Armory Sponsor
Posted: 1/27/2008 6:12:36 PM EDT
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Howdy, folks. From poking around here, it appears to me that a trust is more popular than an LLC for registering ownership of NFA items. Are there any advantages to an LLC? A trust is limited to you and your spouse, right, whereas any of the LLC's members could share access to the NFA items? The trust is established once, and you are done except for adding items to it if you wish. However, the LLC requires an annual report and an annual fee. I'm trying to figure out which way to go. Only my spouse and I need to share access. The trust seems easier, and more useful, but I want to be sure there are no overriding advantages to the LLC. thanks, bws |
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Most people use revokable living trusts, which expire when you die -- the items will have to be transferred to the trust beneficiaries via a Form 5 at that point. A corporation, OTOH, is forever -- no future transfers are ever needed. You also can sell your stock in the corporation (and thus control and possession of its assets) to a new owner, with no new transfers needed. You cannot "sell" a trust. |
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My first answer is consult an attorney. I am not sure if a trust is limited to only you and your spouse as trustees. A corporation certainly allows you to have more officers than just yourself and your spouse. HOWEVER, in my opinion and the opinion of at least one attorney knowledgeable of the NFA forming a corporation solely for the purpose of owning NFA items and then making your shooting buddies officers so that they can go machinegunning at the range without you present is not a very smart thing to do and is not only risky to you as an individual but could make the BATFE more likely to try and change the ability of trusts/corps to own NFA items and/or require CLEO signoffs for them. I don't say this to discourage anyone from owning NFA items or to form a corporation or trust to do so, just that one needs to be serious about how they do it and careful with NFA property whether you own it as an individual or in a corp or trust. |
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For the people using quicken willmaker to set up a cookie cutter revocable living trust, you are opening up whoever is on the recieving end when you die to a bunch of possible legal headaches. If you are going to use a trust you are much better off getting an NFA Trust custom made by an attorney knowledgeable in that field of law. It is only a matter of time before the ATF really starts cracking down on poorly drawn up do-it-yourself trusts. A properly designed one on the other hand can be an excellent way to go. I prefer an LLC personally. Very easy to setup, only drwback is the $250 business entity tax I have to pay every year in CT for an LLC or Corp. Comes out to a $20.83 a month upkeep cost. Well worth it for not having to get fingerprinted, get sign-offs and pictures taken everytime I want to get something. |
Darn it. Now you got me thinking about forming an LLC. |
I formed a corp long ago, before trusts became "popular." Recently I considered forming a trust and moving everything over (despite about $2k in transfer costs) ... but when I discussed it with my attorney, it turned out that a corp works better for me, particularly since I have a lot of (in today's market) valuable MGs. The advantage may not be the same if all yer gonna put in the legal entity is a couple of SBRs and some cans. The $158 annual fees of a FL corp are worth it to me. I worry about future restrictions, and if Congress takes the Canadian approach and limits future transferees, particularly excluding heirs ... in that case a corp will be golden, and a trust will be useless. |
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Just a quick clarified here: Some people get confused and think LLC means Limited Liability Corporation. LLC is Limited Liability Company. It is a non corporate business entity. LLCs are run by members (who own) and managers (who...well....manage), while corporations are run by officers -CEO, CFO, COO, etc. Technically titling yourself as a CEO of an LLC is incorrect as an LLC has no officers. I appointed myself as the managing member of the LLC I use for NFA items, because I own and run it. My LLC I do business with I have (2) members each with 50%. Forgive me if I am stating the obvious, but I have spoken with enough people that were confused on this matter I figured it was worth mentioning. |
I'm waffling back and forth. I like the flexibility of an LLC and the possiblity of selling shares to dispose of it. On the other hand, I have no other use for an LLC, and wonder whether in the future the BATFE might decide to push back on LLCs formed solely for the purpose of NFA ownership. In NH, the LLC annual filing is $100, not a big deal. On the other hand, it's a hundred bucks a year. I'm not going to go crazy like the rest of you guys and buy tons of NFA items. No, really, I swear. he bws |
IMHO, if BATFE ever "pushes back" on a legal entity, it will be on trusts, not on corps. The corporations which currently own NFA are GM, Ford, U.S. Steel ... while the trusts are individuals who have neither political power nor big bucks. BATFE ain't going after the big corporate political donors, they will squash the small fry who cannot punish their political sponsors. Look back to 1934, when the National Firearms aCt was first passed ... Congress did not want to restrict NFA ownership from its corporate political donors which put them in office; the "trusts" snuck in there because, like corporations, they are also legal entities,so there was no way for Congress to give a pass to their corporate political donors without also acknowledging the viability of other legal entities such as trusts. If an individual sets up a corporation, it is difficult to differentiate legislatively between Bubbas45 Corporation and IBM. BATFE has no such qualms about going after trusts. Trust me. 
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Sorry. Sloppy use of language. For shares read membership interests or membership units. And thanks for the discussion, everyone. bws |
Armory Sponsor