It’s official. The long-feared and long-awaited proposed rule 41P has been finalized in a modified (and long, 248 page) form. It is now known as 41F, and it will bring some real changes to the way you buy and transfer NFA items.
Surprisingly, the news is not all bad.
It appears that the regulators took to heart arguments from the thousands of submitted comments that the initial proposal would have essentially given local law enforcement officials the de facto ability to make it impossible to transfer NFA items within their jurisdiction. Such a rule would likely have been threatened by an ultra vires challenge in court and potentially overturned, so the regulators made a change. And it’s a big one.
Once 41F goes into full effect, the CLEO certification will be replaced with a CLEO notification, regardless of whether the transferee is an individual, trust, or corporation. That’s good news if you always wanted to take title to NFA items in your personal name, but it does add a notification requirement to trusts that did not exist previously.
The bad news is that 41F keeps the requirements from 41P that every “responsible party” (including trustees but not beneficiaries of a trust) must submit a photo, fingerprints, and undergo a background check before the transfer will be approved. That means that if you have five co-trustees sharing access to NFA items, any new transfers to the trust will have to be accompanied by a photo, fingerprints, and a background check of not just one trustee but all five. It is particularly noteworthy that ATF will not require updates if the responsible parties change after the fact.
The full text of the final draft is available here:
What Does This Mean For You?
How this change affects you depends on your current situation and future goals.
If you have an existing NFA Gun Trust, it is still perfectly valid and can still be used. The new rule is not retroactive so you will only have to submit a photo and fingerprints if you transfer additional items into the trust in the future. You will not need to do so in order to continue to lawfully use and possess your existing NFA items.
If you have been thinking of getting an NFA Gun Trust, now is the time. Because the new rule does not go into effect for 180 days after publication, you have at least half a year to proceed with trust-based transfers under the old rule. That means no CLEO signature, no CLEO notification, no photo, and no finger prints. If you want to own NFA items without the local sheriff or chief of police having them on record, you will no longer have that option after 41F goes into effect.
If you want to purchase NFA items in your personal name and the need to use a trust to evade the CLEO signature requirement was stopping you, you are now good to go.
Are NFA Gun Trusts Still Legal?
Yes, NFA Gun Trusts are still legal and functional. An NFA Gun Trust will continue to work the same as it always has, with the following exceptions:
- You will be required to submit a “CLEO Notification” to the local CLEO. This is not a certification and does not have to be approved.
- Every current co-trustee (but not successor trustees or beneficiaries) must submit a photo, fingerprints, and submit to a criminal background check. Previously, no photos or fingerprints were required and only the Settlor of the trust had to submit to a criminal background check.
Is There Any Point In Getting An NFA Gun Trust After 41P?
Most attorneys and NFA Gun Trust owners would agree that avoiding the CLEO signature requirement has been a major motivator for trust-based ownership of NFA items. However, most of them would also agree that avoiding the need to get a CLEO certification is only one of many reasons to use a trust. Some of those reasons include:
- Allowing multiple people to have access to the NFA items owned by the trust, which is impossible with individual ownership
- Built-in estate planning that allows you to leave your NFA items to the next generation as part of your legacy while keeping the NFA items out of the public records after your death by avoiding probate
- Ability to mitigate future restrictions to NFA transfer laws and to protect NFA weapons from your beneficiaries’ creditors by using the Perpetual Asset Protection NFA Gun Trust
And last but not least, you can still use an NFA Gun Trust to complete a transfer under the old rules for at least 180 days. As long as you have your application filed before the deadline, it will be processed under the old rules.
As always, we recommend that you get your trust from a qualified attorney who understands the intricacies of this intersecting area of firearm law and trust law. There are only a few in the whole state of North Carolina. Put your faith in gun shop template forms at your peril.
For detailed information about NFA Gun Trusts in North Carolina, as well as information about our process and fees, check out our NFA Gun Trust page.