According to Pew Research, 30 percent of adults in the United States report owning a firearm. Gun sales have risen in recent years, particularly during the Coronavirus pandemic. While many reported having weapons for protection and hunting, 6 percent owned guns that were family heirlooms.
If you own a firearm of monetary or sentimental value, you may wonder how to transfer ownership to your loved ones after you die. In addition to creating a will, you may want to make special arrangements for your weapon.
A gun trust, also known as a firearm trust or NFA trust, is a legal entity created to hold and manage guns. Creating a gun trust can help you pass down your gun to your loved ones, shielding them from probate. It could also help you give ownership to several individuals.
Understanding Fire Arm Trusts
A Trust is an arrangement (not an asset) in which someone (a “settlor”, also called a “grantor”) transfers money or other assets to another (a “trustee”) who manages the assets and spends the money under written terms and conditions for the benefit of a specified person or persons (a “beneficiary”)
Upon termination of a Trust, usually upon the death of a beneficiary, what remains of the trust fund is distributed to “remainder” beneficiaries designated in the written trust instrument. These assets pass outside of probate, not in accordance with the provisions of one’s last will & testament. Trusts can hold many types of property including real estate, bank accounts, and personal possessions such as a jewelry collection or weapons.
Some trusts are revocable, meaning the grantor can change their mind and terminate the trust. Others are irrevocable, so the person making the trust cannot unravel the arrangement. Gun trusts can be revocable or irrevocable.
The National Firearms Act
Creating a gun trust can make it easier for gun owners to comply with the National Firearms Act (NFA), particularly when multiple people want to use the weapon and when the owner intends to transfer ownership.
Congress passed the NFA in 1938 to curb the sale of firearms. The Act imposes specific requirements and regulations on firearms classified as Title II weapons, which include the following:
- Machine guns
- Short-barreled shotguns or rifles (SBSs and SBRs)
- Silencers (silencers)
- Destructive devices such as grenades
- Firearms over .50 caliber, per the Gun Control Act of 1968
The Bureau of Alcohol, Tobacco, Firearms, and Explosives requires individuals intending to own an NFA weapon to complete an application and registration. Registration includes paying a tax and obtaining a tax stamp for each NFA firearm. Those purchasing or possessing NFA firearms must undergo a background check and provide fingerprints as part of the application process. The bureau denies any applications violating federal, state, or local laws.
What Are Benefits of Gun Trusts?
Gun trusts have several benefits.
- They avoid probate. It does not make sense to pass firearms by Will in the not too uncommon situation where there are no other assets that need to pass through probate. And where probate is necessary and appropriate, a gun trust can be included as part of one’s will, to take effect after death at the time a decedent’s estate is ready for distribution.
- Trusts continue beyond death. You can set up the trust so that your loved ones do not have to pay the transfer fee. This makes conveying possession easier.
- When you make a gun trust, you can choose multiple beneficiaries. More than one person can own and use the weapon.
Gun Trustees’ Obligations
Creating a gun trust does not shield trustees from complying with state, federal, and local weapons regulations.
Before 2016, only one trustee had to register, making a primary advantage of gun trusts that they allowed multiple trustees to bypass government oversight. Yet, in 2016, the legislature amended the NFA such that all beneficiaries must submit to registration, eliminating this loophole.
Trustees must also be eligible to own firearms. Violating the NFA is a felony. Felons, recipients of a dishonorable discharge from military service, and people who have been deemed incapacitated cannot possess a gun or be a beneficiary of a gun trust.
When trust creators fail to consider whether the intended beneficiaries may legally possess the firearm, they open the door to criminal liability for themselves and their loved ones. When creating the trust, the lawyer should consider what will happen if a beneficiary loses eligibility to possess the weapon.
Speak With Your Attorney
Stanley Vasiliadis, an attorney with the law firm of Vasiliadis Pappas, cautions that “while there are some do-it-yourself gun trust templates available online, laws vary from state to state and the consequences of a mistake can be severe”.