A Trust

yotesmoker · January 3, 2011, 06:37 AM

I keep seeing this term showing up when people want to obtain a SBR.Exactly what is a trust?

demigod · January 3, 2011, 11:42 AM

A Revocable Living Trust is a legal entity that can own assets.

medalguy · January 3, 2011, 10:39 PM

One advantage of a trust is that, as a legal entity, no fingerprint cards or signature of a LEO is required in order to transfer an NFA weapon. There are certain disadvantages to balance everything out too.

demigod · January 4, 2011, 09:21 AM

I haven't found any downsides yet. I have both individual and trust NFA items. The trust is much less trouble. Once you have an item transferred, no one really cares about your papers and all that stuff. So to me, the path of least resistance for the transfer is preferred.

medalguy · January 4, 2011, 11:02 PM

From my knowledge, the primary downside is in the event of your death when your trust would terminate. All of the weapons must be transferred out of the trust and tax paid and all the signatures have to be obtained. Depending on your age, this might not be a downside but it would be one day.

Otherwise it's a great way to go.

Skans · January 5, 2011, 09:15 AM

Trusts don't generally terminate on death....in fact, trusts are usually set up to deal with the assets you have accumulated during your life after you die. There is no reason that I know of why the machinegun can't simply stay in the trust, and the alternate trustee take over for the deceased trustee. This is, assuming that the alternate trustee lives in the same state.

If this isn't how it works, someone please school me.

Poodleshooter · January 5, 2011, 04:06 PM

I'm not a lawyer, so take this with a grain of salt...

Downsides include the fact that you're likely going to be hauling around trust paperwork to prove that you're a trustee or grantor of the trust. Naming it after yourself can be an easy way to mitigate this problem. It also sucks if you name your trust the "Hiram G. Whifflesnafferupagus Revocable Living Trust",and have to engrave that whole thing on your new form 1'd SBR rather than your name "John Doe".

State trust laws vary, but in my state, a successor trustee can be named. Since the NFA item doesn't "leave" the trust until it passes to the beneficiary, there is no transfer needed and no additional Form 4 for it to go to the successor trustee. In theory, when the beneficiary receives the NFA item, it transfers out of the trust on a tax free Form 5 as with any other action of a will from an estate. At that point, the trust ceases to exist. Until that time, the item can remain in the possession of the trust grantor or trustees.
So a trust is a very good mechanism to allow others to inherit your NFA firearms in a legally "safe" manner, provided your state has good laws on trust "self dealing", allowing you to use the NFA item for your own purposes.

Bartholomew Roberts · January 6, 2011, 02:57 PM

Quote:

If this isn't how it works, someone please school me.

You are generally correct, although most states have what is called "the rule against perpetuities." This basically is a rule designed to prevent property from being controlled by the directives of people who died a long time ago - though with good planning, you could still have a trust that continues 70-100 years after you died.

The flipside is that there are many different approaches to how states deal with the Rule Against Perpetuities and in some states, if you mistakenly draft a trust that COULD violate the rule, then the whole trust is invalid.

January 3, 2011, 06:37 AM	#1
yotesmoker Member Join Date: March 16, 2005 Location: pa mountains Posts: 78	A Trust I keep seeing this term showing up when people want to obtain a SBR.Exactly what is a trust?

January 3, 2011, 11:42 AM	#2
demigod Junior member Join Date: March 13, 2008 Location: AZ Posts: 1,129	A Revocable Living Trust is a legal entity that can own assets.

January 3, 2011, 10:39 PM	#3
medalguy Senior Member Join Date: August 31, 2009 Location: New Mexico Posts: 1,033	One advantage of a trust is that, as a legal entity, no fingerprint cards or signature of a LEO is required in order to transfer an NFA weapon. There are certain disadvantages to balance everything out too.

January 4, 2011, 09:21 AM	#4
demigod Junior member Join Date: March 13, 2008 Location: AZ Posts: 1,129	I haven't found any downsides yet. I have both individual and trust NFA items. The trust is much less trouble. Once you have an item transferred, no one really cares about your papers and all that stuff. So to me, the path of least resistance for the transfer is preferred.

January 4, 2011, 11:02 PM	#5
medalguy Senior Member Join Date: August 31, 2009 Location: New Mexico Posts: 1,033	From my knowledge, the primary downside is in the event of your death when your trust would terminate. All of the weapons must be transferred out of the trust and tax paid and all the signatures have to be obtained. Depending on your age, this might not be a downside but it would be one day. Otherwise it's a great way to go.

January 5, 2011, 09:15 AM	#6
Skans Senior Member Join Date: November 20, 2008 Posts: 11,132	Trusts don't generally terminate on death....in fact, trusts are usually set up to deal with the assets you have accumulated during your life after you die. There is no reason that I know of why the machinegun can't simply stay in the trust, and the alternate trustee take over for the deceased trustee. This is, assuming that the alternate trustee lives in the same state. If this isn't how it works, someone please school me.

January 5, 2011, 04:06 PM	#7
Poodleshooter Senior Member Join Date: August 7, 2000 Location: Floating down the James River in VA Posts: 2,599	I'm not a lawyer, so take this with a grain of salt... Downsides include the fact that you're likely going to be hauling around trust paperwork to prove that you're a trustee or grantor of the trust. Naming it after yourself can be an easy way to mitigate this problem. It also sucks if you name your trust the "Hiram G. Whifflesnafferupagus Revocable Living Trust",and have to engrave that whole thing on your new form 1'd SBR rather than your name "John Doe". State trust laws vary, but in my state, a successor trustee can be named. Since the NFA item doesn't "leave" the trust until it passes to the beneficiary, there is no transfer needed and no additional Form 4 for it to go to the successor trustee. In theory, when the beneficiary receives the NFA item, it transfers out of the trust on a tax free Form 5 as with any other action of a will from an estate. At that point, the trust ceases to exist. Until that time, the item can remain in the possession of the trust grantor or trustees. So a trust is a very good mechanism to allow others to inherit your NFA firearms in a legally "safe" manner, provided your state has good laws on trust "self dealing", allowing you to use the NFA item for your own purposes.