DocNugent wrote:
As a likely purchaser of a NFA Trust, the thing I like best about the OP's choice of Trust is that
you get to read it before you buy it. I know, . . . it's free, but stay with me.
All the attorney-offered Trusts are proprietary meaning what you're paying for is their knowledge and their choice of words. It makes sense from their perspective not to give away the milk before the cow is bought because you might just take advantage of that situation and never buy the cow. But
unless I see how they handle the various provisions, how can I know if that Trust is suitable for my situation? Here's a list of things that can go wrong with generic Trusts. It seems possible to me that an attorney-offered Trust could have the same defects, but I wouldn't know that until I'd bought the cow.
http://www.texasguntalk.com/forums/class-iii-nfa/1442-copying-nfa-trust-3.html#post44852 wrote:
. . . I recently reviewed a Legal Zoom Trust. The results were very much the same. Legal Zoom allowed the creation of a trust which facilitates the purchase of a NFA firearm, but had many problems involving the following
1) the Grantor / Settlor was not defined properly
2) problems when property is transferred from decedents will (if they own other NFA firearms)
3) allowed for revocation of trust when the trust has NFA firearms
4) No requirement of trustee to be legally able to possess the items
5) Problems dealing with homestead properly? also why would you place a homestead in a NFA trust?
6 Termination of trust creates problems because Trustee cannot transfer items in time
7) Nothing to warn unknown future trustees about compliance with state or federal law or what actions are necessary.
8) No power for individual to open bank accounts or deal with ATF when there are multiple trustees.
9) Successor Trustee must sell off assets to divide equally among heirs if there are not an equal number of each items for each beneficiary. You cannot preserve the assets for your children.
10) No power to use NFA firearms in the trust - the trustee violates their duty to Beneficiary to preserve and maximize assets in the trust.
11) What about geographic restrictions?
12) what about age restrictions?
13) Legal zoom trust would transfer a machine gun to 5 year old child upon the death of a parent.
All in all the Quicken Trust was a more complete but equally inappropriate trust for the Purchase of NFA firearms. . . .
Ive watched A Christmas Story too many times so I'll address the potential pitfalls, but basically they boil down to being able to edit the Trust documents to suit your situation. If you cant edit the Trust documents, then it's clearly not something you'd want irregardless of NFA assets in it or not. I had read earlier today where a Trust program ( possibly Quicken) wouldn't allow the Grantor to choose the name of the Trust and would populate that line with the Grantor's name , John Q Public Living Trust etc.
1. defined under state Law or something else ? Edit the wording to clarify who the Grantor/Settlor is.
2. Property transferred before or after the Grantors death? If the items are owned by the Grantor and they added them to the Trust what is the issue? Property owned by the Trust is legally seperate from property owned by the Grantor.
3. How is that an issue? Only the Grantor can revoke the Trust, no one else. As its a revocable living will, its the Grantors responsibility to make sure the maintain the validity of the Trust if they intend to keep it. Owning NFA weapons does take a minimal amount of intelligence, to remain legal at least, so revoking the Trust before the transfering the NFA assets out of the Trust would be entirely on the Grantor for making that kind of error.
4. Trusts are legal fictions that hold and maintain assets and possibly have certain legal advantages over doing so as an individual, namely tax/probate/NFA advantages in certain circumstances. If you're naming Trustees to your Trust who are legally ineligible to take possession of your assets maybe you should rethink your choice of Trustees? If the implication is that there's no requirement for the Grantor to be eligible, ATF does check out the Grantor's eligiblity prior to Form approvals. Ive seen a Form that was denied when the Grantor was a felon.
5. Mixing non-NFA assets such as real estate, insurance payouts, pensions. retirements, other financial instruments really needs an attorney to avoid potential issues like taxes/ non payment of insurance monies/challenges to the Trust by people who want the assets.
6. Again the termination of the Trust before the Grantors Death is up to the Grantor. The Beneficiary would receive the assets as laid out in the Trust, either immediately or at a future date specified in the Trust documents by the Grantor. Upon the death of the Grantor the NFA items owned by the Trust remain the items of the Trust, they do not change ownership unless the Grantor directed the Trustees to transfer them rather than hold/maintain/deliver them to the beneficiary.
7. If the Grantor felt the need to lay out the restrictions/obligations/implications of owning NFA items in the Trust
that would be up to them. However, its not required by State law, it's just another asset on the Schedule A to Quicken.
8. The Grantor could specify who has the power to open an account. I havent opened an account for a Trust but I have for an LLC and a Corp and it's pretty clear cut, need documents showing you're authorized and your photo ID. Same thing with authorizing a Trustee to act on behalf of the Trust when contacting the Trust after the Grantors death.
9. Lay out who gets what as you would in a will, or create multiple Trusts for each of the heirs with the assets set aside within each Trust for each individual.
10. Again, lay out the role of the Trustee as you see fit when editing/writing the Trust.
11.Geographic restrictions as in limiting where the assets can go or where the trust is valid as each state may have different laws specifically dealing with the establishment and maintenance of Trusts? The first is absurd, the second obviously varies by state, however in WA there's no requirement to "register" the Trust or keep the State updated with the assets or mailign address of the Trust.
12. Again laid out in the Trust, which beneficiaries woul receive what assets after the Grantors death. Either a date or an age or event in the beneficiaries life. The example of a 5 year being transferred a MG is absurd because it's not changing owners if it's currently owned by a Trust. The assets and finances of the Trust would be maintained by the named Trustees until the Beneficiary is of legal age to take lawful possession of the Trust's assets and relieve the Trustees of their duty to maintain the assets. I would think 18 in most cases/most states, however with NFA items the ATF wouldn't approve the transfer into a new Trust created by the 18 year old beneficiary, however they wouldn't be under any requirement to move the assets out of the original Trust as they are the named beneficiary.