The National Firearms Act (NFA) regulates such items as machine guns, short-barrel rifles and shotguns and suppressors. Some persons choose to have a trust own the NFA-regulated item, rather than own them as an individual.
A trust is a legal entity that is separate from the individuals, much like a corporation or LLC, to hold property for someone else, called a beneficiary. A trust is set up by a grantor or settlor. A trustee (who also can be the settlor), then manages the trust property for the beneficiary or beneficiaries.
A firearm trust is revocable, like most other estate planning trusts and requires a legal document to be validly created.
If a person purchases a NFA item, only the owner may possess it. If a trust owns the item, the trustee or any of the beneficiaries may possess it.
The main advantage of a firearm trust is that it allows for continued ownership of an NFA item beyond the owner’s life. For example, a parent may be the trustee and name his children as beneficiaries. As grandchildren come along, they could be named as additional beneficiaries. The parent can name a successor trustee to replace him upon his death or if he becomes incompetent.
What a firearm trust won’t do:
- Avoid the $200 tax on transfers. Although the seller is responsible for paying the tax, the tax is built into the selling price. Transferring an NFA item to or from a trust will incur the tax. However, even though there might be a succession of trustees or beneficiaries, the trust continues ownership of the item.
- Allow a person who is otherwise prohibited from possessing a firearm or NFA item to do so. A person prohibited by state or federal law from possessing a firearm or NFA item cannot do so, regardless of who owns it. Whether the firearm or NFA item is owned by a trust or another individual, a prohibited person cannot possess it.
There may be changes coming that would affect such trusts, or at least the procedure when a trust acquires an NFA item. The following notice was recently published:
The Department of Justice is proposing to amend the regulations of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) regarding the making or transferring of a firearm under the National Firearms Act. The proposed regulations would (1) add a definition for the term “responsible person”; (2) require each responsible person of a corporation, trust or legal entity to complete a specified form, and to submit photographs and fingerprints; (3) require that a copy of all applications to make or transfer a firearm be forwarded to the chief law enforcement officer (CLEO) of the locality in which the maker or transferee is located; and (4) eliminate the requirement for a certification signed by the CLEO.
We will have to see what changes will be made in current regulations. If you have questions about setting up a firearms trust and to see if a trust is right for you, contact me through this website.
James E. Wagner concentrates his practice in areas such as personal injury litigation, workers’ compensation, toxic tort litigation, products liability, firearms law, probate, estate planning and insurance. His varied legal experience helps him analyze and resolve issues in all areas of practice for his clients. He has been privileged to represent many of the same clients over my entire career and handles each case with a view toward a long-term relationship. James provides his clients with reliable, dependable service.