LLC vs "NFA" Trust

[ArmedRPh]

I was speaking with an estate planning lawyer to set up all the necessary documents in case I kick it. She started to discuss setting up a family trust so that my assets can be easily passed on to my kids...ok, no problem there. I asked her if that trust, which would be a revocable living trust, could be used as a trust for the purposes of NFA items. She readily admitted that she isn't an expert in NFA matters, but her concern was protection of the other assets in the trust if something bad were to happen and someone came after the trust due to misuse of the firearm contained within. She then suggested a LLC. They are reasonably cheap in Indiana ($30 to the state and $150 for lawyer time and then $25 every 2 years to the state). That is an LLC with a single owner.

Here's my question for the group, does anyone have a reason not to use a LLC for NFA purposes? Seems easy enough based on her discussion. I've done a few google searches and all I find is opinions expressed by law firms that want to set up a trust for me. Kinda skews the opinion if you ask me.

Thanks

 

[mertbl]

In. Cant help but have been considering this myself.

 

[OneBadV8]

Well, there are no recurring fees on a trust unless you are adding amendments.

So you're at at least $200 the first year and another $100 every 8 years unless the fee increases. With a trust you're out around $600 give or take and you're done.

Just depends what you're going for I guess.

 

[ctbreitwieser]

I just typed a huge long reply and when I clicked submit, it just deleted it all. So Im just gonna summarize it into "What OBV8 said"

 

[JoshuaW]

Plus if I remember correctly you have to file a tax return for the LLC every year.

 

[ctbreitwieser]

Plus if I remember correctly you have to file a tax return for the LLC every year.

Yep, that was also included in my original post.

 

[MtnBiker6510]

Sole Member LLC's (or even husband & wife) can file on their own Schedule C for Form 1040 instead of filing a 1065. The burden of preparing taxes is minimal.

 

[gunbunnies]

Ya, but I don't think a LLC can be around if it isn't making money after like 5 years... might be wrong but if your a business you got to be making money unless your a non-profit.... Just my thought on it...

 

[HeadlessRoland]

Ya, but I don't think a LLC can be around if it isn't making money after like 5 years... might be wrong but if your a business you got to be making money unless your a non-profit.... Just my thought on it...

Why not set it up as an S corp and not have to bother with any of it?
Also, a living trust is a personal legal entity, not subject to corporate law. I'd choose an irrevocable living trust above any type of corporation. Then an S corp if I had to, not fun with payroll tax, but if you didn't earn any income, this wouldn't matter. Very distant is a limited liability.

Also, I very much doubt that you'd have to dissolve if you weren't earning income for an extended period, even five years. That's why the tax code includes net capital losses and depreciations over time. I'd be curious if this were true, however, and would love to see the national law/I.C. that dissolves limited liabilities after five years if non-productive. Would be very interesting indeed.

If you're on this end of the State, I'd suggest getting in touch with Fine & Hatfield here in town. I doubt the big players would have or make time for you, but then again, Todd Glass is one of the best estate attorneys in the State, and a really nice guy. He's my go-to for estate questions.

 

[JTinIN]

No issue with the LLC being around for nearly forever and loosing money, just as long as you are not taking a write off on you personal income forever (this is where you get inspected closer, say you have large amounts of expenses, driving and what ever in a LLC that is never going to make money).

The LLC is easier to move between people (i.e. can be sold off), a well written one is probably a little more bullet resistant than a trust (either if done wrong are bad), but one has to pay the few bucks every two years, the taxes can be worked around after the first year if you are not making anything nor doing a write off.

Anything included with the firearms in the LLC has the potential on a bad day of being effected, but the same is true of personal property.

I ended up spending a little more for a lawer that had a track record in this area.

 

[JCDPA]

No issue with the LLC being around for nearly forever and loosing money, just as long as you are not taking a write off on you personal income forever (this is where you get inspected closer, say you have large amounts of expenses, driving and what ever in a LLC that is never going to make money).

The LLC is easier to move between people (i.e. can be sold off), a well written one is probably a little more bullet resistant than a trust (either if done wrong are bad), but one has to pay the few bucks every two years, the taxes can be worked around after the first year if you are not making anything nor doing a write off.

Anything included with the firearms in the LLC has the potential on a bad day of being effected, but the same is true of personal property.

I ended up spending a little more for a lawer that had a track record in this area.

Probably a better idea to spend a little time with an attorney who knows about trusts, guns, estate planning, etc., than to rely on a Google search. Do it right now, and avoid the headaches, and a lot more $$ spent/lost, later.

 

[JTinIN]

Probably a better idea to spend a little time with an attorney who knows about trusts, guns, estate planning, etc., than to rely on a Google search. Do it right now, and avoid the headaches, and a lot more $$ spent/lost, later.

Funny how you have to pay the Lawyers (or Doctors or Dentist) either up front or more later to correct what was not done proper at first.

My feeling is that unless you have a good reason not to (i.e. no CLEO sign off now days or an active second family member shooting plus near term estate planning), the classic Form 4 sign off is the long term "best" route.

 

[JCDPA]

Funny how you have to pay the Lawyers (or Doctors or Dentist) either up front or more later to correct what was not done proper at first.

My feeling is that unless you have a good reason not to (i.e. no CLEO sign off now days or an active second family member shooting plus near term estate planning), the classic Form 4 sign off is the long term "best" route.

Kinda like trying to paint your whole car with a rattle can first. Looks like crap, then a paint shop charges you double/triple to strip & clean and paint it right. Ya get what ya pay for in any business.

 

[JTinIN]

Kinda like trying to paint your whole car with a rattle can first. Looks like crap, then a paint shop charges you double/triple to strip & clean and paint it right. Ya get what ya pay for in any business.

Ya that's the idea ... but in the case of the trust or LLC being messed up one can loose the "CAR" (i.e. NFA items) and possible on a bad day be convicted of a felony for having an "BAD LOOKING CAR*" (i.e. unregistered NFA item).

* Most housing association "regulations" have not gone to the point of 10 years for parking a poorly painted car on the street, yet ;-)

 

[ryknoll3]

Probably a better idea to spend a little time with an attorney who knows about trusts, guns, estate planning, etc., than to rely on a Google search. Do it right now, and avoid the headaches, and a lot more $$ spent/lost, later.

You don't need an attorney who knows anything about guns. Just an estate planning attorney that can draw you up a trust. There's no magic to the "gun trusts."