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By E. Drew Nelson, Attorney

On July 13, 2016 ATF regulation 41P will go into effect. This regulation significantly changes the landscape of acquiring and possessing Title II or restricted firearms. You may have heard about this regulation on the news or during a recent visit to your local gun shop. Over the past several years there has been ongoing debate about amending the requirements to purchase and possess Title II firearms. ATF regulation 41P makes some very important changes in regards to both individual ownership of restricted firearms and ownership via a gun trust or other legal entity. The most significant changes are as follows:

  • The Chief Law Enforcement Officer (CLEO) will no longer have to sign off on any application to purchase a restricted firearm. Under the old regulations any individual submitting a Form-4 for purchase would have to have the CLEO sign off on the application. Many people set up gun trusts to avoid having the CLEO sign off on an application. This will make it easier for individuals to purchase restricted firearms. However, it does not help protect an individual from any liability incurred with improper possession or transfer of the firearm.
  • Form 5320.23 will be required for all “Responsible Persons”. This is a major change that affects trusts looking to purchase restricted firearms. This is a new form required to be sent in with your Form 4. A copy is also required to go to your CLEO. This form will require a recent passport style photo taken within one year. A “Responsible Person” is any member of the trust “who [has] the power and authority to direct the management and policies of the trust or legal entity to receive, possess, ship, transport, deliver, transfer or otherwise dispose of an NFA item for, or on behalf of the trust or entity.” This would certainly include the Grantor as well as Trustees of the trust.
  • Fingerprints will also be required for the purchase of a restricted firearm either by an individual or by a trust. All “Responsible Persons” will be required to submit fingerprint cards for any application to purchase a restricted firearm. This will likely result in an extreme slow down in application processing time because of the added volume for local NFA branches.
  • Even though finger prints and photos are now required there will be a 2 year exemption period on new applications after approval of an application. While this criteria is a bit unclear it appears that if you have had an application approved within 2 years then you will not have to resubmit a photo or fingerprints so long as no details of the trust have changed. It is unclear if these applications will be processed faster than ordinary applications.
  • It is important to note this regulation is not retroactive. Any application being processed prior to July 13, 2016 will be processed under the existing rules at the time. In other words if you have an application currently pending you will not have to comply with these added requirements.

There are several advantages to still holding restricted firearms in a trust. One of the most important reasons to hold firearms in a trust rather than individually is to limit personal liability. There are stiff federal penalties for anyone found in possession of a restricted firearm without authorization. A trust allows you flexibility in allowing others to use and possess the firearm without running the risk of violating federal law regarding possession of the firearm.

Trusts can be powerful estate planning tools in regards to your gun collection. If you own the restricted firearm individually, upon your death whomever inherits the item will have to go through the process of reapplying and paying a tax fee on the firearm for transfer. A trust can avoid the need to have to reapply and wait needlessly before legally being entitled to possess the firearm. A trust can help pass down these restricted firearms free of any additional tax or transfer requirements for generations.

Trusts still provide added privacy over individual ownership. While for the purchase of each new item the ATF will require photographs and fingerprints there is no requirement to notify the ATF anytime the trust is changed. This will allow you to appoint and remove Trustees or Beneficiaries without having to notify the ATF or local law enforcement of each change.

Should you have any questions or wish to speak with an attorney knowledgeable in Estate Planning, Gun Trusts and Firearms Rights please contact Brinkley Walser Stoner at (336) 249-2101.