To Schedule A or Not to Schedule A, That is the Question.

Occasionally, NFA gun trust clients tell me that they have read on the Internet or heard from a Class III dealer that an ATF Form 4 (transfer) application or Form 1 (manufacture) application will be rejected by the ATF examiner if the NFA gun trust does not include a “Schedule A.”  This is only partially correct.

If an individual wants to title a Title II weapon, or NFA firearm, in the name of an NFA gun trust, the ATF needs a complete copy of the NFA gun trust and all amendments to the NFA gun trust to be mailed along with the ATF application.  If an NFA gun trust does not specifically state that it includes schedules, or attachments to the trust, such as a Schedule A to identify all of the trust property or a Schedule B to identify the beneficiaries, then the NFA gun trust is complete without a “Schedule A.”  On the other hand, if the NFA gun trust specifically states that it includes schedules, then the schedules necessarily form a part of the NFA gun trust.  In other words, without the schedules specifically identified in the trust document, it is not a complete copy of the NFA gun trust.

Does a well-drafted NFA gun trust include a Schedule A?  No, and for very good reasons.  Some attorneys who prepare NFA gun trusts include schedules as part of their NFA gun trust, such as a Schedule A to identify all of the trust property.  Such a practice has two primary disadvantages for their unfortunate clients.  First, each time the client transfers property in or out of the NFA gun trust, the schedule must be amended.  The better practice is transfer property in or out of the NFA gun trust using a separate assignment form, which is not part of the NFA gun trust.  Second, the ATF needs a complete copy of the NFA gun trust each time you mail in a new application.  Besides NFA firearms, other personal property such as non-NFA firearms (Title I weapons) and other collectibles may be assigned to the NFA gun trust.  If the NFA gun trust includes a schedule that identifies all trust property, the customer unnecessarily provides an organized, detailed inventory of each and every item assigned to the NFA gun trust, such as NFA firearms, non-NFA firearms, or other collectibles to the ATF.  Why would this be a good idea?  Finally, more and more frequently, Class III dealers mail the package of documents that form a complete application to the ATF on behalf of their customers.  To do so, each time the customer buys a new NFA firearm, the Class III dealer needs a complete copy of the customer’s NFA gun trust.  If the NFA gun trust includes a schedule that identifies all trust property, the customer turns over, or broadcasts, a detailed inventory of each and every item assigned to the trust, such as NFA firearms, non-NFA firearms, or other collectibles to the Class III dealer, which, frankly, the Class III dealer has no reason to know about.  Also, once you turn over your NFA gun trust to the Class III dealer, you do not know whether additional copies will be made or stored online, who among the Class III dealer’s present or future employees have or will have access to the information, or to whom this information is or will be disclosed.  Don’t get me wrong,  I trust my recommended Class III dealers, but this is still a major security breach.  On the other hand, if an NFA gun trust does not include include a schedule that identifies all trust property, the only trust property that the Class III dealer, the dealer’s employees, and any third parties to whom this information might be disclosed will know is owned by the customer is the specific NFA firearm(s) bought from the Class III dealer.  It is a simple matter of privacy and security.

10/22/2013 Update:  One of my favorite Class III dealers sells its own in-house NFA gun trust form that includes a “Schedule 1” to identify all of the trust property.  Their poorly written NFA gun trust, which they market as a “great example of a do-it-yourself option,” also includes several other provisions that I do not recommend.  For example, one such provision provides that the beneficiaries of the NFA gun trust (usually the settlors’ children) can unanimously agree to terminate the NFA gun trust at any time and force all of the trust property (usually the parents’ gun collection) to be sold or transferred to the beneficiaries, even while the settlors (usually the parents) are very much alive and well, and regardless of whether the beneficiaries (usually the settlors’ children) are, in either the settlors’ or the trustees’ opinion, mature enough or responsible enough to lawfully use and possess the trust property (usually the parents’ gun collection).  Another provision requires the trustees (usually includes the parents) to allow the beneficiaries (usually the settlors’ children) full use of all trust property (usually the parents’ gun collection), even while the settlors (usually the parents) are very much alive and well, and regardless of whether the beneficiaries (usually the settlors’ children) are, in either the settlors’ or the trustees’ opinion, mature enough or responsible enough to lawfully use and possess the trust property (usually the parents’ gun collection).  I have received several inquiries from individuals who were very uneasy about the quality, or lack thereof, of Texas NFA gun trusts prepared by others (e.g., attorneys and Class III dealers) after reviewing the information on my website.  In at least two cases, I have been requested to redraft “gun trusts” prepared by two different so-called “gun trust” attorneys in Dallas, Texas.  I also redraft “gun trusts” sold as forms by non-attorneys, such as Class III dealers, and “gun trusts” prepared by individuals using retail legal form generation software.