One reason NOT to use a personal trust

[berettaprofessor]

As a fair warning to other THR'ers; some years back, I used a personal trust in my name to register a 22LR suppressor. Recently, we are in the process of revising said trusts and the separate trust of my wife and I are being revoked and merged into a single family trust. To be safe, I directly emailed the ATF yesterday asking if I could use a Form 5 transfer and be exempted from transfer fees under the "Firearm is being transferred to a lawful heir or by operation of law." exemption.

On the plus side, a polite ATF NFA-branch specialist responded by email in under 24 hours. On the minus side, I have to submit a Form 4 and pay a $200 tax.:banghead:

Again.:banghead:

For the same 22lr suppressor.:banghead:

Note to any current presidential candidates listening in; I'll vote for anyone, from any party, who will propose legislation taking suppressors off the NFA.

 

[Ed Ames]

You are trying to move to a single family-wide NFA-specific trust? As in your wife had NFA items in one trust, you had them in another, and you want to merge? Or are these general trusts that happen to have an NFA asset? Do both trusts have NFA items or only one?

However you answer the above, I don't understand revoking both trusts in this instance.

Assuming there is only the one silencer you mentioned, why not leave that where it is, and consider that trust as the family NFA trust? Create a second family non-NFA trust. Move non-NFA assets from your existing trust to the family non-NFA trust. That gives you finer control over who can be trustees for the NFA item(s), avoids a paper-shuffle $200 transfer, and still leaves you with a family estate trust. Seems like a win all around. What am I missing?

I am not a lawyer.

 

[kanook]

If you had the suppressor in your name and not in a Trust, but wanted to put it into a Trust, it will be $200.

If you had the suppressor in your Trust and wanted to remove it from the Trust and put it in your name, it will be $200.

If you formed a a corporation to purchase the suppressor and now wanted to dissolve the corp., $200 to move the suppressor to your Trust.

Until Suppressors are removed from NFA, for me, the Trust route is the best way to go.

 

[jmorris]

The trust I use for NFA toys is all it was created for and all that it has in it.

 

[pjeski]

Why can't you let the original trust continue to exist with the sole purpose of possessing the silencer?

 

[dogtown tom]

berettaprofessor As a fair warning to other THR'ers; some years back, I used a personal trust

No such beast as a "personal trust". While you may be the only name mentioned as a grantor or member, the trust is the legal possessor, not a person.

pjeski Why can't you let the original trust continue to exist with the sole purpose of possessing the silencer?

This.

 

[berettaprofessor]

To those who want to know why I didn't just continue the original trust as an NFA-only; we already revoked it before I realized there was a problem. Sue me, I'm stupid. Call it a $200 learning experience. And it's certain that the small-town lawyers around here aren't familiar with NFA items on the Schedule A of trusts.

Ed Ames; my wife and I each had separate trusts. That's the way the lawyers wrote them in 2002. In 2015, the estate planning lawyers think the two individual trusts should be combined into a family trust. The suppressor was in my individual trust. That trust is closed. I had to transfer it to the family trust. And I was not stupid enough to keep my individual trust open and just rewrite it only as an NFA-item trust. It would have to been completely rewritten, btw, because it had all the non-NFA assets and beneficiaries etc, in it.

dogtown_tom; okay, it's not a personal trust. It's an individual trust.

 

[Ed Ames]

To those who want to know why I didn't just continue the original trust as an NFA-only; we already revoked it before I realized there was a problem.

Ouch. Out of curiosity, what does it mean to revoke (I'm not a lawyer) and can it be unrevoked?

I ask because it seems like if you just declare the trust kaput, that would be a transfer before a form 4 was approved, and that's a bad thing. Again, not a lawyer.

Ed Ames; my wife and I each had separate trusts. That's the way the lawyers wrote them in 2002. In 2015, the estate planning lawyers think the two individual trusts should be combined into a family trust. The suppressor was in my individual trust. That trust is closed. I had to transfer it to the family trust.

So it sounds mostly like your lawyer in 2015 wasn't familiar with NFA rules and gave you bad advice.

 

[JohnKSa]

...we already revoked it before I realized there was a problem...

This sort of sounds like there was (or is) a period with no valid trust covering the item in question. If that's the case, and I were in your place, I think I'd want this thread deleted.

 

[Arizona_Mike]

Do you realize that revoking the trust puts you in possession of an unregistered silencer? Your lawyer just helped you commit a felony.

You should had transfered all non-NFA items to the new joint trust, then made both of you trustees of the residual NFA trust. If $200 was really burning a hole in your pocket, you should have transferred the silencer before dissolving the trust. In fact if I were in your situation, I just would have made you trustees of one another's NFA trusts and created a new trust to deal with whatever you intend to do financially.

Also if you transferred all non-NFA items out of trust, language dealing with those items would just be redundant. There would be no reason to amend or redraft the nfa trust for that reason. I can't imagine anyone drafting a trust so poorly that it would need amendment to transfer assets out.

As far as the original subject line goes, grossly and criminally mishandling an NFA trust is not an argument against one.

PS. A trust is a trust whether it has one or multiple trustees.

 

[mooner]

My lawyer advised that NFA trusts should be for NFA only. If you want any other type of trust fine, but don't mix the two. There is no benefit to using your NFA trust for other items.

 

[Arizona_Mike]

My lawyer advised that NFA trusts should be for NFA only. If you want any other type of trust fine, but don't mix the two. There is no benefit to using your NFA trust for other items.

It avoids a lot of potential mistakes and confusion. Also good advise because there is absolutely nothing wrong with having multiple trusts.

Mike

 

[medalguy]

Another good reason to have an NFA trust drawn up by an NFA friendly attorney. He's the guy to advise you on all things trust.

 

[Arizona_Mike]

Actually I've chatted with NFA trust attorneys who want input from a regular trust attorney in your home state. It's a matter of specialty.

I think in the OP's case an attorney without NFA/gun knowledge gave him bad (even illegal) advice.

Mike

 

[Aaron Baker]

There's plenty of attorneys in any given state that understand trust law. There's far fewer that understand the National Firearms Act.

You need one that understands both if you want legal advice about NFA trusts.

Aaron

 

[Theohazard]

This thread is a perfect example of why it's a good idea to use an NFA-specific trust set up by a lawyer with specific knowledge and experience with the NFA. And any follow-up questions or services regarding the trust should be addressed by either that same lawyer or another trust lawyer who is also familiar with the NFA.

As soon as the OP revoked his trust, he was in possession of an illegal silencer, and until his new Form 4 comes back, he's still in possession of an illegal silencer. Given that Form 4s are running 4 - 5 months in most places, I'd recommend finding an NFA trust lawyer and see about getting the original trust un-revoked ASAP (if that's even possible; I'm not a lawyer so I don't know if it is).

The lawyer who set up my trust specifically discussed this issue with me. He pointed out that non-NFA-specific trusts often contain language that allows the trust to be revoked and the trust assets distributed amongst the trustees. And, of course, this means you're now in possession of illegal contraband in the event that the trust owns NFA items. So my trust is specifically worded in a way that specifies that all NFA items must be properly transferred out of the trust before it can be revoked.