We often get questions regarding the use of NFA Trusts in regards to legal challenges to show that they are permitted under the NFA.
While there are no successful challenges that stand for the positive or negative use of a NFA Trust, Trusts are not generally denied because the Federal statutes specifically authorizes the use of a trust for ownership of a item restricted by the NFA. There have been many applications with the ATF by people using other forms of Trusts that have been denied because the application or the trust was improper.
The more troubling issue with a Trust is that there are many invalid trusts that have been approved by the ATF. The reason this is problematic is that many individuals feel there possession and use of these firearms valid because ATF approved the transfer. They do not realize that the ATF’s approval is to a valid trust and while they may disapprove an obviously invalid trust, there is no requirement for the ATF to validate (nor do they validate) a trust.
The approval process does little to shield the individuals from the liability that comes with an improper transfer, possession, and use of a NFA firearm and a Valid Form 4 or Form 1 to an invalid trust does not protect your right to ownership, use, or possession of NFA firearms.
The traditional estate planning trust and many so called gun trusts do not deal with the NFA and actually instruct individuals to break the law in regards to transfer, possession, and use of the restricted firearms. This is why it is important to have a professionally drafted trust that is specific to the NFA and actually guides you, your family and beneficiaries thought the correct process of determining what to do in the case of your incapacity or death depending on the individual circumstances that exist at that time.