NFA & Gun Trusts
National Firearms Act (NFA)
Answers to some common questions related to what is the Nation Firearms Act (NFA) including the definition, clarification and application of the Act, as well as which form(s) to use in order to apply for a tax stamp.
The Truth About Gun Trusts - and How Attorneys Lie to Get your Money
This is a sore subject that many people don’t see eye-to-eye on, but as someone who has regular interaction with customers who practice law on behalf of the public and private interest – this is an issue that seriously grinds my gears. Attorneys who claim to be qualified in writing gun trusts frequently extol their virtues in an attempt to separate you from your money. How right they are and how wrong they are after the jump . . .
To start with the most prevalent, and most frequently pontificated: “YOU NEED A GUN TRUST IF YOU WANT TO STAY OUT OF JAIL!”
The economics of the gun business have led attorneys to love to sell gun trusts. All the language is boilerplate, they get you on the hook for their fee, replace a few words, notarize it and suddenly you have legal powers that you didn’t 15 minutes before, right?
Owning a trust makes you no more empowered than you were they day before, unless you live in an area where the CLEO won’t sign your form – in which case the gun trust is the battering ram against your barrier to entry.
I can’t speak for all 50 states, but in my research and experience, I can’t recall a single state that has a statutory requirement of a formation of a trust as a legal prerequisite to purchase an NFA device. Most states have relatively limited regulation on NFA devices, and even the ones with the most draconian legislation (California or New York) do not have legislation prohibiting trusts or corporations from holding firearms or NFA devices as assets.
Most of the people who form trusts for NFA acquisitions do so for several popular reasons, the most common being that it’s a lot easier to do a transfer to a trust or corporate entity than it is to hassle the local CLEO. You also can have several co-trustees or employees that have lawful access to the firearms. And yes, some form trusts as a solution to a barrier to entry – specifically the policy of a local CLEO who won’t sign an ATF Form 4 or equivalents.
What really gets me is the people who form a trust for the wrong reasons. Their attorneys should be hauled in front of an ethics board to explain their actions. For instance, my business gets more junk mail from so-called expert trust attorneys than a new 28 year old homeowner with good credit gets from Williams-Sonoma, Bed Bath and Beyond, and Pottery Barn combined. I cringe thinking about how many trees have died so these shysters can separate ignorant people from their money.
The so-called experts love to push their services: “Here’s how you own a Class 3 weapon – you form a gun trust to do it, because if you don’t, you’re breaking the law!”
My eyes roll so far into the back of my head when I read their ads that it shifts my center of gravity backwards and I nearly fall out of my chair. For starters, any attorney that professes to be an expert in firearms and gun trusts that doesn’t know that “Class 3” is a rate of taxation ($500) for a special occupational tax, is a hack…in my opinion. But that’s just for starters. What really separates the shysters from the actual professionals is the way they pose legal scenarios and how they apply to the client.
Gun trust attorneys love to tell clients that if they don’t have a trust, they can risk going to jail and losing all their guns – even their title one guns – due to noncompliance with the National Firearms Act of 1934. How could that happen, you ask? One attorney that I spoke with on the phone stated as a matter of fact that during her vast legal career as a board-certified attorney and her research and interaction with ATF that if someone who lawfully owned an NFA device (for this exercise, we’ll call it an M1 Thompson) and shot their M1 at a public range and then let a bystander that wasn’t the lawful registered owner shoot said M1 at said range in the presence of the registered owner, they would be guilty of an illegal transfer of an NFA device. And the ATF would prosecute both the recipient for taking unlawful possession and the owner for making the unlawful transfer.
Now, this is contrary to my experience on a number of occasions. I got hooked on machine guns when my friend Ken (not his real name) handed me a registered receiver M16, a full magazine and told me to have fun. Ken is a large collector of Colt machineguns. He has about half a million bucks worth of them. Why the hell would he break the law?
If anyone is wondering, the ATF has sent me an opinion letter regarding the above scenario and they have stated in a far more refined fashion than I will that I am right and that particular attorney is utterly wrong. Oh, did I mention the attorney was board certified in real estate law?
