Registering an NFA weapon [inc Suppressors] via trust

[jshuberg]

[EDIT - updated and edited since suppressors have been legalized in MN. The BATFE considers a suppressor to be a firearm as far as the paperwork goes, so is considered an NFA weapon anywhere the term is used below]

I am not a lawyer, and if you have any legal questions concerning owning NFA weapons or creating an NFA trust, you should contact an attorney or the BATFE. The following is my experience having gone through the process numerous times.

Here in MN, we are limited by what NFA weapons we can own by state as well as federal law. We can only have machine guns manufactured prior to 1986 *and* are on the curio relic list. Suppressors and short barrel shotguns are illegal by state law, as are some destructive devices. Suppressors are now legal to own in MN as of July 1, 2015! SBRs are perfectly fine. Class 2 manufacturers and class 3 dealers are exempt from these laws, but have additional federal regulations they need to comply with. For the sake of simplicity, the below assumes the person registering an NFA weapon is not a class 2/3, law enforcement, or military procurement office.

First off, there are 3 types of entities that can own NFA weapons - individuals, corporations, and trusts. There are 2 BATFE forms that are used to register an NFA weapon. The original manufacturer of an NFA weapon registers it on a BATFE form 1, and ownership transfers are registered on a form 4. If you are manufacturing an SBR you will do so on a form 1. If you are purchasing an SBR or suppressor, you will do so on a form 4.

If an individual registers an NFA weapon, he has to provide FBI fingerprint cards and a passport photo to BATFE, and get the chief law enforcement officer (CLEO) where he lives to sign the form 1 application stating he has no reason to believe that the weapon will be used in a crime. This is a pain in the butt, takes a lot more time for BATFE to process, and many CLEOs won't sign off on the form 1 as doing so is entirely optional. Corporations and trusts don't have to provide fingerprints, photos, or get the CLEO signature, so is much less hassle and speeds up the background check and registration process. Any officer of a corporation, or trustee in the trust may also be in possession of the NFA weapon, where only the registered individual can be in possession if registered as an individual. Even if a person already owns a corporation, it may be preferable to create a trust that will own the NFA weapons instead of using the corporation. The reason is that corporations can go out of business, be sold, be sued, have their assets seized, etc. Also, if you don't already have a corporation, creating one for your NFA weapons isn't a very good idea, as corporations require annual paperwork, tax papers, etc. Trusts have the same benefits that corporations do when they own NFA weapons, but none of the recurring hassles.

A trust is similar to a will in that you assign property to it and specify beneficiaries for that property when certain conditions are met (like when you die). People like trusts over wills as they don't have to go through probate when the grantor of the trust dies, or because you can setup rules where the trust will payout certain amounts every month or whatever (think trust fund kids). However, since the property in the trust is owned by the trust (rather than the grantor - the individual who created the trust), a revocable living trust is considered to be the best legal entity to own NFA weapons.

Most trusts are designed to own regular property - houses, cars, bank accounts, etc. However, there are a number of legalities involved in owning NFA weapons that most other trusts aren't designed to handle. A few of those legalities are:

1) Anyone named in the trust - trustees, beneficiaries, conservator, etc. all have to be legally able to own NFA weapons. No kids, criminals, etc. If you make your brother a successor trustee, and he is convicted of a felony, you need to modify and remove him from your trust immediately, or better yet have the trust written in such a way that if anyone named in the trust becomes prohibited, that their status as a trustee is immediately revoked. Note that once the BATFE issues you your stamp, you are not required to notify them in changes to the trust unless you revoke it for some reason.

2) If your beneficiary is under 18, or over 18 but less than 21 when the grantor dies, the trust should have language specifically detailing what happens to the weapons it owns. Without this language, a legal adult (18, 19 or 20) may find that they illegally own an NFA weapon. Under this circumstance the weapons in the trust can be seized, and the beneficiary could be convicted of a felony.

3) The trust needs to own property. If you are converting a title 1 weapon into a title 2 weapon (manufacturing an NFA weapon), simply assign the original weapon you will be modifying to the trust when you create it.If you are creating a trust for the purposes of registering an NFA weapon via form 4, you must transfer something you own into your trust to make it legally valid before sending a copy with your registration paperwork to BATFE. It can be anything, and you can remove it from the trust later if you want to, but for the trust to be accepted by BATFE it needs to hold property.

If the trust isn't set up right, or if something happens that makes it unable to own NFA weapons, then whoever is in physical possession of the NFA weapons it contains is in possession of an unregistered NFA weapon.

