SBR Questions

[Crumley25]

It's strongly recommend purchasing any NFA restricted items in a bank account owned by
the trust to avoid the potential allegations that the paperwork that gets approved does not comply
with the actual transaction. Although it is possible to properly document the purchase of these items
without a separate trust bank account, the risk of the potential exposure to criminal charges is
increased significantly unless a bank account is used.

Most individuals, businesses, and Trusts do not make the purchase correctly and therefore
subject themselves to unnecessary violations of the NFA. Although the chance of being arrested is
slight, the proper purchase of items when using a Form 4 is so simple that it is an unnecessary risk.
You never know when an ex spouse, business partner, angry neighbor, or law enforcement officer
will choose to report your improper purchase of the firearms to the ATF in an effort to subject you,
your family, and friends to the penalties associated with an illegal weapon, improper purchase,
improper possession, and improper transfer of items restricted by the NFA. In addition, should
someone ever want to remove many of the NFA firearms from the public, what better way than to
declare many of them illegal and confiscate and destroy them as required under the NFA.
Remember, once an item is illegal it cannot be made legal.

When you purchase a Title II firearm with the use of personal funds or a personal credit card,
you create a series of transactions that creates multiple violations of the NFA. Most trust purchases
receive approval from the ATF to allow the dealer or transfer agent to transfer the items to the
named trust. The technical violations occur when the dealer does not transfer the items to the trust
but sells them to the individual, and the individual transfers the items to the trust. Neither of these
transactions have been approved by the ATF and are therefore improper.

What if I already purchased the Items?

If you have already purchased the items (that will be transferred with a Form 4) with personal
funds or a credit card, you should prepare a letter to attach to your trust which states that you
contributed $____ to the TRUST by paying ____________(the seller) for the
__________(the item(s) you purchased) through _________(method of payment). This document
needs to be signed by a trustee showing the acceptance of the benefit to the trust as well as the
contributor of the funds to the trust. This letter should be attached to the trust and submitted to the
ATF when you send in your documents for approval. You should also keep a copy of this letter with
your original trust for future documentation and proof.




Not sure that I actually undersand all of this, First off how do you get a trust it's own bank account.
I am New to the SBR world, in fact just now looking into getting my first one and a trust seems to be the way to go. Here is my problem though, I already have the rifle just planning on having the barrel cut down, would there be a different procedure for adding this to a trust, also if I wanted to pay for it with the Trust account would I just pay for having the barrel cut?

 

[Laxguy59]

If the purchase was improper, do you really think the ATF would approve it? Thats a bunch of overly litigious BS if you ask me. A member of the trust can purchase for the trust simple as that.

 

[No2sc2]

Grantor is the owner of the Trust. It's like Steve Jobs buying fully automatic m16 for his company, Apple via Corporate in his form 4. I don't know how to explain it but let's put it this way, 99.5% transfer fee that was paid, isn't paid by Trust account, so if it's not legal, why NFA still cash the check within a week of receiving?

 

[Quiet Riot Firearms]

Not a lawyer, but putting the item on the schedule a of the trust is equivalent to the long winded letter you would attach. By putting it in that schedule, you are saying it belongs to the trust, not you. How it got paid for is pretty moot, all the law cares about is ownership/possession.

 

[Twitch2120]

As long as uncle sam got his $200 the ATF is happy. If the money was dirty then i could see an issue but if you went to work for that $200 then there is no issues.

 

[EddyT]

Use a money order.
From: "your trusts name" (include the address)

Problem solved.

 

[Quiet Riot Firearms]

^^ sounds like the best option

 

[azb]

Whoever wrote that (where did it come from anyway?) is really not very well versed in trust law. While what he says is true for an estate trust that handles many millions of dollars of property, it's simply not required for a revocable trust with a dozen or so NFA items in it. They are two completely different kinds of trusts, and don't follow the same rules, requirements, or scrutiny.

Why would it be necessary in an estate trust worth large sums of money? Taxes. Trusts are liable for taxable income, and the paper trail created by using a bank account owned by the trust can keep the taxable income liability clear. Otherwise, Joe Billionaire might be sued for non payment of taxes by hiding assets in a trust to avoid paying income tax. This is a very complicated part of estate trusts, and this is where a good estate lawyer is a very, very good idea.

