Are NFA Trusts a Thing of the Past?
Not so fast……
On July 13, 2016, President Barack Obama’s executive order (known as “Rule 41F”) went into effect. This order mandates certain modifications in the manner in which transfers of Title 2 (often referred to as “Class 3”) Firearms must occur. Many pundits have declared these changes sound the death knell of National Firearms Act Gun Trusts. Nothing could be further from the truth. While the process is certainly more cumbersome than it was (especially in “pro-gun” locales such as Arizona) prior to July 13, 2016, it actually helps people wishing to acquire Title 2 firearms in areas where the local Chief Law Enforcement Officer (“CLEO”) has traditionally refused to sign off on the formerly required permission slip. Obama’s executive order no longer requires CLEO permission—now only “notification” to the CLEO is required.
The Grantor/Trustee of the Trust is now known as a “Responsible Person,” or “RP.” All RP’s in a Trust are now required to submit fingerprints and a passport-style photo, along with the new ATF form known as “Form 5320.23.” This new form replaces the “old” forms 1 and 4 and combines those two forms with the 4473 form. This form 5320.23 is also the form that must be sent to your local CLEO as “notification” of the transaction. It would be a good idea to mail this form to your CLEO via certified mail in order to be able to prove that you complied with the Federal notification requirement.
If you are like me, requiring all of your Co-Trustees and/or Successor trustees to submit fingerprints, a photo and form each time you acquire a new toy could be problematic (my wife is my Co-Trustee—I think you get the picture). Not that anyone has anything to hide—it is just another hoop through which some of our trusted friends/relatives may not be too wild about jumping.
As such, just be sure to specifically exclude those folks, in the body of your NFA Trust, from RP status. They will be unable to make any management decisions as to the Trust, and will not be able to be the purchasers of the items, but the trade-off is they will not have to submit the above-referenced red tape laden documentation at the time of a transaction.
Rule 41F also contains language (which no one seems to be able to accurately interpret quite yet) indicating that these extra documents will only need to be submitted every two years—not each time you acquire an item. Stand by to see how that is interpreted by ATF as time goes on.
The Trust will still act to prevent “accidental felonies” from occurring if your Co- or Successor Trustee is in possession of an item, and it still makes the transition of ownership after the Grantor’s death (that’s you—it’s going to happen to all of us sooner or later!) completely hassle free. In essence, there is no transition—the Co-Trustee/Successor Trustee is already established as someone who can legally possess the item.
These advantages still make establishment of an NFA Trust by far the best, smartest and cheapest method to obtain Title 2 Firearms. Time, and the upcoming election, will tell how long these extra steps will remain part of the “Class 3 Landscape.” One thing is certain, however—despite rumors to the contrary, NFA Gun Trusts are still alive and well and by far the best way to go!