Although there are numerous ways to setup a cheap trust, do the the legalities involved in owning NFA weapons, I would recommend that you use a trust specifically designed to own NFA weapons. While a cheap generic trust mught get you your stamp, it will likely not protect you if certain life events occur, that can result in the trust no longer being able to own firearms. If you already have a trust, I'd suggest creating a separate one specifically for NFA items. If you ever decide to build an SBR for example, you will need to engrave the name of your trust on the receiver. You might not want it to have your complete first and last name. Most people name their trust something like the following:

J.M. Doe NFA Trust

If you are making an NFA weapon, you must provide 2 copies of a form 1. If your are transferring (purchasing) an NFA weapon, you must provide 2 copies of a form 4. This is generally easier, and the dealing your are buying the NFA weapon from will be more than able to assist you with the paperwork involved. If you are making an NFA weapon (such as an SBR) you need to do the form 1 youraself. You can do it online and then print it when your done - http://www.atf.gov/forms/download/atf-f-5320-1.pdf

section 1 - check box A
section 2 - check 'corporation or other business entity'
section 3a - leave blank
section 3b - The name of your trust, and your full address as it would appear on a mailing label
section 3c - Leave blank unless line 3b lists a PO box, in which case put the real address here
section 3d - county of the address in 3a
section 3e - your phone #
section 4a - what is currently engraved on the firearm, ex - Sig Sauer Exeter, NH
section 4b - 'Short Barrel Rifle'
section 4c - caliber of the weapon, ex - 5.56x45 mm
section 4e - the length of the barrel
section 4f - the overall length of the weapon. If the stock folds, this measurement is unfolded. If the stock collapses, this is the most collapsed position.
section 4g - the existing serial number of the weapon
section 4h - this is what you will have engraved on the weapon after the form 1 is approved. It is the name of the trust, and the city and state where it will be made into an NFA weapon. If you want to abbreviate the city name, ex - Minneapolis MPLS, this is where you do it. Just make sure that whatever is specified in 4h is exactly what is engraved on the weapon.

section 4i - 'All lawful purposes, collector'
sections 5 and 6 - FFL and SOT info. Leave blank if not an FFL or SOT
sections 7 and 8 - a bunch of questions. If any are yes you will be denied.
section 9 - leave blank
section 10 - 'Grantor and trustee'
section 11-13 - leave blank

Double check everything, and print it. Make sure you print it on both sides of a single piece of paper. If you print on 2 pieces of paper they will reject it. Sign section 9 and date section 11. Make a couple of copies.

Now fill out the form 5330.20. You can do it online and then print it when your done - http://www.atf.gov/forms/download/atf-f-5330-20.pdf

section 1 - the name of the trust
section 2 - your full name
section 3 - any other country you have dual citizenship with, or leave as-is
section 4, 5 & 6 - only fill out if you are not a US citizen

Double check everything, and print it. Make sure you print it on both sides of a single piece of paper. If you print on 2 pieces of paper they will reject it. Sign and date section 7. Make a couple of copies.

Get a money order or cashiers check for $200, made out to 'The Bureau of Alcohol, Tobacco, Firearms and Explosives'.

Package up a copy of your declaration of trust (not the original, and not the certification but the full declaration of trust, including your schedule A), two copies of your Form 1 (or Form 4), both hand signed, Form 5330, and the $200 cashiers check and send them all off to:

National Firearms Act Branch
The Bureau of Alcohol, Tobacco, Firearms and Explosives
244 Needy Road, Suite 1250
Martinsburg WV, 25405

It should take about 3-5 months for the form 1 to come back approved. During this time you can send your receiver out for engraving if you are registering via form 1 (making an NFA firearm). You must engrave the name of the trust, and the city and state where the weapon will be converted to an NFA weapon. It should exactly match what you entered into line 4h of your form 1. There are engraving size, depth, and location requirements that need to be adhered to. I recommend you send it off to someone who is familiar with the requirements, and does this for a living to make sure it's done correctly, and looks good. Don't get it done at a hardware store or trophy shop. A good place is Orion Arms - http://www.orion-arms.com/

Then it's pretty much just waiting for the paperwork to come back. Don't build the SBR until you get the approval from BATFE, and don't buy the parts to convert it into an SBR until you get approval from BATFE. Technically, if you have the parts to make an SBR, but don't have an approved form 1 in hand, you can be convicted of 'constructive possession' of an SBR.

After the approved form 1 comes back, make a ton of copies. Put one in the gun case, one in the stock, one in your car, a 1/4 size one in your wallet, etc. You don't ever want to find yourself in a situation where you can't produce the form 1 if you need to. I also keep a copy of the certification of trust in my gun case just in case I need to prove my relationship to my trust. If you name anyone else as a trustee in your trust, any time it's in their possession they need to have both a copy of the form 1, and the trust document proving they are a trustee of the trust. After the form 1 comes back and you've built the SBR, update the property in the trust and change the description of the original weapon to be a 'Short Barrel Rifle'. The same applies for form 4 applications. Keep multiple copies, and put the original in a safe or safe deposit box, etc. and make sure you update schedule A on your trust to include the NFA item that you purchased.

