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Although a gun trust and Limited Liability Company can both be used as vehicles to obtain NFA items without the need for CLEO signoffs, the NFA gun trust is more versatile and less expensive to maintain. The NFA trust is much like a will but can last several generations with the ultimate disposition of trust assets determined in the trust instrument. A Limited Liability Company can theoretically last forever. LLC ownership is measured by the shares held by its members. The shares are usually transferred upon death of a member by the deceased member’s will unless there are restrictions on transfer. The class three trust does not require annual “maintenance”, a limited liability company does. A Texas LLC must file annual public information reports and franchise tax reports. K-1’s must be prepared and distributed to the members (owners). The recurring expense of having these forms done on an annual basis by an accountant adds up. A gun trust has no such requirements and is therefore less expensive to maintain.

Recently a decorated Vietnam veteran wanted to purchase a 9mm submachinegun with integral suppressor.  He contacted the Bexar County Sheriff to see if he would sign off on the required Form 4 transfer form.  The response was a resounding no.  The Sheriff no longer signs off on such documents.  The veteran was referred to Marty Seidler by his stockbroker to prepare an NFA gun trust.  Marty drafted the trust and the veteran was able to acquire the submachinegun in the name of the trust without the need for the Sheriff’s approval.  His trust is now the proud owner of a suppressed 9mm submachinegun, whose use, his children as trust beneficiaries, can also enjoy.

The famous YO Ranch in Mt. Home, Texas, held its 2010 Annual Machine Gun Shoot May 7, 8 and 9, 2010. Over 33 Class 3 dealers, machine gun enthusiasts and gun trust owners enjoyed three days of good food, comradery and good shooting. Participants enjoyed shooting at pickup trucks, propane canisters, water heaters, various original targets including plenty of Tannerite and other exploding targets. This year, the services of the Kerrville Fire Department were not necessary despite the large number of shooters with belt fed machine guns.

Last year, the dry weather and the extensive use of APIT ammo caused several range fires which were quickly extinguished. Many shooters took advantage of Crockett Keller’s straw hat extravaganza and sported custom straw hats personally fitted by Crockett. He is a regular at many Texas gun shows, easily identifiable by his large brimmed straw hat.

Gun trusts have become increasing popular with Texas Class 3 gun enthusiasts who wish to achieve flexibility in the use and possession of Class 3 weapons in addition to avoiding CLEO signoff problems. A well drafted gun trust by a gun trust lawyer will not only keep NFA weapons “in the family” for generations but can also make such weapons available for use and enjoyment by a broad range of
friends and family members.

Texas law requires a trust to be funded in order to be created. Section 112.005 of the Texas Property Code (Texas Trust Code) provides: “A trust cannot be created unless there is trust property.” Nominal funding is sufficient to create a trust where the other formal requirements for the establishment of a trust are met. In a battle over a large estate, the San Antonio Court of Appeals ruled that the funding of a trust with $1.00 was sufficient corpus to meet the funding requirements of a valid trust. In Re: Estate of Canales, 837, S.W.2d 662 (Tex. Civ. App. – San Antonio, 1992). The mere drafting and signing of a revocable trust does not create a trust unless it is funded. This is why some ATF examiners have questioned ATF Form 4 transferees regarding NFA trust funding. If a trust has not been funded the transfer may be to a non-existent entity and therefore invalid. A gun trust must be funded to be in existence and valid.

Funding of a Class 3 gun trust may be accomplished in many ways. A bank account can be opened or property can be transferred into the trust. Trust property is know as the “res” or the “corpus”. It is vital to document transfers of property into an NFA gun trust. Since the gun trust can last several generations and survive the death its creator (grantor or settlor), issues often arise as to what
property the trust actually owns. When there is no one living to ask, documents must be reviewed to determine ownership. The document which reflects a transfer of title into the gun trust is a Form 4 or Bill of Sale. Without one or the other there is no written proof of the conveyance of NFA or other tangible physical property into the trust. This can lead to expensive litigation in the future if not done correctly in a timely manner. A few years ago, litigation arose in the large estate of a Kerrville oilman. Since the trustee of the trust created by the oilman’s will did not keep good records, it was difficult and quite expensive to determine what property was actually in the trust and what was not. Some of the items to be transferred to the trust or left to the heirs had stickers with the trust or beneficiaries names thereon. However, over the years the glue had dried up and the stickers had fallen off of the items making it difficult to establish who was entitled to what property. For example, the sticker on the back of a $25,000.00 painting by Salinas, hanging on the a wall in the estate’s mansion, had fallen off. The sticker on the back of a less expensive armoire with another heir’s name thereon had also fallen off. Both stickers were found lying on the floor, next to one another, behind the armoire covered in dust. The dispute over who received the expensive painting versus the less expensive armoire needed to be resolved. In a gun trust setting this problem can be avoided by simply filling out a bill of sale conveying the property at issue (i.e. 1862 Sharps rifle, Serial # 3354) to the NFA gun trust and keeping the bill of sale with the original gun trust document. This should be sufficient proof of transfer of the non-NFA item into the trust. The transfer of NFA items into a gun trust require a approved Form 4 to be valid.

It is vital that a gun trust be funded and transfers into the trust be properly documented. Martin Seidler, a Texas gun trust lawyer, solves these issues by properly drafting each NFA trust which he prepares along with a custom Bill of Sale with instructions for use.