ATF-41P Changes the Rules for Gun Trusts

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On January 4, 2016, a new regulation—commonly referred to as ATF-41P—proposed by the Bureau of Alcohol, Firearms, Tobacco & Explosives (The “ATF”) was signed as a final rule by Attorney General Loretta Lynch. The final rule, which goes into effect 180 days after it is published in the Federal Register (27 C.F.R. § 479), changes three key aspects of the regulations governing applications to make or transfer an NFA firearm, especially for Gun Trusts.

Background Checks for Trustees

Perhaps the biggest change made by ATF-41P requires “responsible persons” of a trust, partnership, association, company, or corporation to complete the same forms, and to submit photographs and fingerprints to the ATF whenever such a legal entity is applying to make or transfer an NFA firearm. (27 C.F.R. § 479.11). This means that for Gun Trusts, each and every trustee of the Gun Trust will have to submit to a background check anytime the Gun Trust is applying to add a new NFA firearm to the trust.

While this requirement eliminates one of the greatest advantages of using a Gun Trust to acquire NFA firearms, Gun Trusts still allow more than one person to serve as a “responsible person” for any one NFA firearm. In contrast, a person making or purchasing an NFA firearm in his or her individual name will be the only person authorized to possess or use that firearm. Thus, while ATF-41P makes it much more inconvenient for the trustees of a Gun Trust to acquire new NFA firearms to add to their trust, it is still possible for the Gun Trust to have multiple authorized users as long as each of those users has passed a background check.

CLEO Signatures No Longer Required

One benefit of ATF-41P for gun owners is that it eliminated the requirement for applicants to obtain a certified signature from their county’s Chief Law Enforcement Officer (CLEO) as part of an application to make or transfer an NFA firearm. Applicants for NFA firearms must still send a copy of their applications to the local CLEO as part of the application process, but the CLEO’s signature is not necessary in order for the application to move forward with the ATF. Several comments submitted during the rulemaking process of ATF-41P noted that the CLEO signature requirement was somewhat redundant with the requirement to submit to a criminal background check. Commenters also noted that many CLEOs in the past have refused to sign applications for NFA firearms, and thus requiring a CLEO signature often gave too much unfettered discretion to CLEOs who were generally opposed to anyone owning an NFA firearm. By eliminating the requirement for a certified CLEO signature, the ATF has addressed these criticisms and somewhat streamlined the already complicated process for acquiring NFA firearms.

Executors of Estates may Possess NFA Firearms

The ATF also “clarified” that an executor, administrator, or personal representative of an estate may possess any NFA firearms registered in the individual name of the deceased gun owner during the term of the probate process without having to treat the gun owner’s death as a “transfer.” (27 C.F.R. § 479.90a). Instead, when the executor is ready to transfer an NFA firearm to a certain beneficiary or heir, he can submit the application to the ATF, along with an ATF Form 5 (5320.5) Application for Tax Exempt Transfer and Registration of Firearm. This means that the estate of an NFA gun-owner will not have to pay the $200 transfer tax per NFA item that was registered in the gun owner’s individual name. For Gun Trust owners, this clarification has little impact, since many Gun Trusts (done correctly) may be designed to continue after the death of the person who originally created the Gun Trust.

Helpful Links

The final ruling of ATF-41P can be found here: https://www.atf.gov/file/100896/download

For a helpful guide to the benefits of a Gun Trust, see our FAQ blog post: http://www.wolfejones.com/what-is-a-gun-trust/

Alabama Eminent Domain – When the State takes Private Property

New Homestead and Property Exemptions Eminent Domain & Condemnation Proceedings – What Happens when the Government takes Private Property?

The power of eminent domain is a power given to federal, state, and local governments to take private property for public use. The U.S. Constitution, as well as the Alabama Constitution, require the state to provide “just compensation” to property owners whenever it exercises its eminent domain power.

Landowners are often caught off guard when they learn that the government intends to take their property. When this happens, it is good to know the procedures that the government has to follow, and how an attorney can help.

Public Use

The power of eminent domain is limited to property that is being taken for “public use.” Common examples of public use include new roadways, roadway expansions, state parks, public utilities, and even private developments that will generally benefit the public and local economy, such as new retail or commercial developments.

For example, in Kelo v. City of New London, the U.S. Supreme Court held that the city of New London, Connecticut, could take property from several landowners that would be used by private developers for “economic development.” More specifically, the city intended for the property to be developed into a new state park and marina, as well as a new office and research facility for Pfizer Inc. The Supreme Court found that this taking was consistent with the definition of “public use” under the Takings Clause of the Fifth Amendment, but that state governments can further limit the use of eminent domain powers if they so choose.

