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Thread: trust?

  1. #1
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    Default trust?

    ive been reading about people opening up a "trust" to purchase nfa items. what is a trust? i buy through my corp now but someone was saying its better to open a trust. can someone explain what it is.

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    Default Re: trust?

    I set up LLC's and corporations as vehicles for purchasing Title II weapons. The people who recommend trusts usually are looking to go cheap, and they spend $29.95 to set one up using software from Staples.

    The main problem that I have with trusts is that they aren't as clearly backed by the government as LLC's or corps. To set up an LLC or corp, you go through the PA Corporations Bureau, you fill out the forms, pay the fee, and presto, there's a State-created entity. It's a new "legal person" that can be verified by ATF or law enforcement.

    A trust may or may not be registered with the county or state. Some federal firearms statutes mentin trusts along with corps and LLC's, others just mention the corps and LLC's. So far, ATF has approved transfers for trusts in most states, but ATF is famous for suddenly changing rulings, declaring guns to be contraband, and arresting people for things they previously approved.

    Trusts also have certain purposes and fiduciary duties. If you set up a trust, name y9ourself as trustee, name yourself as the beneficiary of the trust corpus, purchase all of the trust assets, and from time to time sell them and pocket the cash, it's not really a trust at all. Trusts traditionally have 1 person creating them, another person acting as fiduciary, and a 3rd person (or persons) receiving the benefit. There are exceptions, of course, but those exceptions require someone legally knowledgeable to keep the trust within the law.

    There's only so far that you can stretch the paperwork, and some day these trusts are going to pop like old party balloons. When that happens, every NFA item the trust owns will be in limbo, with nobody entitled to possession.

    So far, though, they seem to be working for people, for the last few years anyway. Me, I'd protect my tens of thousands of dollars of appreciating toys by spending a couple hundred bucks on a corp or LLC.

    You can have any lawyer or accountant set up your corp or LLC, but you need someone familiar with NFA issues to finalize the paperwork. An LLC needs a customized operating agreement, and a corp needs appropriate resolutions from the board.

  3. #3
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    Default Re: trust?

    Quote Originally Posted by GunLawyer001 View Post
    I set up LLC's and corporations as vehicles for purchasing Title II weapons. The people who recommend trusts usually are looking to go cheap, and they spend $29.95 to set one up using software from Staples.

    The main problem that I have with trusts is that they aren't as clearly backed by the government as LLC's or corps. To set up an LLC or corp, you go through the PA Corporations Bureau, you fill out the forms, pay the fee, and presto, there's a State-created entity. It's a new "legal person" that can be verified by ATF or law enforcement.

    A trust may or may not be registered with the county or state. Some federal firearms statutes mentin trusts along with corps and LLC's, others just mention the corps and LLC's. So far, ATF has approved transfers for trusts in most states, but ATF is famous for suddenly changing rulings, declaring guns to be contraband, and arresting people for things they previously approved.

    Trusts also have certain purposes and fiduciary duties. If you set up a trust, name y9ourself as trustee, name yourself as the beneficiary of the trust corpus, purchase all of the trust assets, and from time to time sell them and pocket the cash, it's not really a trust at all. Trusts traditionally have 1 person creating them, another person acting as fiduciary, and a 3rd person (or persons) receiving the benefit. There are exceptions, of course, but those exceptions require someone legally knowledgeable to keep the trust within the law.

    There's only so far that you can stretch the paperwork, and some day these trusts are going to pop like old party balloons. When that happens, every NFA item the trust owns will be in limbo, with nobody entitled to possession.

    So far, though, they seem to be working for people, for the last few years anyway. Me, I'd protect my tens of thousands of dollars of appreciating toys by spending a couple hundred bucks on a corp or LLC.

    You can have any lawyer or accountant set up your corp or LLC, but you need someone familiar with NFA issues to finalize the paperwork. An LLC needs a customized operating agreement, and a corp needs appropriate resolutions from the board.
    thanks for the time to answer. thays what i've been doing is buying through my company. i dont plan on going out of business until i die so looks like my investments are safe , i hope. nfa is fun, but it sucks to pay 200.00 to cut a shotgun barrel. then again, its fun listening to people say, you cant own a sawed off shotgun or machinegun...

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    Default Re: trust?

    Just make sure that your corporate paper trail gives you authority to possess the toys. Owing all the stock in a corp does NOT automatically give you personal authorization to shoot the stuff at the range; you need a written board resolution vesting that authority in you.

