CategoryGun Trusts

ATF Regulation 41F and Gun Trusts – Moving Forward

Well, the “dreaded” day is upon us.  The ATF’s rule 41F goes into effect tomorrow, Wednesday, July 13, 2016.  All Form 1 and Form 4’s that are postmarked July 12th or earlier will be processed under the current guidelines.  All that are postmarked on or after July 13th will be subject to the new guidelines.  If you are not familiar with 41F, you can read my previous blog post on it by clicking here.

I’m writing today because the ATF finally issued the new versions of the Form 1, Form 4 and Responsible Person Questionnaire that will need to be used starting July 13, 2016 going forward.  They have said they will not accept the existing forms for submissions on or after July 13, 2016.  Since the process takes plenty long on its own, do yourself a favor and make sure you use these new forms.  Here is where you can get each of them:

Form 1

Form 4

Responsible Person Questionnaire

If you need to order fingerprint cards, you can do that by clicking here.  You can find the ATF’s latest FAQ by clicking here.

Now, despite saying “dreaded” in my opening paragraph, the sky is not falling on gun trusts.  No doubt, there is definitely more red tape going forward.  But, gun trusts will remain the best option for many people who have (or plan to have) NFA items and/or a firearms collection.  The multiple authorized user and inheritance options will stay (and are very important).

If you have any questions, please contact me.

What Does New ATF Regulation 41F Do?

By now you have no doubt heard of the President’s latest efforts at gun control.  There is a LOT of misinformation about it in the media (not surprising), so I thought I would provide a quick summary.  For this post I am focusing on only the ATF’s final rule 41f (formerly known as rule 41p).  In case you prefer the full text rather than a summary, you can read all 67 pages here.

silencerATF rule 41f will change the requirements for purchasing Title II NFA items (silencers, short-barreled rifles, short-barreled shotguns, and full auto).   As noted above, 41f was previously known as 41p.  Although I still do not support the rule, the final rule ended up being much better than the proposed rule was.  Here is a quick list of the effects:

  • Individual purchasers will no longer need their Chief Law Enforcement Officer (CLEO) to approve their application, but they will need to notify the CLEO that they are applying for a tax stamp for a NFA item before submitting their application and will need to include the notice in their application materials.
  • In addition to the existing requirements, gun trust applicants will need to include the following with their application: (1) fingerprint cards, (2) passport quality photos,  and (3) a “responsible person” form.  These requirements apply to all current Trustees of the gun trust.   In the case of gun trusts I draft, that will be the client and their Co-trustees.  If someone else drafted your gun trust, you will need to check with the drafter for what is required or, if preferred, have me review and update the trust, as needed.  The gun trust applicant will also need to notify the CLEO before submitting their application and include a copy of the notice with their application materials.
  • Gun trust applicants may not need to do all of the above steps every time they apply.  So long as the gun trust applicant had an application approved in the previous 24 months and there has been no change to the documentation (e.g., gun trust, responsible person forms, etc.) previously provided, the applicant needs to provide only the following, in addition to the Form 4 or Form 1: (1) certification that the information had no changed since the prior approval, and (2) identification of the application for which the documentation had been submitted by form number, serial number, and date approved.  My recommendation would be to include a copy of the previously approved Form 4 or Form 1 (as the case may be) with the new application.
  • The changes do not take effect until 180 days after the rule is published in the Federal Register.  It was published on January 15, 2016, making the effective date July 13, 2016.  The existing process remains in place until July 13, 2016, and all applications (Form 1 and Form 4) that are “in process” on or before July 13, 2016 will be process under the existing rules, not the new rules.

machinegun-medSo, knowing that gun trusts are a significant part of my firearms law practice, what do I think of these changes?  As you might expect, I think the changes for individuals are great because it is less burdensome, and the changes for trusts are completely unnecessary and overly burdensome.  Is it the end of gun trusts?  No way!  First, from now until July 13, 2016 is a sweet opportunity to get a gun trust in place and purchase all the NFA items you want and can afford without having to deal with the overly burdensome requirements of the new regulation.  Second, gun trusts (LLCs and Corporations too, if necessary) are still going to be the only way to allow multiple people to have access to an item.  For instance, if I did not have a gun trust and instead I owned NFA items in my individual name, the mere fact that my wife has access to my gun safe without me present would be illegal.  Although others can use a NFA item under the direct supervision of an individual owner, with individual ownership only the person to whom the item is registered via tax stamp is allowed to have access to it.  With a gun trust, any Trustee can have access to and use the item without anyone else needing to be there and/or supervise.  This has and should continue to be one of the main reasons to have a gun trust.  The main effect I see the new regulations having on gun trusts is in the selection of Co-trustees.  I think more often than not, the Co-trustees of a gun trust will need to be geographically close due to the logistical difficulties of long distance coordination of fingerprinting, etc., under the new regulation.