The debate skills that I acquired in years of Catholic school would finally come to vanquish my unwitting board certified opponent.
My rebuttal to her was that if such an action was so blatantly illegal, how come many retail firearm operations such as The Gun Store in Las Vegas, Nevada and The Scottsdale Gun Club in Scottsdale, Arizona (these were the only two that came to mind immediately) are able to rent machine guns to customers? Surely an outfit as large and above board as the Scottsdale Gun Club with a million dollar operation wouldn’t risk it all by breaking the law. Was she telling me that each time a customer, or paying member of the club picks up a post sample M16, or the employee at said club hands it to them, they’re knowingly facilitating NFA violations?
She didn’t have a good answer for me. The answer she did have was that she had asked ATF what constituted an unlawful transfer and ATF told her that if someone that was not the registered owner was using an NFA device, they were guilty.
There’s a few ways you can look at this. You can fault the ATF for being wrong, and God knows the ATF has been wrong in the past. You can fault the attorney for asking the ATF, as ATF would not put something that stupid in writing. You could actually read the text of NFA ’34. Or, you can believe what I believe which is that she didn’t ask ATF and was making it up as she went along and presented enough gravitas to make it sound like she knew what she was talking about.
These kinds of legal shenanigans are what you’re going to get when you go shopping for gun trust attorneys. Attorneys who practice gun law typically do so exclusively. Attorneys who practice wills, trusts, and estate law, typically do so exclusively. Wills, trusts and estate law and gun law could not be farther apart in the legal field, and yet some people go to a real estate lawyer who claims to do gun trusts for gun advice.
You don’t go to the world famous Peter Luger Steakhouse in Brooklyn for the broccoli rabe, so why would you take gun law advice from someone who is seriously under- or un-qualified to dispense it?
This happens every day.
I think that it is completely unethical for an attorney to write an advertisement that talks about “Class 3 firearms” — which is patently wrong — write paragraphs about how you need to buy a gun trust or you will go to jail and lose all your guns, and claim a moral/legal high ground about how they know better than you (when they simply don’t) in an attempt to separate you from your money. They wouldn’t do it if it didn’t work, and it’s apparently worked too damn often.
Yet, that’s not the worst part.
In my state, all advertisements by legal firms have to have the literal seal of approval from the state bar’s advertising division. All that fear mongering text about how you need a gun trust or else? In print, no less? Those ads bears the rubber stamp of approval of the bar association.
So, I called the bar association’s advertising division and asked them how their advertising division could approve advertising that was factually incorrect and, in certain circumstances, could compel someone to purchase a trust that they didn’t need out of sheer fear of federal gun law. They didn’t have a very good answer for me. They stated that the advertising was within the guidelines of the state and that I should file a complaint if I truly felt the ad was misleading. I decided to fight fire with fire.
FC: This ad is misleading. It’s saying buy a gun trust or lose all your guns, a gun trust is the only legal way to own “Class 3” firearms, which is wrong because there’s no such thing as a “Class 3” firearm and if this attorney is 100% accurate, I personally know 8 police officers, 2 state prosecutors and a retired federal judge that are about to be in pretty deep trouble.
Bar: The advertising was within state guidelines. We saw no reason to disapprove of it.
FC: So, if I was a real estate attorney and I drafted an advertisement stating that I am board certified in the practice of Unicorn Ranch Agricultural Tax Abatement, you’d approve it?
Bar: Well. no. There’s no such thing as board certification in that field. Or unicorns for that matter.
FC: So it’s okay for this attorney to advertise specialization in the ownership of an item that does not exist and is factually wrong on numerous other counts, but it would be wrong for me to do the same?
At that point the woman became rather cross with me and suggested that if I felt that strongly about the issue, I should file a complaint. That’s right, the regulators that are supposed to prevent attorneys from making misleading advertising don’t give a damn about misleading advertising.
So I filed a complaint with the bar association, stating that the advertising is without merit and has numerous false claims; specifically that one must have a gun trust in order to stay out of jail and that temporarily lending an NFA device was unlawful. Neither of which is not correct. The regulators (being totally useless) did not see things my way and let the complaint drop.
