Dogulas A. Turner, Esq.

Does My Trust Need to be Registered with the State of Colorado?

As of September 2020, Colorado does not require registering our revocable firearm trust.  Several other states require registration, but not for personal property or revocable trusts of this nature.

How Can I Transfer Items to the Trust When the Trust Already Owns Them?

In other words, why is the assignment page necessary and what does it do?  Technically, in the case of a Form 4, the Assignment form we include with your trust does nothing because you never owned or purchased the items as an individual.  However, if you do not include a completed assignment with your trust, the ATF will not approve the transfer or purchase of the NFA items. The ATF has a checklist and without an assignment page or Schedule A, the ATF will not approve the transfer.  Do yourself a favor and fill it out and send it in with your NFA trust to avoid unnecessary delays.

Maintenance or Repair

Should you require service or repair of an NFA item, other than routine and otherwise permissible owner-completed maintenance, a trustee should contact the manufacturer for recommendations, because some NFA items cannot be repaired under the NFA.  If these items are serviced or repaired, a licensed gunsmith may be used after submitting an ATF Form 5 (5320.5) application for the purposes of the work.  The gunsmith must have a Special Occupational Taxpayer license to perform services or repairs of NFA items.  The gunsmith will then submit an ATF Form 5 before returning the item to a trustee.

Storage of NFA Items

The ATF requires NFA items be stored in a manner that no one other than a current trustee shall have access to them.  This is specific to how the trust is drafted.  Our trust is drafted so that only current trustees are entitled to firearm possession and even then with some limitations.  The fact that an individual is a successor trustee or beneficiary does not entitle them to current possession of trust firearms.

Transferring Previously owned NFA Firearms to the Trust

Should you want to transfer previously acquired NFA items to your trust, fill out a Form 4 from yourself to the trust.  In the section where the dealer would provide its information, you will provide the information on yourself as an individual.  Each of these transfers will be subject to a new fee.  Remember that in some states where the laws have changed, it may not be possible to complete a new transfer because it would violate the current laws of where the items are located.  A Colorado background check may be required on you and other co-trustees.

Should I Make a List of all Firearms and Submit it with my Trust to the ATF?

There is no requirement to make a list of all your firearms.  However, it is a good idea to keep an inventory of the trust firearms for you and your successor(s) information.  This list does not need to (and should not be) submitted to the ATF when you send in a Form 4 or Form 1.  Send only a copy of the one assignment sheet containing the item that pertains to that particular Form 4 or Form 1.

Can a Successor Trustee Possess Trust NFA Items?

Under our trust, a successor trustee may not have access to or be in possession of any NFA items until they become an active/current trustee. Successor trustees are typically not considered a Responsible Person under your trust agreement as drafted by us.  One who is named a successor trustee does not have to accept the position.

Can a Beneficiary Possess Trust NFA Items?

There are two types of Beneficiaries.  The original beneficiary of the trust is usually the grantor or settlor who creates the trust.  This is the lifetime beneficiary.  In addition, a valid trust may require that there be a beneficiary named who will receive the benefit of the items upon the death of the lifetime beneficiary.  As usually drafted, a beneficiary has no rights in the trust as long as there is a living Settlor; therefore a beneficiary has no right to access or be in possession of the NFA items owned by the trust.  A beneficiary can also be named as an active trustee, and as an active trustee, have the right to possession and use of the NFA firearms.

As the Person Who Created the Trust, Can I act Alone?

In article III Section F of the trust where Trustee is defined you will notice that we usually give the trust maker/settlor some special powers to act on their own which everyone else usually needs a majority of the then serving trustees to take action.  This extra protection allows you to make decisions regarding the trust on your own and without consent or agreement of the others.  The language usually states: “Despite anything in this Trust Agreement to the contrary, whenever (the main trustee) is serving as trustee, he/she may act alone in all matters pertaining to the trust including but not limited to removing and replacing trustees even though this Trust Agreement may refer to the “Settlors acting jointly.”

Can I put my non-NFA firearms in the NFA Trust?

As a general rule, our NFA trust is designed to be a Colorado firearm trust.  Most regular firearms can be held in the name of our Colorado NFA trust.

