Texas Gun Trust

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Texas National Firearms Act Gun Trust: 

The Gun Trust is a trust that is designed to protect the Settlor/Grantor and Trustees of the trust from violations of the National Firearms Act while ensuring that the assets that are owned by the trust are protected and passed to the beneficiaries of the trust upon the death of the Settlor.

I have been preparing Texas gun Trusts for Many Years and these are some of the recurring Questions that I answer on a regular basis: 

1.       Should I register the Items regulated by the National firearms Act as an individual, a trust, an LLC or a Corporation?
This depends on many factors, some of which include whether a local CLEO will sign a form 1 or 4, whether you want more than one person to have the legal capacity to posses the items regulated by the National Firearms Act, whether you want the existence of the entity to be private or public and many other factors that go into this decision.

2.      What are the benefits of the Texas NFA Trust over the Corporate and individual form of ownership?

a.      No filing fee or annual fee

b.      There are NO requirements that the Trust be filed with the Secretary of State

c.       The trust documents and the assets of the trust remain private.

d.      No CLEO signoff, no photos, no fingerprints and NO BEGGING the government for permission to exercise your Second Amendment rights!

e.      The ability of anyone who is a trustee to be able to lawfully possess the weapons.

3.     Can my friends and I form a Revocable living Trust and put weapons regulated by the National firearms Act into the trust?
This is possible.  However the Settlers/Grantors need to be aware of the implications of doing this.  Concerns include what happens when the friendship ends, where the items regulated by the national firearms act are stored and positive control of the items regulated by the national firearms act.  Each Settlor and trustee may have legal liability for the actions of the other so this form of Trust ownership is to be entered into with much careful consideration.  I generally recommend that each friend get their own individual Texas NFA Trust.

 

4.      Can I use a other self help services to create a trust?
This is possible.  I have friends who have done this and they have purchased NFA regulated items and shoot them with me.  No BATF agents have crashed their doors and shot their dogs.  However, by having my firm prepare your trust, you have a lawyer available to answer your questions regarding the National firearms Act, I will assist you with preparation of your National firearms Act forms and I will be there to help you whenever you need help.  Frankly, you will probably see me at major machinegun and silencer shoots in addition to IDPA and 3 Gun matches and can ask me questions in person when you see me.  Try calling the do-it-yourself services when you have a question about your trust or the National Firearms Act.  If a
do-it-yourself trust is rejected by the BATFE or found to be invalid, they will contact you and you may feel free to call and email me immediately and I will see what I can do to correct the problem.

5.      Do I have to file a copy of my Texas NFA Trust with the State of Texas?
No. The Texas NFA Trust does not have to be filed with the City, County or State of Texas.  The only government entity that the trust is filed with is the BATFE when a form 1 or Form 4 is submitted.

6.      Does the Texas NFA trust appear in Law enforcement databases and Records?
No. The Texas NFA Trust and the items that are regulated by the National Firearms Act are private and known only to the BATFE. 

7.      Are there any annual reports fees or franchise taxes that are due from the Texas NFA trust?
No. The state of Texas does not require the filing of a franchise tax report or other reports to maintain the trust.

8.      Is there a benefit to putting Title I (Non NFA) firearms into the trust?
There is no specific benefit to putting title I firearms into a trust except for estate planning.  However, a perpetual trust may get the firearms around a California style Assault Weapons ban.

9.      I have a dealer who has offered to draft an NFA trust for me.  Is that legal or all right?
The dealer is practicing law without a license which is a Class B Misdemeanor in the state of Texas.  Further, the dealer is accepting a lot of liability if the trust is later found to be invalid.  If the dealer is using quicken or legal zoom, see the answer to question 4.  Basically, the trust may be valid, it may not be valid, but the dealer is accepting a lot of potential liability by doing this if the trust is later found to be invalid. 

10.  Will I be the only person who is allowed to use the firearms and items that are regulated by the National firearms Act?
No.  The Texas NFA Trust allows you to name multiple individuals as trustees.  They can are allowed to possess and use the items regulated by the National firearms Act. 

11.  What happens if I become incapacitated? 
No, the Texas NFA Trust contains specific language to deal with the possibility of you becoming incapacitated.   

12.  Who can be the beneficiary of the Texas NFA Trust? 
Anyone, including a minor child may be a beneficiary of the Texas NFA Trust. The Texas NFA Trust has a trustee who will manage the trust assets until the beneficiary reached either majority or a pre-designated age.  The Texas NFA Trust is designed to protect the assets for a minor beneficiary until the child reaches the age of eighteen or a later date that is selected by the settler.  These terms may be amended at any time the settler wishes.

