend submitting the Certification, in case you agent wants it. For instructions see https://www.guntrustlawyer.com/certification.html.
ATF Online submission of Form 1 Status Updates.
- Thursday August 8, 2013 Electronic Form 1 Submitted to ATF online
- Friday August 9, 2013 Status changed to Submitted/In Process
(with paper it will take 1-2 months and as much as 6 months to cash your check and change the status to In Process
NFA GUN TRUST CLE
I have been asked to teach a CLE on Gun Trusts on September 11, 2013 for LawReview CLE.
Traditional estate planning can be problematic when dealing with firearms. This course will explain how a Gun Trust is designed to acquire, manage, use, and transfer firearms, including those restricted by the National Firearms Act of 1934.
The course outlines the different types of firearms, federal and state laws, as well as an analysis of how to use a Gun Trust.
The agenda will cover
Types of Firearms
State Law Federal Law
Types of Ownership
The Gun Trust
Ethical and Malpractice Issues Conclusion
If you are an attorney and interested in becoming a Gun Trust Lawyer, you can also request information by filling the contact us form and checking the box to indicate you are an attorney.