And with all regulations and laws, us firearms law and gun trust attorneys are already putting our heads together on ways to handle and work around the upcoming changes.  Keep your eyes peeled for future updates, this is a rapidly changing area and I hope to keep you up-to-date through this e-newsletter.

If you or someone you know have any questions or would like to get a gun trust started (if you do not have one already), please contact me.

Michael Lichterman is an estate planning and gun trust attorney who helps families and firearm owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on estate and asset protection planning for  firearm owners (both NFA regulated and non-NFA regulated), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses and pet planning.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

How Do I Apply For a Tax Stamp with a Michigan Gun Trust?

machine_gunAs a Michigan NFA gun trust attorney, there are some questions that I am asked on a regular basis.  I am going to try to cover them over a series of posts.  The first and, by far, most common question is, “how do I apply for a tax stamp for my NFA item using my gun trust?”  The “how” is heavy on the paperwork side.

If you worked with me to put your gun trust together, you must send the following to the ATF to get a tax stamp:

  • A copy of the entire trust itself (this includes the trustee declarations at the end of the trust);
  • The signed Assignment Page to the trust listing the make/model/serial number of the item you are purchasing or manufacturing;
  • A copy of all amendments to the trust (if there are any);
  • Two original double-sided ATF Form 4 (if purchasing the item or otherwise having it transferred to you) or ATF Form 1 (if manufacturing . . . for example, making a short-barreled rifle (SBR) or short-barreled shotgun (SBS) from an existing rifle or shotgun);
  • A Certification of Compliance (ATF Form 5330.20); and
  • A check for the tax ($200 for a Form 4 or Form 1) made out to “Bureau of Alcohol, Tobacco, Firearms and Explosives”.

Currently, all of the above should be sent by a trackable courier to the following:

National Firearms Act Branch
Bureau of Alcohol, Tobacco, Firearms and Explosives
P.O. Box 530298
Atlanta, GA 30353-0298

If you do not yet have a gun trust in place, do not wait any longer.  Now is the time.  Call me at 827-7596 and I will help you take the important step of putting a gun trust together!

Why Do I Need a Michigan Gun Trust

As a Michigan gun trust lawyer, I’ve noticed a dramatic increase in the number of calls we’re receiving asking about setting up a gun trust.  It’s really not a surprise given the current state of the “gun control debate” after the horrible tragedy in Newtown, CT.  It seems that the most common question I’m asked is, “why do I even need a gun trust?”  Well, the short answer is that you don’t need a gun trust to own a firearm, whether regulated by the National Firearms Act (NFA) or not.  But, with very few exceptions, a Michigan gun trust is the best way for many Michigan residents to own their guns, especial NFA items (for example, suppressors / silencers).

Why is that?  The reasons vary based on your specific circumstances.  This previous blog post shares many of the reasons a Michigan gun trust is a great way to own, protect, and ultimately transfer a NFA regulated firearm or item in Michigan.  What many Michigan firearms owners don’t realize is that a Michigan gun trust can be a MUCH better way of owning their non-NFA firearms . . . especially if you are a Michigan resident with a firearm “collection.”  Generally speaking, we consider a “collection” to include total value of firearms of $10,000 or more.

Why would you do that when Michigan law already provides a way to transfer non-NFA regulated firearms if something happens to you?  The key lies in the fact that a well-drafted Michigan gun trust is drafted with the purpose of acquiring, holding, and eventually distributing firearms, ammunition, and accessories.  What does that mean for you?  Well, let’s think about the current “gun control debate” going on nationally and in many states.  As you probably know there is “gun control” legislation going through Congress right now.  The goal of much of the proposed legislation is to ban a wide variety of semi-automatic firearms as well as implement “universal” background checks.  And some of the legislators have made no secret of their wish to confiscate all firearms and accessories, and if they can’t do that, to at least prohibit the transfer of any “grandfathered” weapons and require any such weapons to be surrendered to the state at the current owner’s death.  My hope is that none of these laws are passed, but even so, it gives you insight into what they are really thinking about controlling your right to “keep and bear arms.”

