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NFA Trust vs. LLC

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  • NFA Trust vs. LLC

    I am asking the question for my own self interest but might help others too. I am ready to move into Class 3 weapons.
    Putting the cost issue aside, between a NFA Trust or a LLC, which one gives me better legal protection?
    Where is the balance?

    I plan on buying a suppressor and a full auto.
    Your advice is well appreciated and will be used.

  • #2
    What legal protection are you looking for? The NFA Trust and the Corp/LLC are just legal entities which are entitled to own real property, such as the items you are interested in purchasing. The trust is more expensive up front, but the Corp/LLC has annual fees to keep it maintained. If you cannot get a CLEO signoff (as I just did in Polk Co.), a trust will end up costing you less in the long run.
    Last edited by Bladesmith2000; 12-21-2010, 07:31 PM. Reason: typo
    Scott

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    • #3
      Again "COST NOT BEING AN ISSUE" Which protects the individual better? Or which is more solid?
      Which one is going to cover my *** better in the long run? Does one make a person "more right with the law" than another?

      Comment


      • #4
        Legal ownership is legal ownership, it does not matter which entity owns it. I must be missing what legal protection you are seeking. Doing anything illegal with a NFA item is another story, no entity will protect you from this. Sorry if this is no help, but maybe you should explain what you are trying to protect yourself from.
        Scott

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        • #5
          Let me try to clarify. I asked the same question on another forum that has some major class 3 users on it. One reply was "If you are getting anything significant you might also look at a LLC."
          This made me begin to look into an LLC. (I own a corporation and have owned an LLC. I know of the yearly costs involved.)
          Knowing that a trust is a one time fee I ask myself "Why would an LLC ever be considered by anyone?" Would an LLC be considered more beneficial if I wanted to trade or sell frequently?
          On another good forum one reply (from a guy in a North Eastern state) said NFA Trusts are going to become illegal (outdated) and a lot of people would be scrambling to keep legal ownership of what they have.
          If an NFA Trust and an LLC provide the same amount of protection and keep you within legal parameters of the BATF, Why would a wise person use an LLC that requires yearly taxes?
          It is these differences that I am trying to disseminate.
          I will admit it has been only this week that I have started to get in touch with lawyers. I have yet to speak with one directly. I feel that it will be after the new year until I speak with one and get direct answers.

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          • #6
            I don't see how a previously existing legal trust could ever be declared patently "illegal" and invalidated. I am no lawyer, but I think if new trusts were somehow prohibited, existing trusts would be grandfathered in. As far as why someone would choose a Corp or a LLC, it could be that they already have one of these entities and choose to own the NFA item within this legal entity. I considered buying my supressor through my C Corp, but I decided not to so that I did not have to explain the purchase to my accountant or put it on the list of corporate assets for the local tax collector.
            Scott

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            • #7
              That was how I saw it as well but I continue to explore all angles. I feel that a trust that is specifically written with NFA law and rules considered would be the best legal entity to use. I appreciate the dialogue. When I speak with an attorney I will post on this thread more.

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              • #8
                I have a corporation but decided to go the trust route for my class III toys. the drawbacks to a corp. owning them are if you decide to sell the business, you have to go thru another transfer and another $200. tax stamp for each weapon and there are yearly fees to pay to keep a corp. active. with a trust there are no more costs once it is set up. you can put who ever you want to inheriet or play with your toys as co trustees. years ago I went the CLEO sign off route, what a pain that was. ever try to get a politician to sign his name on anything contraversial? add that to an anti gun sentiment and you have a long wait and a lot of runaround to endure. in my opinion, the trust is the way to go. I paid a lawyer that specialises in NFA trusts because I heard stories of Quicken, Legal Zoom etc. trusts causing problems with the BATF because they were not worded correctly.
                peace through superior firepower

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                • #9
                  The CLEO sign off all depends on the CLEO. I got mine back in a week without a problem.
                  Scott

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                  • #10
                    A discussion touching on this subject is HERE.
                    Dr John Meade
                    Director of Tactical Medicine
                    Suarez International

                    Click here for all my posted SI classes

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                    • #11
                      I shared your same concerns and went with the trust. It is a complete separate entity solely for my NFA weapons. If you have an existing LLC, you are now puting that at risk just to save the up front cost of the trust. I chose to keep all NFA isolated from any other legal paperwork for simplicity sake and my own protection.

                      Your choice is your own, but I found most people agree that the Trust is the "better" way to go. Easy, quick, and you don't have to file taxes on it every year!

                      Good luck, and practice your patience for the wait!

                      Comment

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