This is infuriating because as a consumer I wouldn’t shop at a gun store that barked incessantly about how one must purchase a Colt AR15 or equivalent because of a so-called looming ban on the horizon. Nor would I patronize an attorney that lauded the threat of jail time as a sales pitch for their product. At best, it’s fear mongering. At worst, it’s taking advantage of exactly how stupid the Brady Campaign and the Moms Demand Action crowed think gun owners are.
As if the situation isn’t complicated enough – the advent of the trust has yielded the NFA Merchant of Death/Unlicensed Practitioner of Law.
What’s this I speak of? The most candid example I can think of is a small company that will not be named that manufactured hundreds of AR15s in Florida, and the owner was remarkably helpful if you wanted something that needed a stamp — like a silencer. So helpful that he’d create a trust for you. Just sign on the dotted line.
That’s one helpful dealer of death and destruction, right? What happens when ATF approves that transfer and the trust isn’t legal?
The problems are numerous. The first being that you have zero legal recourse because whoever set up your trust wasn’t qualified or even licensed to practice law to begin with — so, you got what you paid for. The entity that you have may or may not be legal and will likely cause a substantial headache for you to resolve. Finally, if someone was improperly practicing law without a license, will that case be prosecuted?
Based on my interaction with state regulators, prosecution is unlikely. They just don’t seem to prosecute those cases. I can’t help but wonder if they view it as a self-correcting problem.
I don’t think it’s proper for a gun retailer (or anyone other than an attorney) to draft a trust, so when someone came in my business a few months ago with a silencer built by a local firm that he wanted to have re-cored because it was too loud, he had literally no clue about how the NFA worked and how it was transferred, etc. I became curious to see what my competition was up to. After speaking with him for a few minutes about what he did and how he did it and reviewing his approved ATF Form 4, I managed to piece together the mystery.
As it happens, he wanted a silencer for his GLOCK 9mm pistol knowing nothing about the process. So they sat him down and did the old car salesman trick with the paperwork and said sign here, here, here, here and here.
The dealer had created a trust using a computer program, had the buyer sign it — unknowingly creating an irrevocable living trust in their name — and then transferring a silencer to it, which the ATF approved. Where the original copy of the trust went, nobody really knows. So this particular individual will be hard-pressed to do another transfer in the future without having their actual trust documents. But that’s not a problem, because if he goes back to that dealer, they can just create another trust he doesn’t know about for the next NFA device he wants to buy.
What it boils down to is this: NFA trusts are a necessity to ownership for some. Although no law states purchasers must have one, many do so out of sheer practicality. To others, an NFA trust is a luxury item as it saves them trips to the fingerprint station and the CVS photo center. The truth is that having an NFA trust can make NFA-regulated device ownership easier, and in some cases we couldn’t own NFA item without it.
I bought my first machine gun when I was 22 years old, but no CLEO would sign for me. So I went down to OfficeMax, bought prepared trust documents and made my own. A month later I hauled home my new bullet hose. Would I do the same today? Probably not, but my legal needs were very different compared to what they are today.
I’ve seen too many attorneys in the NFA trust business who are hacks, who will pitch lies and deceit in order to goad unknowing rubes into buying trusts on the threat of jail time. And their ads somehow were approved by the state bar advertising division. Others will not have a clue as to what makes an NFA gun trust different from a regular trust (I have yet to talk to an attorney who has found a fundamental legal distinction between the two) besides some language declaring the purpose of the trust, and attorneys who practice criminal law will likely not be of very much help in this area.
Don’t get an NFA trust because some shyster said you’ll go to jail if you don’t. Do your homework, see if you actually need one based on who you want to give legal access to these devices. Trust but verify. Don’t hire a hack, and for the love of Jeebus, don’t have your gun dealer do it. Most gun dealers have a difficult enough time staying out of prison themselves.
Verily, let’s also not forget what the great William Shakespeare taught us: the first thing we do, let’s kill all the lawyers.