We are often asked whether a Colorado NFA Trust or a Colorado Firearm Trust can be used in another state. Or, if the trust creator/maker (Settlor) moves, can he/she keep the same trust or would he/she have to establish new a new NFA/Firearm Trust in the new state? The short answer is yes, probably, the trust maker can keep their NFA/Firearm trust. The longer answer is it depends on the state the person moves to and what that state’s law says about trusts and how the trust is viewed. The trust is not the limiting factor. State law is the limiting factor. Even if the trust can operate in the new state, as a general rule, the trust does not allow an individual to possess an item that is prohibited under local law.

In Colorado, a trust is much like any other entity. The trust is considered a person. However, some states do not recognize trusts as a separate entity or treat trusts differently. It is important that any settlor of an NFA Trust or Firearm Trust understand all the laws, rules and regulations surrounding the possession of firearms in the destination state.

It all started in the 1930s. After the repeal of prohibition, the National Firearms Act (the “NFA”) became law. Congress imposed restrictive regulations on certain firearms by way of the power to tax. Initially, machine guns, short barreled shotguns and rifles (SBS’s & SBR’s), any other concealable firearm other than a revolver or pistol (AOW’s), and silencers were regulated. Registration was mandatory as was the payment of a $200.00 tax. $200.00 was a lot of money in the 1930s. That is about $3,000.00, adjusted for today’s dollars.

The $200.00 tax has remained constant for machine guns, SBSs, SBR’s, suppressors, and destructive devices (DD’s). The tax on AOW’s was eventually reduced to $5.00. Consequences for illegally possessing an NFA item are significant. A violation could mean a 10 year prison sentence and a $250,000.00 fine. Next time you want to try out your friend’s short barreled shotgun, keep that in mind. Only the person who registered the NFA firearm with the BATF and acquired the tax stamp may legally be in actual or constructive possession of the NFA firearm. Some may argue otherwise. However, to date nobody has shown us the written ATF document that says otherwise.

The important word is “person”. The term person includes individuals and other entities like LLC’s, corporations, and trusts. To allow friends and family to legally possess NFA firearms and avoid constructive possession issues, individuals have turned to trusts with multiple trustees to comply with the law. At first the trend was slow. Over time, the trust became the preferred way to hold NFA firearms and Title I firearms as state laws became more restrictive.

Properly drafted, an NFA/firearms trust allows for multiple individuals to possess the NFA item/firearm thereby letting several individuals be in legal possession of the NFA item/firearm. Accessories may also be transferred to the trust depending on local law. All allowing for continuity of ownership and continued possession by multiple individuals.

We are often asked whether multiple individuals can legally possess a Title II firearm in a Colorado NFA Trust. By making those individuals limited purpose or full trustees and assuming the individual is otherwise qualified, in most cases multiple individuals can be in possession of the trust NFA item. Under current BATF interpretations, all trustees at the time a tax stamp is requested must complete the Responsible Person form (including fingerprint cards and photos). This can create some logistical complications depending on the number of trustees and their location.

Colorado NFA Trusts – Adding and Removing Trustees / Specialized Form.

Another common question is how easy is it to add or remove trustees of a Colorado NFA Trust. Because of the unique, copyrighted design of our Colorado NFA Trust, adding or removing trustees is easy. Typically, it takes less than 24 hours and less than 20 minutes of attorney time to change the trusteeship. So, if a father/son/daughter/friend no longer is able to be trustee or does not want to be trustee, removing or replacing them is very easy.

One of the improvements we have made since 2016 is the addition of a new class of trustee called a limited purpose trustee. The limited purpose trustee has no management authority. The limited purpose trustee can only possess trust property (e.g., the firearms assuming they have been properly qualified). The limited purpose trustee cannot make purchases or open financial accounts.

With the addition of this new concept, adding trustees for a day, week or month is possible through the use of our specialized trustee addition form. The limited purpose trustee automatically ceases to be a trustee after the designated time period. So long as a tax stamp is not pending, the ATF does not currently require these short term trustees to submit fingerprint cards and photos. Only actual trustees at the time the application is made apparently need to submit fingerprint cards and photos.

The Certification of Trust is used primarily to open a bank account in the name of the gun trust. It is a summary of information instead of all the detail. DO NOT confuse the Certification of Trust with a Declaration of Trust. The ATF will often refer to the actual trust document as a Declaration of Trust. If you send ATF the Certification of Trust instead, your ATF Form 4 or ATF Form 1 will be rejected.