How Do Recent Executive Orders Affect NFA Trusts?

On Thursday, August 29, 2013, President Barack Obama passed two more executive orders which will adversely affect law-abiding gun owners. Exactly how, and exactly when, remain to be seen.

The first of these two orders is probably the one that will affect gun owners the least, though strangely I think it makes me more sad than the other, which we’ll get to in a moment. In what can only be viewed as a misguided attempt to lower illegal gun violence (don’t forget – not ALL gun violence is illegal–in fact, some of it is downright necessary and life-saving), the President’s first order bans the further importation (re – importation?) of U.S. military surplus firearms. These firearms had been given or sold to our allies around the world in the years following World War II. They are now considered obsolete by even those non-first world countries. Several of those countries expressed the desire to sell such firearms back to private companies here in the U.S. which in turn planned to sell those firearms to law-abiding gun collectors and appreciators of military history here in the U.S.

Sadly, by a single man’s edict, it now appears that this will no longer be allowed.

It would be interesting to determine whether the FBI keeps statistics on crimes committed with surplus military rifles. While I’m sure that handguns might be another story (there are likely a few Walther P-38’s, Luger P-08’s and most certainly US model 1911A1’s that have been used by bad guys), I cannot believe that there are many M1 Garands being used by gangbangers in Detroit. It would seem that even the most illogical person could grasp this point. As with so many things concerning gun-control, the symbolism of the effort seems to be all that matters. The only actual result of this effort will be to cause the loss of yet more appreciation of American history and those veterans that gave their blood, sweat, tears and lives to defeat Fascism and Communism. It will also keep some pretty cool, affordable guns out of the hands of law-abiding people who would otherwise appreciate them. The economic impact on the US is also something to be considered. The capitalistic purchase and subsequent sale of these firearms would add money to our struggling economy.

The other of the President’s two executive orders will likely have a more direct impact on an admittedly small, though influential and vocal, slice of the gun owning public–Class 3 firearms collectors.

The President has decreed that NFA Trusts will henceforth require background checks for every individual included in the Trust. A bit of background is in order.

Those owners and collectors of so–called “class 3″ (more properly called Title 2 or NFA) firearms, such as machine guns, sound suppressors, short–barreled rifles, short-barreled shotguns and the like, have grown used to navigating their way through the mysterious labyrinth of federal paperwork to legally acquire and possess these firearms.

Traditionally, for a civilian to acquire such firearms first required the written “blessing” of a local law-enforcement entity such as a chief of police or County Sheriff. While some of these authorities cooperated in appropriately and promptly bestowing these letters upon the gun owner following a reasonable check of criminal history, others did not. Extensive delays or even capricious denials were not at all uncommon. In order to skirt this sometimes onerous requirement, while still fully complying with federal legal requirements, some observant and intrepid legal minds noticed that the federal statutory requirements allowed for corporate and trust entities to own the title 2 firearm just as easily as an individual person. Thus was born the so–called “NFA (National Firearms Act) Trust.”

By forming such a Trust with carefully selected trustees, co-trustees and beneficiaries, one could legally obtain class 3 firearms without having to obtain the written blessing of local law enforcement entities (with the above–referenced commensurate difficulties) which sometimes inappropriately denied such requests, and often dragged them out inexplicably. This could shorten the time required to navigate the federal paperwork waters by as much as 6 to 8 months–a most desirable outcome in light of the fact that many collectors would shell out upwards of $20,000 at the time they “purchased” the item, but were unable to take possession of it (being forced to leave it with the dealer until the federal government approved the transfer via the bestowal of a “tax stamp”) for as long as 12 to 18 months thereafter.

While there is anecdotal evidence that some very few of the individuals listed in some very small percentage of NFA Trusts were, in fact, prohibited possessors of firearms according to federal law, I’m aware of no information indicating that any such person ever actually acquired or possessed the firearm, let alone committed any sort of crime with it. Again – this would seem to be a “solution” desperately in search of a problem.

We should know in the next 3 to 4 months, following the dictated study by the Attorney General’s office, in what form this order will actually come down. If it merely requires a submission of fingerprints and a passport photograph on behalf of each of the parties with an interest in the Trust, the effect upon the class 3 firearms community will be minimal. If, on the other hand, any party with a Trust interest is once again forced to seek local law-enforcement approval, we are back to the point where there is little, if any benefit to be found in the formation of an NFA Trust. In short, there will be no time savings afforded to the individual who chooses to acquire the item via a Trust. There will still be some estate–planning benefits to acquiring guns through a Trust otherwise not afforded to civilian purchasers, but one of the main reasons that Trusts are so appropriate and effective will be negated by President Obama’s issuance of this Executive Order.

For members of the class 3 firearms community, now might be a good time to write letters to your lawmakers at the federal level about this dilemma. The never ending battle continues….

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