13.  Does a Texas NFA Trust have an affect on the time the BATFE takes to process the form 1s and form 4s for the transfer of items regulated by the National Firearms Act
Yes, usually it will shorten the registration process because a background check does not take place.

14.  What if I live outside of Houston and cannot meet you in your office to execute the trust?  Can you still set up an NFA trust for me?
Yes, I have created Texas NFA Trusts for Texans all over the state from El Paso to Beaumont and Brownsville to Amarillo.

15.  Are there any Downsides to Trust ownership? ?
The only downside is the fact that the BATFE may not allow a tax free form 5 transfer of the item regulated by the National Firearms Act upon the death of the settler. 
 

16.  If I currently own Items regulated by the National Firearms Act, may I transfer them into the trust without paying the transfer tax?
The answer is no.

17.  May I be the only Settlor, Trustee and Beneficiary?
The Texas NFA Trust is a revocable living trust.  That means that the founder of the trust (the Settlor) may be the life trustee and the life beneficiary.  However, the beneficiary who takes when the settler dies should be named.  A trustee of the trust may not generally also be the beneficiary of the trust.

18.  How many people may be a trustee on my Texas NFA Trust?
There is no limit.  However, each trustee has duties and obligations to the trust that they will have to be aware of. 

19.  May I remove a Trustee from my Texas NFA Trust? ?
The simple answer is yes.  As a Settlor, the right to remove trustees is reserved in the Texas NFA Trust.

20.  Will my Beneficiary get the assets of the Trust when I die?
The answer is not simple.  In Texas, all property is presumed to me community property.  If you put community property in a Texas NFA Trust, your spouse may have a claim on her share of the community property that is in the trust.  This prevents fraud on the community estate. 

21.  May a beneficiary of the trust possess the items regulated by the National firearms Act?
No, only the trustee may possess the items Regulated by the National firearms act.  The Trustee must be eighteen years of age to possess the items regulated by the National Firearms Act.  The Trustee must be twenty one years of age to purchase items regulated by the National firearms Act.

22.  May I amend my Texas NFA Trust?
The general answer is yes, you may amend the Texas NFA Trust at any time with few limitations.

23.  May I change the name of my Texas NFA Trust?
This is generally not necessary.  However, should it become necessary, the trust, like a corporation, may change its name, the trust may be amended to reflect a new name.  This is also similar to an individual who owns an item regulated by the National firearms Act getting married and changing her legal name.  In this case, the original trust papers should be kept in a safe place.

24.  What should I name my Texas NFA Trust?
You may name it anything you want.  "Captain Awesome’s Machinegun Trust" sounds great, but it is a lot to engrave on the side of an SBR.  I normally recommend using your surname to keep the name of the Texas NFA Trust short, simple and easily engravable.

25.  May a trustee live in another state?
Yes.  However, the trustee must have the proper BATFE forms to take the items regulated by the National Firearms Act out of the state of Texas.  The BATFE form 5329.29 is the proper form for this.  One caution is that spreading items regulated by the National Firearms Act across the country creates potential issues.

26.  What must I submit with my form 1 or form 4 when I am transferring an item regulated by the Nationaklfirearms Act into my Texas NFA Trust?
This is simple.

a.       A complete copy of your Texas NFA Trust

b.      A copy of your schedule A

c.       A certificate of compliance

d.      Two copies of your form 1s or form 4s signed in blue ink

e.       A check for $200.00 made payable to the BATFE or DOJ with the word transfer, the make, model and serial number of the item being transferred or manufactured

f.       Send all of the above to 244 Needy road, Martinsburg, WV 25404.

27.  Should I open a bank account for my Texas NFA Trust?
Yes.  However, if you do not, there has been no problem.  At this time, there is no limitation on who may pay the transfer tax or pay for the item regulated by the National Firearms Act itself.  However, I have am concerned that the BATFE may decide to attack the validity of a trust based on the co-mingling of assets.  A simple work around is to use a postal Money order to pay for the item and the transfer tax.

28.  You told me about making a Short Barreled Rifle (SBR).  What do I have to do to mark the receiver?
If you register an existing receiver as a Short Barreled Rifle (SBR) on a form 1, you must engrave the lower receiver with the name of the trust and the city and state that the trust is located.  The receiver must be marked with the name of the manufacturer (the trust name), the city and the state of manufacture.  The name of the trust may not be abbreviated absent a letter granting the marking variance from the BATFE. 

a.       Name of Trust

b.      City, State

 

Sean Cody shooting the Larue Tactical 3 Gun Match 2010 with his DPMS AR-15 SBR with a 12.5" DI upper, Larue FUG, Larue SPR mount holding a US Optics SN-4 and shooting his Benelli 1014.

 

Send mail to SeanCody@HoustonAttorney.org with questions or comments about this web site.
Last modified: 06/13/11

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