The trust thing is the hardest part, but fortunately those individuals who BATFE has gone after for having invalid trusts (people who listed themselves as a beneficiaries, or who put their underage kids as trustees without specific wording, etc), simply correcting the trust paperwork has been a satisfactory resolution to the problem. I recommend Ben Rust for the creation of NFA trusts. He's local here in the cities, is currently serving as the legislative director for OGC, and a really good guy. If something comes up with BATFE regarding your trust, he can take care of it for you unlike Quicken or other do-it-yourself trusts:
https://www.facebook.com/pages/Minnesot ... 87?fref=ts

Anyways, thats pretty much it. Alot of hassle mostly. I recommend calling the BATFE NFA branch and double checking everything before mailing out your stuff as they do change things from time to time - they used to not require form 5330 for trusts, and they used to accept certification of trusts instead of the full declaration of trust. They also didn't used to require a copy of schedule A (which lists the property the trust owns), but they do now. They may have different requirements since the last NFA weapon I registered.

Once again, I am not a lawyer, and the above is not legal advice. It is a detailed description of my experience in registering an NFA weapon - YMMV.

BATFE NFA Branch - (304) 616-4500

[TTS]

Great write up, thanks!

[MNGunGuy]

Lots of info in one spot, which is always nice. One thing I would note is engraving is only required if you are filling out Form 1 (manufacturer). If you are filling out Form 4 (transfer) there's no requirement to do that step as the manufacturer registers the sbr.

[bstrawse]

Extremely helpful - thanks!
b

[Shipyard]

awesome! thanks for all the great info!

PS - my wife would like a word with you for putting these ideas in my head... i'd run

[MNGunGuy]

Also, short barrel shotguns that fall on the C&R list are also legal to own.

[Bitter Bastard]

That is an excellent write up!

I would like to note the ATF doesn't care what kind of check they get. A personal check is less hassle for most people. It's the gov't - they just want money and don't really care what form it comes in.

[Ron Burgundy]

Well done. Thanks for sharing.

[Hmac]

Nice write up. Thanks for doing that.

[rukwikenuf]

i think JShuberg is just tired of people like me asking a zillion questions....

good solid write up man. thanks for putting it all in one place

[BemidjiDweller]

Great write up, couldn't have come at a better time.

Oh and this:

Also, short barrel shotguns that fall on the C&R list are also legal to own.

[XDM45]

This thread should be made sticky. That is one heck of a write-up. I've copying the info for reference. Who knows when/if I may do that.

[minnhawk]

Great info, thanks. I might also add that many posters on this forum could benefit from creating a trust if you have children, let alone class 3 weapons. My wife and I had an attorney write up our trust two years ago. (We are definitely not part of Obama's 2% club, btw) We have been frugal and bought property over the years instead of new cars and stuff. $2,200 was the total bill, and most of that was the cost of transferring property out of our names and into the Trust's name. Bye bye probate, bye bye estate taxes, bye bye hassle of who gets what when we pass away, down to the gun collection and vehicles. When my parents passed years ago, I learned about trusts and how simple it made the transfer of their property into the kids' names. NO TAXES! (unless you are on the heavy side of Obama's 2% club)

Now I see I can utilize the trust for class 3 purchases as well. Look into creating a trust -- there are good attorneys out there who don't charge an arm and a leg to write one for you.

Full disclosure: I am not an attorney.

[XDM45]

Great info, thanks. I might also add that many posters on this forum could benefit from creating a trust if you have children, let alone class 3 weapons. My wife and I had an attorney write up our trust two years ago. (We are definitely not part of Obama's 2% club, btw) We have been frugal and bought property over the years instead of new cars and stuff. $2,200 was the total bill, and most of that was the cost of transferring property out of our names and into the Trust's name. Bye bye probate, bye bye estate taxes, bye bye hassle of who gets what when we pass away, down to the gun collection and vehicles. When my parents passed years ago, I learned about trusts and how simple it made the transfer of their property into the kids' names. NO TAXES! (unless you are on the heavy side of Obama's 2% club)

Now I see I can utilize the trust for class 3 purchases as well. Look into creating a trust -- there are good attorneys out there who don't charge an arm and a leg to write one for you.

Full disclosure: I am not an attorney.

Absolutely.

I'm in the process of doing that myself.

Who owns X,Y, and Z? The trust. *I* will own the trust, bot not much else. It's sad, but you need to legally isolate yourself to protect your assets, especially as you age. If something should happen to you or your family like a life changing health issue, injury, death, then everything should be covered to protect you and your assets.

Like you, I've never bought a new car or lots of "stuff" I didn't want, desire, or need. There are better investment opportunities out there.

[Shawski]

I was told section 4f was with the collapsible stock extended. That's how the manufacturers list their OAL. Did that change or something?