This post is by Ryan Cleckner [above], an attorney who specializes in firearms law. It’s republished from ryancleckner.com with the author’s permission.
I recently posted an article exploring the new rules by the ATF concerning NFA trusts. One of the multiple changes discussed in the article, which include the removal of CLEO approval and new rules for handling firearms in an estate, is extra paperwork and approval requirements for “responsible persons.” These “responsible persons” on the trust will need to . . .
fill out a special form (Form 5320.23) and submit it along with fingerprints and photographs to the ATF with each application/form to make or transfer an NFA firearm. A copy of the “responsible person” form (Form 5320.23) and the NFA firearm application/form will also need to be sent to each “responsible person’s” local Chief Law Enforcement Officer (CLEO).
The copies of the forms submitted to each respective CLEO are a notification to law enforcement only – under the new rules no approval from the CLEO is required.
This will significantly increase the paperwork burden – as many different CLEOs may be notified across the country as there are “responsible persons” on particular trust. It is important, therefore, to determine who is a “responsible person” on an NFA trust so that the proper paperwork can be filed with the ATF and the appropriate CLEOs may all be notified.
Here is the relevant language from the ATF’s published final rule notice on NFA trusts:
The 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. 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 definition of a “responsible person” is also mentioned elsewhere in the 200+ page document in smaller sections but this is the most complete definition I could find. From that language, we can know that there are two conditions that define which trust “members” (for lack of a better term) will now be considered “responsible persons.” In short, they are those who are (1) in charge of the trust and (2) may possess NFA firearms on behalf of the trust.
It is not worth debating whether these two provisions are an “and” (both required) or an “or” (only one or the other required) requirement because they both cover the same type of “member.” Namely, if the person may lawfully possess an NFA firearm on behalf of the trust, then that person is a “responsible person.”
The language establishes a “responsible person” as someone who has “the power and authority to direct the management and policies of the trust . . . to receive, possess, ship, transport, deliver, transfer . . . a firearm . . . on behalf of . . the trust.” This means that anyone who actually controls the trust language and has the power to modify it is a “responsible person.”
The language from the ATF then expands that definition in the case of NFA Trusts and includes certain persons who have the “capability to exercise such power and possess . . . the power or authority . . . to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for or on behalf of the trust.”
This language could be read to include only those already covered in the first part of the definition who also have the authority to possess the NFA firearms. For example, if someone was in charge of the trust but couldn’t possess the trust’s NFA firearms then they wouldn’t be a a “responsible person.”
I think that this interpretation is incorrect. This interpretation would limit the original definition. The language used by the ATF, however, seems to expand the original definition.
I argue that anyone who may lawfully possess an NFA firearm under the trust (second part of definition) is a “responsible person” because they also may “exercise [the] power” to “receive, possess, ship, transport, [etc.]” (first part of definition) NFA firearms of the trust. A lawful possessor (usually a “trustee” of the trust) may “exercise” the power to manage the trust by adding NFA firearms to the trust.
For example, a lawful possessor under the trust generally may also use a copy of the trust to transfer a new NFA firearm into the trust without the consent or approval of anyone else in the trust. In such a transaction, the person who was previously a mere lawful possessor has the capability of managing the inventory and property of the trust on their own. Therefore, a lawful possessor may exercise power to manage the trust’s ability to “receive, deliver, transfer, [etc.]”
This means that if a person can lawfully posses an NFA firearm under that trust, they can also generally mange the trust by adding to its inventory and manage/control the location of trust property. Therefore, if a person is allowed to posses an NFA firearm from the trust (regardless of whether they actually do), then they are a a “responsible person” for the purposes of the submission requirements above.
This interpretation, of course, is subject to change once the actual language in the regs is amended/published and/or ATF publishes the formal rule. Much of this interpretation is based on ATF’s choice of words explaining what they intend that the final rule will do and is not based on what the language actually will say or do.
Even if my interpretation is wrong, this seems to be the intent of the ATF. If it turns out that not all people who could possibly possess an NFA firearm under the trust are “responsible persons,” then it will very likely be corrected so that they are.
The entire purpose of this particular change is to prevent people from possessing NFA firearms without being approved to do so by the ATF and without the local CLEO being notified about who may be in possession of an NFA firearm. If the term “responsible person” included only the person who created and can change the trust, then it would not serve the goal of the ATF.
So, who is not a “responsible person?” Simply, anyone who may not possess an NFA firearm under the trust is not a “responsible person.” Examples of this include future beneficiaries who are not currently old enough to lawfully possess NFA firearms.
If you haven’t come to this conclusion already, much of the benefit of having an NFA trust is now gone. Yes, members of the trust may still share NFA firearms in the trust without conducting a transfer (which is why I think the ATF wants them all to be checked-out) but the main reasons I hear from people of getting a trust – to avoid the CLEO requirement and to avoid extra paperwork each transaction – are now gone.
My advice going forward? Just transfer the firearm to yourself and tell your buddy to buy his own – it’s good for our industry.