Charleston Gun Trusts or Firearm Trusts

Understanding Rule 41F

On January 4, 2016 United States Attorney General Loretta Lynch signed ATF Rule 41F. The Rule administratively changes federal regulations regarding firearms regulated by Title II of the Gun Control Act (GCA), specifically known as the National Firearms Act, 26 U.S.C. Chapter 53 (the NFA).

The first provision of the rule is that it revises the definition of person and adds a definition for responsible person:

“As to a trust, a responsible person includes “…those persons with the power or authority to direct the management and policies of the trust” including “…any person who has the capability to exercise such power and possesses, directly or indirectly, the power of authority under any trust instrument, or under State law, to receive possess, ship, transport, deliver, transfer or otherwise dispose of a firearm for, or on behalf of, the trust.”

Another important contention of the rule is that: “a trust or other legal entity with an approved application in the preceding 24 months may certify no change in certain documentation previously submitted.”

This will certainly be advantageous to firearms trust clients who acquire and dispose of NFA firearms from time to time, reducing the amount of paperwork and additional expense for new firearms. RPs would still submit documentation, the transfer tax would still be paid, but entity documentation previously provided for an application approved within the preceding 24 months would not need to be provided. Providing a “Certificate of Trust” might be advisable.

Impact on Gun Trusts

In the context of firearms trust planning, it is important to remember that a trust not only continues beyond the death of the settlor for administration but could continue on as a common trust for heirs. If there are no changes in identity or if this is not a “transfer” then no documentation would be required. However, if reallocation is made to a lawful heir or into separate trust shares, documentation of responsible parties and a copy of the trust would likely be required along with filing of the Form 5.

Failure to address the new issues raised by Rule 41F will expose owners of firearms trusts to the risk of committing a new kind of accidental felony, i.e. related to a failure to document an RP. Firearms trusts must be reviewed – and likely revised – to clarify the roles of parties involved and whether or not they are RPs. If new NFA applications are made following implementation, it might be advisable to limit the number of “responsible persons” as defined by Rule 41F to avoid substantial paperwork or risking liability for unlawful transfer of an NFA firearm. The legal consequences of failing to comply with the new NFA rule can be severe, including fines of up to $250,000 and up to 10 years in prison, as well as confiscation of the firearm(s) involved.

A properly constructed Charleston gun trust instructs the gun owner in how to lawfully share and enjoy firearms – both conventional and NFA – without committing an accidental felony by an innocent but technically unlawful transfer. Contact our Charleston estate planning attorneys to learn more.