On September 2, 2011, Michigan Attorney General Bill Schuette, issued an opinion stating “that the possession, manufacture, or sale of a firearm silencer is permitted in Michigan…if the person is licensed or approved to possess, manufacture, or sell such a device by the federal Bureau of Alcohol, Tobacco, Firearms and Explosives, as required by MCL 750.224 (3)(c).” Opinion No. 7260, Sept. 2, 2011. One such way of achieving licensing is by acquiring your Class 3 firearm or silencing device with a trust. Clark Hill PLC’s Personal Legal Services group is well aware of the requirements and benefits of using an NFA firearms trust to acquire your next Class 3 weapon or silencing device. Such benefits include:
- Protection Against Inadvertent Violations of the NFA. Under the National Firearms Act (hereinafter “NFA”), 26 U.S.C 5861 (2011), possession, either actual or constructive, rather than ownership is punishable. Constructive possession exists when a person knowingly has the power at a given time to exercise dominion and control over an object, either directly or through others. For example, if the Class 3 weapon is housed in a safe, and individuals other than the owner have access to the safe, or have the combination to the safe, the owner and the other individuals may be in violation of the Act. A trust naming the other residence of the home, as beneficiaries or authorized users can protect family members living in the home from prosecution under the NFA. In the event of a violation of the NFA, any person, upon conviction, may be fined up to $10,000, or be imprisoned up to ten years, or both. 26 U.S.C. 5871 (2011). Further any firearm involved in any violation of the NFA shall be subject to seizure and forfeiture. 26 U.S.C. 5871 (2011). Although the fine specified in the statute is an amount not exceeding $10,000, as of October 12, 2011, an amendment to Federal law provides for a fine of not more than $250,000 in the case of an individual or $500,000 in the case of an organization. 18 U.S.C. 3571 (b) and (c) (2011). If a trust is registered with the NFRTR as the transferee, all beneficiaries named in the trust may use the weapons without running afoul of the NFA.
- Minimizes Transfer Fees. Under 26 U.S.C. § 5811, a $200 transfer tax is paid on every transfer of a firearm. The term transfer is broadly defined by the NFA to include “selling, assigning, pledging, leasing, loaning, giving away, or otherwise disposing of an NFA firearm.” 26 U.S.C. § 5845(j) (2011). The lawful transfer of an NFA firearm requires the filing of an appropriate transfer form with ATF (Form 4), payment of any transfer tax imposed ($200), approval of the form by ATF, and registration of the firearm to the transferee in the National Firearms Registration and Transfer Record (hereinafter “NFRTR”). By using a trust an individual may name a spouse, children, or other authorized users as beneficiaries, entitling the authorized users to possess or use the firearm without paying the $200 transfer tax.
- Provides Privacy. Ordinarily when transferring firearms to individuals other than FFLs, the transferees’ fingerprints and photograph must accompany Form 4. In addition, an individual transferee must have an appropriate law enforcement official execute the certification on the form. Id. The requirements for fingerprints, photographs, and the law enforcement certificate specified in 27 CFR 479.85 are not applicable to a transferee who is a trust. Further, a trust does not have to be titled with the individuals name.
- Probate Avoidance. The use of a trust to hold and manage the weapon provides flexibility, privacy, probate avoidance, and incapacity planning.