What function does an NFA Trust serve?
It is possible to title or transfer NFA/Title II (also known as Class 3) weapons to an individual or another type of legal body, such as a trust or business. To guarantee compliance with Title II firearms, an NFA trust is a specialized revocable living trust. There are numerous advantages to filing your NFA firearm through a trust rather than as an individual:
- NFA weapons may be available to co-trustees.
- In the event of death, ATF documents are not necessary and firearms can be inherited outside of the probate procedure.
- Trusts are adaptable and amendable.
- Privacy: The NFA trust does not have to be filed with your state of residence because it is not a public document.
- Benefits of estate planning
What is an NFA firearm?
The National Firearms Act (“NFA”) regulates certain types of firearms, including fully automatic weapons (also called “machine guns”), short-barreled rifles (“SBRs”), short-barreled shotguns (“SBSs”), and sound suppressors (also called “mufflers” and “silencers”). These firearms are frequently incorrectly referred to as “Class 3” firearms or weapons. Conversely, firearms that are subject to the Gun Control Act of 1968 (“GCA”) and other federal regulations but not the NFA are technically referred to as “Title I weapons.” Title I firearms are frequently referred to as “non-NFA firearms” or “normal firearms” to distinguish them from NFA firearms.
How can I buy NFA weapons in a legal manner?
Basically, there are two ways that an individual or a legal entity, such as a trust, corporation, limited liability company, or partnership, may legally acquire NFA firearms, if the individual or entity is not prohibited by federal, state, or local law from receiving or possessing firearms:
(1) by transfer after approval by the ATF of a registered NFA firearm from its lawful owner residing in the same state as the transferee (ATF Form 4); or
(2) by obtaining prior approval from the ATF to make NFA firearms (ATF Form 1).
What Is a Trust?
A trust is a fiduciary agreement that allows a party (known as a trustee) to hold assets on behalf of one or more beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries. When a trust is created by a party (known as the settlor), a separate legal entity is created. After the trust is created, the settlor transfers ownership of assets from the settlor’s name to the trust’s name. If the asset is personal property, the settlor signs an assignment of the personal property to the trust. The trustees of the trust may also acquire assets on behalf of the trust. The duty of the trustee, who is named in the trust agreement, is to administer trust assets in accordance with the terms of the trust agreement, for the benefit of the trust beneficiary.
What is a revocable living trust?
A trust is classified as a “living” trust when it is established during the settlor’s lifetime and as a “revocable” trust when the settlor has reserved the right to amend or revoke the trust during the settlor’s lifetime. A revocable living trust can help assets pass outside of probate, yet allows the settlor to retain control of the assets during the settlor’s lifetime. It is flexible and can be dissolved by the settlor at any time, if the settlor’s circumstances or intentions change. A revocable trust typically becomes irrevocable upon the death of the settlor. A settlor can also serve as a trustee (or co-trustee) and retain ownership and control over the trust, its terms, and its assets during the settlor’s lifetime, but make provisions for a successor trustee to manage the assets in the event of the settlor’s incapacity or death.
What is a gun trust?
A gun trust is special type of trust designed to address issues that are unique to firearms, which are one of the most heavily-regulated types of personal property in the United States. Many ordinary law-abiding citizens use gun trusts to acquire and enjoy NFA firearms. Most gun trusts are highly-customized revocable living trusts that address the rights and duties of the parties to the gun trust relating to the use, possession, and transfer of firearms. Most gun trusts determine how a single person or a married couple’s firearms are to be managed during his/her/their lifetime, in the event of his/her/their incapacity, and also upon his/her/their death. Because firearms in the gun trust pass privately to the beneficiaries outside of the probate court process, many people also assign their non-NFA firearms to their gun trusts. A well-written gun trust can serve as a comprehensive estate plan for all of the settlor or settlors’ firearms that are assigned to or acquired by the gun trust.
What are the main benefits of a gun trust?
Three of the most important benefits of a gun trust are:
(1) NFA firearms registered to a gun trust can be used and possessed by more than one person. The settlor of the gun trust can add or delete persons (co-trustees) who are allowed to use and possess the NFA firearms throughout his or her lifetime. NFA firearms registered to an individual can only be used and possessed by the registered individual during the individual’s lifetime.
(2) NFA firearms registered to a gun trust pass to the beneficiaries of the gun trust outside of the probate process according to the terms and conditions of the gun trust agreement prepared by the settlor. NFA firearms registered to an individual pass to his or her beneficiaries according to the terms of the individual’s last will and testament, which is probated in a probate court and provided to the ATF during the transfer process so the executor can prove to the ATF that the individual intended to transfer the NFA firearms to the beneficiaries.
(3) If your NFA firearms are owned by you individually and you are later deemed to be incompetent, your NFA firearms are subject to confiscation immediately since it is illegal for any other individual to take possession of your NFA firearms. On the other hand, if your gun trust owns your NFA firearms, any co-trustee can take possession of your NFA firearms to hold them on your behalf. In other words, you will not lose ownership of your firearms. As as result, you will retain the ability to either direct that the NFA firearms be sold and the cash returned to you, or that the NFA firearms continue to be held in trust for the beneficiaries to inherit when you die.