    Of course, this is outside the familiarity of most cops, but you still need SOMETHING to show them, and it might as well be something legally sufficient.

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    Default Re: trust?

    Quote Originally Posted by GunLawyer001 View Post
    Just make sure that your corporate paper trail gives you authority to possess the toys. Owing all the stock in a corp does NOT automatically give you personal authorization to shoot the stuff at the range; you need a written board resolution vesting that authority in you.

    Of course, this is outside the familiarity of most cops, but you still need SOMETHING to show them, and it might as well be something legally sufficient.
    i just sent the info to my accountant. hopefully he can get it resolved if theres something wrong... thanks for the info, i spent alot of money to become incorporated, thinking this is the legal and right thing to do, now i have to worry if these items are legal for me to use... i'll find out monday...these nfa items are'nt cheap, dont want to lose them, also theres alot more out there to buy......

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    Default Re: trust?

    You might want to take a look here:
    http://www.nfa-trusts.com/

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    Default Re: trust?

    Quote Originally Posted by eduard69 View Post
    You might want to take a look here:
    http://www.nfa-trusts.com/

    ROFL: "we can help you navigate the delicate and complicated process of NFA regulations"

    whatever did we do before we had someone to help us navigate the delicate and complicated process of NFA regulations?
    "Oderint Dum Metuant" - BMFH

    "Tact is for people not witty enough to use sarcasm"

    Note: any whingeing crazy that hits my PM inbox will be deleted without reply

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    Default Re: trust?

    Quote Originally Posted by JayBell View Post
    ROFL: "we can help you navigate the delicate and complicated process of NFA regulations"

    whatever did we do before we had someone to help us navigate the delicate and complicated process of NFA regulations?
    I'm not so sure that Mitsy is the person to do the navigating. "Class III weapons" are not "Class III", they are Title II. Silencers are not "weapons", although they are defined as "firearms". And I'm still not so sure that an NFA trust is a good idea for most non-lawyers, since it's a legal person created entirely in the imagination of the citizen, and can disappear or reappear without any intervention by the government; this puts it in the same class as your daughter's imaginary playmate, Ginger Jellybeans, albeit with an extra piece of paper.

  9. #9
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    Default Re: trust?

    Not to hijack the thread, but does anyone have an idea as to what the cost in general is on setting up a corp (LLC I'm guessing) for Title II related items? Is there any tax liability each year on the corp? I understand that other annual or regular filing and license fees in regards to the corp apply (it's a copr like any other), I'm just not so clear on the initial costs and tax issues since there would be no profit or expenses or anything.

  10. #10
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    Default Re: trust?

    The individual LLC in PA costs $125 fee to file and currently there are no annual fees and there are no filing requirements if you don't turn a profit or have expenses. I could walk you through it but for NFA a lawyer might be a better bet, at least you won't come crying to me.

    If you had profit or expenses, you would file a simple Schedule C on your taxes, which should be basically free by your accountant for a cash basis business. Probably $200 accounting bill for all your taxes.

    If you want a lawyer to walk you through it and give you an operating agreement, probably about $600. I can PM you with Phil Kline's contact info or you can get it from Dan P, etc.

    The operating agreement is highly lauded around PAFOA but is basically to tie the LLC name to your name should a cop question why you have the firearm that is not in your name. It is not a legally binding document from what I understand since it only binds your actions to your approval. Still, I would guess it's good to have a paper trail of some sort. I would take it a step further and sign up your LLC for a free business checking account, fund it, and use it to purchase your NFA items. I was not advised to do this, but it is common business sense. If you are using a LLC for its intended purpose, you should keep its finances separate. Again, goes to legitimacy in my humble opinion. My bank made me get a Federal EIN number (otherwise use my own Social Security number, PA number was a no-go with them). This surprised me because I did not have to do it with my last NJ LLC, I just showed the state papers. If your bank says the same thing, go ahead an do it, it's a one-page form.

    Again, just my opinion. A business should be run like a business to serve its purpose and withstand scrutiny in cases of liability, I would act the same way to avoid LE or ATF scrutiny. Even if there are no filings, meetings, or fees required. This is all very simple and will only require a couple hours of your time and a couple weeks turnaround time. Again, no lawyer advised me to set up a bank account for my NFA LLC. But it was the first recommendation I got when I set up my first company way back when for the reasons I have stated.

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