Although firearms laws and trust law is still developing, it can be a good idea to transfer non-regulated weapons into a trust prior to the enactment of any such legislation (whether the legislation comes now or sometime in the future). This may avoid a scenario in which your family is forced to surrender your prized collection after you are gone.  Proper estate planning will help create and share your legacy with your family and loved ones.  It’s no different with your firearms – a properly drafted gun trust can help you leave a legacy with your firearms and plan for their use for generations to come.

Call at (616) 827-7596 to start creating your gun trust today!

Michael Lichterman is an estate planning and gun trust attorney who helps families and firearm owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on estate and asset protection planning for  firearm owners (both NFA regulated and non-NFA regulated), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses and pet planning.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

What is a Michigan Gun Trust?

As a Grand Rapids, MI estate and legacy planning attorney, I am always researching ways to better protect, preserve, and pass on my clients’ legacies in the way they want.  In some cases, this may mean protecting and preserving a prized firearm or a firearm collection.

Think about it for a moment . . . there are four million members of the National Rifle Association (NRA) and an estimated 270+ million firearms in this country.  Many families also have guns and other weapons as heirlooms that they would like to keep in the family and pass down from generation to generation.  Although some may think their estate plan (or lack thereof) will “take care of” their firearms, sadly, many will find out that is not the case . . . and they will find out too late to do anything about it.

You see, firearms present some unique challenges. The National Firearms Act (NFA) as well as state and local laws strictly regulate possession of certain weapons and may affect the transfer of permissible weapons. For example, convicted felons, those with a history of mental illness, persons convicted of misdemeanor domestic violence offenses, convicted users of illegal drugs, dishonorably discharged veterans, and persons who have renounced their U.S. citizenship are not allowed to own or possess certain weapons.

When an estate includes firearms or other weapons, the executor must be careful to avoid violating these laws.  Transferring a weapon to an heir to fulfill a bequest could subject the executor and/or the heir to criminal penalties.  Just having a weapon appraised could result in its seizure.  An out-of-state heir creates even more problems.

A revocable living trust designed specifically for the ownership, transfer and possession of weapons (commonly known as a gun, NFA or firearm trust) can avoid some of the problems or at least make them manageable. A corporation or LLC can also be used to own weapons, but trusts do not require annual filing fees, public disclosure or a separate tax return. Here are some of the main points:

  • The trust is the owner of the weapons.
  • The trust document must be carefully written to account for the different types of weapons held and comply with the applicable laws.
  • The name of the trust, once established, should not be changed. Because the regulated weapon is registered in the trust’s name, a change in the name of the trust would require that it be re-registered and a transfer tax paid.
  • The trust can name several trustees, each of whom may lawfully possess the weapon without triggering transfer requirements. (Persons not allowed by law to own or have access to the weapons in the trust are not eligible to be a trustee.)
  • Weapons can be purchased by a trustee to avoid having to pay a transfer tax.
  • Once a weapon becomes a trust asset, any beneficiary (including a minor child) may use it. However, the trustee is still responsible to determine the capacity of the beneficiary to use it.
  • Unlike a traditional revocable living trust which can be revoked at any time by the creator of the trust, the Bureau of Alcohol, Tobacco, Firearms and Explosives (BATFE) must approve the termination of a gun trust and the distribution of its assets to the beneficiaries.
  • No regulated weapons held in the trust may be transported across state lines without prior BATFE approval.
  • Also, since weapon laws vary from state to state, gun trusts may not be valid from one state to another as a traditional revocable living trust would be.

As you can see, one mis-step in a Michigan gun trust can have disastrous results for those involved (and possibly others).  Give us a call at 616-827-7596 to help make sure you are protecting, preserving, and passing on the legacy you want and that you don’t “mis-fire” with your firearms in your planning.

Michael Lichterman is an estate planning and business planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on estate and asset protection planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses and pet planning.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.