The dreaded day is here, but it isn’t as bad as it could have been. On January 4, 2016, the Obama administration released the final version of the long dreaded rule change, ATF Rule 41F, which addresses how the ATF handles the procedures for NFA applications from trusts or business entities. The new rule will certainly impact how your gun trust works in the future, but there are opportunities to minimize the impact. Indeed, a premium gun trust from AZ Gun Law creates unique opportunities under the new rule that low-end trusts simply cannot.
July 13, 2016. Since the rule has now taken effect, all applications to the ATF to purchase or make NFA firearms will be subject to it. No one is immune.
The rule plainly states that it is not retroactive and therefore the rule will not apply to previously approved applications (NFA firearms you already own) or to pending applications. An applications that were post marked on July 12, 2016 or before will be processed under the old rules. All new applications post marked on or after July 12, 2016 will be subject to it.
All future applications to make or buy NFA firearms will be subject to the new rule now. If you do not plan on making or buying any NFA firearms, the rule will likely never affect you, though it could if you are named as a beneficiary or successor trustee on someone else's trust.
The basic sequence for acquisition of an NFA firearm with a trust:
The basic process for making an NFA firearm with a trust:
The answer depends on many facts:
What happens with a decedent's firearms can be a complex undertaking depending on the answers to the above questions. The short answer, is that ATF form 5 will likely be submitted to ATF to "transfer" the firearms to the dead persons heirs or beneficiaries, but that isn't always the case. Please contact us to discuss.
Sadly, there are several definitions in the new rule that are not identical to each other, however, the most common definition, and apparently official definition, reads as follows “In the case of an unlicensed entity, including any trust, partnership, association, company (including any Limited Liability Company (LLC)), or corporation, any individual who possesses, directly or indirectly, the power or authority to direct the management and policies of the trust or entity to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of, the trust or legal entity. In the case of a trust, those persons with the power or authority to direct the management and policies of the trust include any person who has the capability to exercise such power and possesses, directly or indirectly, the power or authority under any trust instrument, or under State law, to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of, the trust. Examples of who may be considered a responsible person include settlors/grantors, trustees, partners, members, officers, directors, board members, or owners. An example of who may be excluded from this definition of responsible person is the beneficiary of a trust, if the beneficiary does not have the capability to exercise the powers or authorities enumerated in this section.” In our trusts, this means that settors/grantors and trustees (but not successor trustees) are responsible persons. Some AZ Advanced Gun Trusts also include Trust Protectors, which may be considered a responsible person in some trusts.
No! The rule states: "If you have had an application approved as a marker or transferee within the preceding 24 months and there have been no changes to the documentation previously provided, the entity may provide a certification that the information has not been changed since the prior approval and shall identify the application for which the documentation had been submitted by form number, serial number, and date approved." There is a split on what this actually means - one camp argues that this only allows you to forego sending in a copy of your trust if there have been no changes, but still have to submit form 23, photographs, and fingerprints. The other camp argues that this means you can forego sending in form 23, photographs, and fingerprints, along with a copy of the trust. If that is the case, as long as you buy or make one new item every two years, you will only have to submit fingerprint cards, photographs, and the personal information contained on form 5320.23 once. Only time will tell which answer is correct as ATF starts processing applications post-41F.
A careful reading of the legal definition of “responsible person” appears that it may maintain potential for different classes of trustees, some of which don’t possess the power or authority to direct the management of the trust, but yet have the legal ability to possess NFA firearms! I believe this is the case. Please contact me to discuss your specific scenario.
Additionally, the new rule allows that additional responsible persons can be added after applications are approved, without having to submit an ATF form 5320.23 for the newly added person. This fact allows trustees, who may have the legal right to possess NFA firearms, to be added after the fact. This feature is also something that most of our existing trusts feature. A multi-generational trust makes more sense now than ever! Learn more about how to get your own multi-generational gun trust.
The rule places no requirements on the CLEO as to what they do with the copies of applications they receive – indeed they have no federal duties at all. CLEO is welcome under the law to review, save, and store the information, or they may immediately shred it. The Rule states that “CLEO’s will have flexibility and discretion to review and maintain the information they obtain as a result of this rule in the manner that best enhances public safety in their respective jurisdictions…this final rule imposes no obligations on CLEOs but does provide them with the ability to obtain information that is potentially useful to accomplishing their missions." Maricopa County Sheriff's Office has informed me that they will scan all forms they are sent and then file them - they have no additional plans at the time.
Given that e-forms has barely worked since its inception, the question is almost moot, but the answer is no. Since all responsible persons must submit fingerprints and photos, the e-forms system will be unavailable to the general public (non-SOTs).
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