This is not an issue with personal trusts with NFA items in them. While NFA items sometimes do appreciate in value, the amount is so far under the threshold of paying taxes on it, it's simply not an issue. Many estate lawyers do not understand this because they are experts in estate trusts not NFA trusts, and they are different. They may assume the same laws and rules apply, but they don't have the experience with NFA trusts to understand that's not the case at all. So they commonly suggest things that are way off for a simple revocable, personal, NFA trusts. (This is also why it's a good idea not to use your NFA trust for estate items, use two different trusts if you have valuable estate items you wish to leave in a trust)

As someone else mentioned, as grantor/settlor of the trust, you are the source of most everything in the trust, either directly or indirectly. It is your job to place items in the trust, and it is your job to maintain the trust as you see fit, by adding or removing items, trustees, or whatever else you think needs to be maintained for the overall benefit of the trust. This is not a loophole or an oversight, this is the grantor/settlor's responsbility, and the primary reason the trust exists. So if you buy an SBR or suppressor for your trust and pay for it with a credit card, it is perfectly legal, expected, and above board. A lawyer is not needed, a notary is not needed, even a witness is not needed. This is a private document between you, the trustees, and the beneficiary. Obviously, making neat, organized changes and notes and having them initialed by a trustee or even notarized can't hurt if there are ever any disagreements between trustees and/or beneficiaries, but in 99% of our cases with our NFA trusts, this is never going to be an issue.

Many people also don't understand the Schedule A. This is not a list of items in your trust. It can be, but it doesn't have to be, and it really shouldn't be. The schedule A is simply created and populated with something, anything really, to show that the trust is funded. In many states, Georgia included, a trust isn't valid if it's not funded. (Although revocable trusts are not published, recorded, or even examined upon your death as they are private documents, this is mostly just for using the trust for things like NFA items, where the trust has to pass scrutiny of the BATFE) All that needs to be on the Schedule A is one item of any value. It can be a book, your false teeth, the spare tire from your pickup truck... it doesn't make any difference what the item is, or what the value is, it's technically funding the trust. You can create a different page of items owned by the trust, and call it sched B, or really whatever you want. It's probably a good idea to include a schedule of compensation for the trustees just to make sure that it's clear the trustees aren't receiving any compensation. It is possible that this may be required now for the BATFE approval, or it may be require in the near future. It's a simple doc that looks like this:

STATE OF XXXXXXX
COUNTY OF XXXXXXXX
John Q Public Revocable Living Trust
Schedule of Compensation for Trustee
The trustees agree to forgo compensation at this time and until any further amendment is agreed upon in accordance with Section 9 of the Declaration of Trust.

Article 9 can be any article in the trust (I just picked the number 9 arbitrarily) and would look something like this:

9. Compensation of Trustee

For the management of this trust, the trustee shall receive the compensation set forth on the schedule hereto attached and entitled “Schedule of Compensation for Trustee.” However, it is agreed that the fees set forth on such schedule, and the source of its payment, will be adjusted from time to time in accordance with the amount of work and the responsibility of the trustee in administering this trust, by a written agreement signed by the grantor and the trustee, if the grantor is still in life and suffering under no disability. In the event the grantor is dead or suffering under a legal disability then such written agreement must be signed by the trustee and a majority of the beneficiaries of this trust who are entitled to receive income therefrom and who are then of age and suffering from no legal disability. Such agreement may apply to fees both on income and on principal and the source, principal or income, from which such fees shall be paid and shall be binding on all persons taking thereunder.

What this does is allow you to change the compensation schedule without rewriting the trust. You simply rewrite the compensation schedule to reflect whatever you want, initial and date it, and include it with your trust. There's no need to send any changes to BATFE or anyone else.


You also don't need to send a Schedule A with all your previous, current, or future NFA items to the BATFE. It's not required as they already know what you have and what you're applying for. It's also probably not a good idea, as these forms are sent through the US mail, and many of the examiners work from home where we have no idea what kind of security they have regarding their mail or their offices. Someone intercepting the mail, or even just the examiner's maid could get your name, address, and a list of exactly what you own very easily. Keep that information personal, and you have a bit more security. Personally, I have a hard enough time with the government knowing exactly what I own, but that is required by law, so I comply. It's no one else's business, and in this day and age, I want to keep it that way. It's also good business to keep them separate, just like a corporation does.

If all else fails, pay with a bank or USPS money order that you buy with cash. There's absolutely no paper trail. It will get approved by the BATFE, and they will cash the MO, and they could care less where the money comes from. That's your business and not theirs.

Az