Gun Trust Library

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.