“Just who are these ‘responsible persons’ the ATF keeps talking about?”
This is the key question that NFA Trust attorneys have been talking about since the final version of 41F was released earlier this year.
After all, we need to know the bounds of the rule so that we can advise our clients on the best way to reduce the impact of 41F on their collection activities.
The text of the rule has this to say about ‘responsible persons’ where trusts are concerned:
“[T]he term “responsible person” for a trust or legal entity includes those persons who have 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 a firearm for, or on behalf of, the trust or entity.”
They go on to further ‘clarify’ by adding that:
“In the case of a trust, those with the power or authority to direct the management and policies of the trust include any person who has the capability to exercise such power AND possesses, directly or indirectly, the power or authority under any trust instrument, or under State law, to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for or on behalf of the trust.”
The language is clearly intended to cast a wide net and make as many parties to the trust as possible subject to the requirements of the rule. However, you will note in both cases, the key element is the power to “direct the management and policies of the trust … to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for or on behalf of the trust.”
Boiling this down further, the key element that makes someone a ‘responsible person’ is power. Regardless of the title they have on the trust:
- If a person can purchase an NFA item on behalf of the trust then they are a ‘responsible person’.
- If a person can sell trust assets then they are a ‘responsible person’.
- If a person can compel possession of trust assets then they are a ‘responsible person’.
Based upon my analysis of the regulation, on the trusts I provide my clients, only the Settlor themselves and the Joint Trustees laid out on Schedule B meet these requirements.
I have been asked by several people whether Successor Trustees (Schedule C) are considered ‘responsible persons’ and my considered opinion is that they are not. Successor Trustees are those who may, at some unspecified time in the future, take over to handle the distribution of trust assets to the beneficiaries. However, they do not have any power currently on the trust and may never serve.
As for beneficiaries, even if they have been granted the ability to possess trust assets by a trustee, unless the distribution instructions on Schedule D grant them the power to compel possession or distribution while the Settlor is still alive then I believe that they do not meet the definition of ‘responsible persons’ either.
Based upon this breakdown, I am currently working on an article which will walk my clients through their options to manage ‘responsible persons’ on their trust. I will link it here when it is complete.
Final Note: This analysis, and the resulting advice, may change 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 (I will be writing more about that later).
