“What can I do to my trust to reduce the number of people who need to be fingerprinted and photographed?”
Now that 41F is actually in effect, I am getting dozens of emails with some version of this question.
The good news is that I believe there is a way to reduce the number of people who need to be fingerprinted and photographed while still allowing them temporary access to the items for hunting and sporting purposes:
IMPORTANT: This advice is specific to trusts that I have drafted. If you have a different trust, please consult with the attorney who drafted your trust.
The solution revolves around understanding which parties to a trust are affected by the new rule so let’s take a quick moment to review that question.
Under 41F, those persons who need to be fingerprinted, photographed, and notify their CLEO are known as ‘responsible persons’. I have a detailed article here that breaks down my analysis of which parties on a trust are ‘responsible parties’ and which ones are not.
The summary version is this:
- Settlor – Responsible Person
- Joint Trustee – Responsible Person
- Successor Trustee – No
- Beneficiary – No
Therefore, our goal is simple. If we are going to submit a new Form 4 or Form 1 application then we need to remove as many Joint Trustees as possible.
That, in and of itself, is quite easy. When I originally emailed you your trust, it was accompanied by a Word document containing blank schedules. If you have lost that document, I still have it in your client file and will be glad to email you a replacement copy.
If you do not have Microsoft Word or would prefer my assistance, I would be glad to make the changes for you.
In either case, we simply use that template to print a new version of Schedule B with the selected Joint Trustees removed. Once printed, you should:
- Sign and date it with the current date (not the date that is on the other schedules)
- Make as many copies of the signed and dated Schedule B as you have copies of the trust
(including those held by joint or successor trustees and by beneficiaries) - Replace that page in all copies of the trust
Incidentally, it works the exact same way if you want to add a new Joint Trustee to the trust. And that brings us to one of the questions that I have answered literally hundreds of times since 41F was published … “Do new trustees have to be fingerprinted and photographed when they are added to the trust?”
The answer is “Not unless you have a pending application.”
The ATF addressed this in their 41F FAQ. The relevant portion notes that:
Q: Will new responsible persons, added after the making or transfer, be subject to the same requirements?
A: Once an application has been approved, no documentation is required to be submitted to ATF when a new responsible person is added to a trust or legal entity. However, should a responsible person change after the application has been submitted, but before it is approved, the applicant or transferee must contact the NFA Branch for guidance.
So … while it is possible to remove joint trustees and then re-add them at a later date once all pending applications are approved, it certainly is not an ideal solution and deprives your friends and family of months of legal access to your NFA items.
But that is not the solution I am proposing for my clients. Since Joint Trustees are ‘responsible persons’ while Beneficiaries are not, can we make the current Joint Trustees into Beneficiaries with the ability to possess NFA items at the discretion of the Settlor? I believe under both state trust law, and the clear text of 41F, that we can.
Let start with the general premise that, in my trusts, Beneficiaries have no power to compel or control any aspects of the trust. I make this clear in Section 5.1 where it states in part:
“My Trustee has the sole and absolute discretion to … deny a beneficiary benefits”
In 5.2 however, I note that Beneficiaries may have temporary possession of trust assets at the discretion of the Trustee (which in a trust with no Joint Trustees will be the Settlor). That section states:
“My Trustee must have actual or constructive possession of trust property at all times. My Trustee may document reasonable, temporary transfers of trust property to a beneficiary”
Taken together, I believe that under 41F, the Settlor may issue letters of authorization to Beneficiaries to possess items for temporary hunting or sporting activities (I will be posting a sample letter shortly). This does not grant the same level of “treat it like you own it” possessory access that a Joint Trustee would have. However, it will satisfy the needs of 99% of those persons who would have historically been listed as Joint Trustees, and most importantly, does not require them to be fingerprinted, photographed, or to provide CLEO notification.
So how do we add the former (now removed) Joint Trustees to our list of beneficiaries? We return to our Word template I provided. In Schedule D, most of you will have language that looks something like the following:
Upon the death of the Settlor, 100% of trust assets are to be distributed to John Andrew Pierce. If he predeceases the Settlor or is unable to take possession for any reason then 100% of trust assets should be distributed to Joshua William Pierce. …
What we are going to do is leave the post-death section alone and add a section above it that will read like the following:
During the life of the Settlor, the following shall be beneficiaries of the trust with benefits available only at the sole and complete discretion of my Trustee: First Middle Last1, First Middle Last2, and First Middle Last3.
The resulting Schedule D will then describe beneficiaries both during the life and following the death of the Settlor as illustrated below:
During the life of the Settlor, the following shall be beneficiaries of the trust with benefits available only at the sole and complete discretion of my Trustee: First Middle Last1, First Middle Last2, and First Middle Last3.
Upon the death of the Settlor, 100% of trust assets are to be distributed to John Andrew Pierce. If he predeceases the Settlor or is unable to take possession for any reason then 100% of trust assets should be distributed to Joshua William Pierce. …
I want to stress that none of us in the legal community know exactly how the ATF will handle the various strategies we are each proposing for moving forward. So I would advise my clients to only make such a change as-and-when they are ready to submit a new Form 4 or Form 1 (guides to the new forms will be posted shortly).
That will serve the dual purposes of not overwhelming me with requests to review changes all at once and giving the ATF a chance to approve or reject the theory. We simply do not know how they will interpret a given instrument in the light of that loosely worded definition of ‘responsible person’.
As I have stated before, this entire analysis, and the resulting advice, may change completely if the ATF chooses to ignore the clear text of the regulation as they have already done where the 24 month exemption clause is concerned.
If you are one of those people who are ready to file a new Form 1 or Form 4 and would like me to assist you with making these proposed changes (knowing the uncertainty that will face the initial applicants), or would just like me to review them after you have made them, feel free to contact me.