The Kelo decision illustrated that the definition of “public use” is broad, and that the federal, state, and local governments can take private property for virtually any purpose that provides a benefit to the general public – even if the general public does not directly “use” the property.

 Alabama Eminent Domain Code

The Alabama Eminent Domain Code (Ala. Code § 18-1A-1 et seq.), consistent with the U.S. Constitution, requires the State to pay “just compensation” for a total or partial taking of property for public use. The Eminent Domain Code also applies to county, municipal, and city governments when exercising their power of eminent domain.

When the State chooses to take property for public use, it must first conduct an appraisal of the property and make an offer to the landowner that is based on that appraisal. These appraisals are often far below what the actual fair market value of your property might be. If the landowner rejects the offer, the State will then file a Complaint for Condemnation with the probate court for the county in which the property is located.  These proceedings are known as “Condemnation” proceedings. The Probate Court will usually determine two questions (1) if the State has the power to take the subject property, and (2) what amount of “just compensation” is due to the landowner.

After the Probate Court issues its final judgment, the State or the landowner may choose to appeal the case to the circuit court for the county in which the property is located. The Circuit Court will then hold a trial de novo – a new trial – in which the Probate Court’s decision is disregarded. An appeal to Circuit Court is often advantageous to a landowner since the amount of “just compensation” will be determined by twelve jurors rather than a real estate appraiser or judge.

How an Eminent Domain Attorney Can Help

An experienced eminent domain and condemnation lawyer can help guide you through the legal process – from the time the State makes an offer for your property and through the entire appeals process. An attorney is often essential to finding the right witnesses to testify as to the fair market value of your property. Our firm usually handles condemnation cases on a contingency fee basis – meaning you will not owe us anything unless we recover an amount greater than what the State initially offers you for your property. If the State tells you or your family that it intends to take your property, contact our experienced attorneys immediately for a free and confidential consultation.

DISCLAIMER: No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers.

Judicial vs. Non-Judicial Foreclosure: What’s the Difference?

Essentially, there are two types of foreclosure procedures in Alabama; judicial foreclosure and non-judicial foreclosure.  Non-judicial foreclosures are more common than judicial foreclosures.  This is due to the fact that judicial foreclosures entail a more burdensome process.  In order to forgo the burdens of judicial oversight associated with judicial foreclosures, lenders often include a “power of sale” clause in the mortgages entered into with borrowers. The power of sale clause is a necessary instrument in allowing lenders to conduct a non-judicial foreclosure and, thereby, eliminating the drawn out judicial process.

Judicial Process

Generally, states that use mortgages without a power of sale clause conduct judicial foreclosures, using the court system to execute the foreclosure. States that use mortgages containing a power of sale clause conduct non-judicial foreclosures, using an out-of-court procedure defined by state law.

In judicial foreclosure states like Florida, borrowers sign two separate instruments: the note, which is evidence of the borrower’s promise to pay the debt; and the mortgage, which is the legal instrument that creates the lien on the property as security for the debt. If the borrower cannot pay the mortgage, the lender hires an attorney, who begins legal action to protect the lender’s interest. The attorney files several documents with the clerk of the court in the county where the property is located.

If the borrower fails to respond to the notices within the statutory time limit, the attorney submits a report to the court requesting that the court appoint a referee. The referee reviews the facts and circumstances in the foreclosure action and renders a report to the court. Then a judge issues a Judgment of Foreclosure and Sale in favor of the foreclosing lender. The judicial auction is advertised and the property is sold at the auction to the highest bidder.

Non-Judicial Process

Non-judicial foreclosures are based on mortgages that contain a power-of-sale clause. The clause enables the lender to initiate a foreclosure sale of the property, without having to file a lawsuit or go to court. The lender is typically required to issue a notice of default and notify the borrower accordingly about the defaulted loan status. If the borrower does not respond, the lender then initiates the steps for conducting the foreclosure sale of the property. In Alabama, this requires notice of the foreclosure by publication in a newspaper of general circulation for three consecutive weeks, followed by a foreclosure taking place at the front of the courthouse of the county where the property is located, for cash, to the highest bidder.

Click on the New York Times link below for an in depth narrative of how judicial foreclosure states continue to muddle through the court system in the wake of the financial crisis.

http://www.nytimes.com/2015/03/30/business/foreclosure-to-home-free-as-5-year-clock-expires.html?_r=0