The Gun Trust: Estate Planning with the National Firearms Act

There are four million members of the National Rifle Association (NRA) and an estimated 240 million guns in the United States. Roughly two-thirds of those guns are owned by less than one third of the country’s gun-owners, indicating there are quite a few people for whom a gun collection comprises a significant portion of their estate. Beyond aficionados,  many families have guns and other weapons as heirlooms that they would like to keep in the family and pass down from generation to generation.

The question is, how?

Bequeathing a gun is not like bequeathing an armoire or a car. Commonplace bequests like the latter examples often pass through a will directly to the ownership of the inheritor, after a payment of taxes. If prudent planning has occurred (less often, unfortunately), then a trust owns the item and the inheritor in this instance becomes the trustee or simply a  beneficiary. But hideous old furniture and cars are not regulated the same as guns.

The National Firearms Act (NFA), as well as state and local law, strictly regulates gun transfer and possession. Convicted felons, persons with a history of mental illness, persons convicted of misdemeanor domestic violence offenses, convicted users of illegal drugs, dishonorably discharged veterans, and persons who have renounced their U.S. citizenship are denied gun ownership.

When an estate includes firearms or other weapons, the executor must be careful to avoid violating these laws. Transferring a weapon to an heir to fulfill a bequest could subject the executor and/or the heir to criminal penalties. In fact, just having a weapon appraised could result in its seizure. An out-of-state heir is even more complicated. Because of these complications, a simple Last Will and Testament does not suffice for gun bequests.

Instead, a revocable living trust designed specifically for the ownership, transfer and possession of weapons (commonly known as a gun trust or a NFA trust) can avoid some of the problems or at least make them manageable. A corporation or LLC can also be used to own weapons, but trusts do not require annual filing fees, public disclosure or a separate tax return. A gun trust is easier and more private.

What You Need to Know About the Gun Trust:

  • The trust owns the gun(s).
  • The trust document must be carefully written to account for the different types of guns held and to comply with the applicable laws.
  • The name of the gun trust, once established, should not be changed. Because the regulated weapon is registered in the trust’s name, a change in the name of the trust would require that it be re-registered and a transfer tax paid.
  • The gun trust can name several trustees, each of whom may lawfully possess the gun without triggering transfer requirements. (Persons not allowed by law to own or have access to the gun(s) in the trust are not eligible to be a trustee.)
  • Guns can be purchased by a trustee to avoid having to pay a transfer tax.
  • Once a gun becomes a trust asset, any beneficiary (including a minor child) may use it. However, the trustee is still responsible for determining the capacity of the beneficiary to use the gun.
  • Unlike a traditional revocable living trust which can be revoked at any time by the grantor, the Bureau of Alcohol, Tobacco, Firearms and Explosives (BATFE) must approve the termination of a gun trust and the distribution of its assets to the beneficiaries.
  • No regulated weapons held in the trust may be transported across state lines without prior BATFE approval.
  • Also, since weapon laws vary from state to state, gun trusts may not be valid from one state to another as a traditional revocable living trust would be.

Give me a call if you have any questions. As a born-and-raised Texan, you may consider me your officially unofficial expert on all things football, fried, and firearmed – when it comes to estate planning, at least.

Good luck and good hunting.

Note: Read my update on how a key loophole in Gun Trusts allows you to purchase restricted firearms without a background check.

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The Fisher Law Office is known for its experience in estate planning, probate administration, asset protection, and business development. Annapolis attorney Randall D. Fisher has practiced for over 20 years, maintains the highest peer review rating for ethics (AV Preeminent) by Martindale-Hubbell, and is a sucker for long walks on the fairways.

Find out how to reach Randy via TheFisherLawOffice.com or find him at Facebook.com/FisherLawOffice, on Twitter @thefisherlawoffice, or at LinkedIn.com/in/FisherLawOffice.

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15 Responses to The Gun Trust: Estate Planning with the National Firearms Act

  1. Great post. This area is ENTIRELY overlooked by many gun owners… and there are huge risks in transferring ANY firearm… by sharing, by gifting or selling, and as transfers via an estate or trust at death. Some firearms are legacy items, some are “problems” for inheritors and estate or trust administrators. Thanks for bringing this to people’s attention!

  2. Interesting Picture, you are discussing regulations on firearms but the guns you have in your picture are not considered firearms and do not have the same restrictions in all states. While some states regulate who can own and possess the items pictured most do not unless used for an illegal activity.

  3. James Vaughn says:

    Very interesting comments….I have clients with extensive collections and I have never thought about this aspect. And some of the beneficiaries are felons!

  4. Jonathan Lingo says:

    I am glad I came across your post. I have set up several California Estate Plans where the father’s firearms are to be given as specific gifts to his sons by way of pour-over will and revocable trust distribution upon the passing of the father. A properly set up gun trust specifically for these items would take care of most of the unknowns which could arise in the future.

  5. Pingback: The Wine Collector’s Estate: Planning for a Wine Cellar | Planning for Your Wealth

  6. Pingback: The Boat Trust: Why Every Sailor Needs to Plan | Planning for Your Wealth

  7. I had an interesting experience in this area. My client, died intestate with perhaps a hundred thousand dollars in financial assets, and a few thousand dollars each worth of tools and guns. His intestate heirs were his two sons, one a convicted felon. What should have been a cheap, uncontested probate turned nasty when the son with the conviction was told that he couldn’t have half the guns. This forced an expensive sale procedure for the guns. Lesson to be drawn: a client who is doing a will or trust and has guns and can’t leaves the guns equally to his beneficiaries should make specific provision in the will or trust so the disappointed heir can’t make life difficult for the trustee or executor.

  8. Just reporter touch using this submit… We loved the actual go through. Thanks

  9. Pingback: The Gun Trust Loophole Exposed by Christopher Dorner | Planning for Your Wealth

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