President Obama, in his “Fact Sheet” describing his Executive actions to reduce gun violence released on January 4, 2016, states: “ATF is finalizing a rule that makes clear that people will no longer be able to avoid background checks by buying NFA guns and other items through a trust or corporation.”

What do these changes mean for individuals who already hold their firearms in a gun trust, and what do they mean for those who are contemplating using a gun trust to purchase and hold firearms?

Regular Firearms Are Not Affected

For individuals who hold their regular firearms (typical standard length manual or semi-automatic rifles, shotguns, or pistols) in revocable living trusts (RLTs), the ATF has made no changes. Well-drafted NFA gun trusts are designed to also hold regular firearms (ATF has made no changes to how regular firearms are purchased or held in NFA gun trusts.)

Expanded Background Checks And Reporting When a Gun Trust Purchases a NFA Firearm Or Device

Previously, purchase of an NFA firearm or device by a trust required the applicant trustee to fill out ATF 4473 (Firearms Transaction Record) documenting the purchase from the FFL (Federal Firearms License holder/seller) and to be subject to a NICS (National Instant Criminal Background Check System) background check. But the gun trust eliminated the need for CLEO (Chief Law Enforcement Officer; typically the county Sheriff or city Chief of Police) permission or notification when the trust purchased a NFA firearm or device. The gun trust also eliminated the need for the grantor or trustee(s) to submit fingerprints and photographs in order to purchase a NFA firearm or device.

The ATF, in its “Final Rule Change” (ATF 41-F) (which will soon be published in the Federal Register) does not change anything about the ability of a NFA gun trust to hold or manage NFA firearms or devices. Instead, the ATF makes changes to the application process for acquiring NFA firearms or devices via an ATF Form 4 (application for transfer and registration of an NFA firearm) or an ATF Form 1 (application to make and register a NFA firearm.)

When a gun trust makes a purchase or manufactures an NFA device, ATF 41-F expands the rules in the following manner:

  • Each “responsible person” (a new ATF designation) associated with the trust (the trust grantor and trustees in appropriately-drafted NFA gun trusts) must notify his local CLEO of the proposed NFA purchase or manufacture by submitting a copy of the new ATF 5320.23 Responsible Person form; this must occur before the ATF Form 4 or ATF Form 1 is submitted to the ATF. The other copies of the ATF 5320.23 Responsible Person form must be filed with the ATF;
  • ATF will require a complete copy of the NFA gun trust document (this rule is unchanged) with submission of ATF Form 4 or ATF Form 1;
  • Each “responsible person” must submit two FBI Forms FD-258 fingerprint cards, two photographs, and be subject to a background check.

Gun Trusts – Remaining Benefits

ATF-41F leaves the following gun trust benefits unaltered:

  • The NFA gun trust provides a more flexible means of controlling legal possession of both NFA firearms and devices, and regular firearms–more than one co-trustee can legally possess firearms or devices owned by the trust;
  • Well constructed gun trusts provide for appropriate and legal transfer of firearms at death or incapacity;
  • Firearms in a gun trust bypass probate; avoiding probate fees and disclosure to the public.