WHAT IS AN NFA GUN TRUST?
NFA firearms (also called NFA weapons) are certain guns and accessories regulated by the National Firearms Act. They are sometimes incorrectly called “Class 3 weapons.” The confusion over the Class 3 terms is related to the licence that is required for a dealer to possess to sell Title II Firearms. NFA firearms include all fully automatic and select fire weapons, short-barreled rifles and shotguns and sound suppressors (silencers). NFA firearms include things that you might not expect.
Example: Remember the Hi-Standard .22 Derringer It is an ordinary “garden variety” pistol. Pair it with a wallet holster and it becomes an NFA weapon. Many collectibles, including pistols with detachable shoulder stocks, such as the Artillery Luger and the “Broomhandle” Mauser are also regulated by the National Firearms Act.
Suppose that your father brought home a “deactivated” machine gun from World War II? Even though these “Deactivated War Trophies” are welded up and are incapable of firing, they are still NFA weapons.
You can lawfully own NFA firearms, as long as they are permitted under state law. You have to register them with the Bureau of Alcohol, Tobacco, Firearms and Explosives (“BATFE”) and pay a $200 tax on each one. Unless you acquire them through a trust or other entity, you have to obtain the consent of your chief of police. If you create a special type of trust, no local approval is required. These trusts have other significant advantages as well.
An NFA Gun Trust, sometimes called a “Gun Trust” or a “Class 3 Trust” is a type of revocable trust that you create specifically to acquire NFA weapons and to hold your other firearms. It differs substantially from an “ordinary” revocable trust.
An NFA Gun Trust makes it easier and more private to transfer not only NFA firearms, but any guns, to your family members if you die or become disabled. Assets in a trust pass directly to your beneficiaries outside of the probate system. There is no public record of what you own.
An NFA Gun trust can be an irrevocable or revocable, but an “ordinary” estate planning trusts should not be used to acquire and hold NFA firearms. NFA trusts must have special provisions that deal with firearms.
Example: You want your twelve-year-old child to someday inherit your gun collection, including NFA weapons. An NFA trust provides a way to lawfully store them until your child is old enough to have them transferred to him or her.
We have lawyers in every state that we work with who have modified our trusts for your state’s specific law. The local attorneys deal with state trust and firearms issues and we are here to support you with the federal issues and the NFA.
Our NFA trusts contain language which deals with unique provisions of each state’s law. In addition to the Gun Trust documents, we provide you with detailed, plain English instructions showing you how to fund the trust, acquire NFA weapons as a trustee and administer the trust.
WHY DO I NEED AN NFA TRUST?
No Signature Required
In order for an individual to lawfully acquire an NFA weapon, his or her CLEO – police chief or first selectman must sign a form called a “BATFE Form 4.” Many CLEO’s are reluctant, or refuse, to sign the form either for political reasons or concern about potential liability. If your chief refuses to sign, and you do not have an NFA trust, you will not be allowed to purchase any NFA weapons.
Avoiding Confiscation and Criminal Liability
Ordinary revocable trusts do not give the trustee the powers needed in order to deal with NFA weapons and with BATFE. Before distributing any NFA Item, the trustee must be sure that your beneficiary is not a “disqualified person” under State and Federal law. He or she must also determine which laws apply, including statutes in your beneficiary’s home state.
Penalties for violating the National Firearms Act can be severe
Forfeiting the weapons is only the beginning. Individuals who run afoul of the NFA can be subjected to fines of up to $250,000 and 10 years in prison. An ordinary revocable trust does not give the trustee any instructions on dealing with firearms. An NFA trust provides the trustee with a “roadmap” to help him or her and your beneficiaries stay out of trouble.
If you die or become disabled, your firearms will be part of your “probate estate.” A Probate Court proceeding will be required to deal with your guns. Any member of the public can find out about the items in your collection and who will receive them.
Some people have used Corporations and LLCs to acquire NFA Firearms Corporations and LLCs must pay ongoing fees and need to file tax returns. Trust offer significant advantages over corporations and LLCs, which are primarily intended to be “business entities” and are subject to annual fee and tax return requirements. After you have signed your NFA trust, there are no additional fees. No tax returns are required. Unlike a corporation or a LLC, a trust is a totally private arrangement. Other than BATFE and, only you and your designated successor trustees and beneficiaries will have any information about the trust assets.
Spouse and Children as “Registered Owners”
An NFA firearm can never be handled or transported by anyone other than the registered owner. NFA firearms owned by trusts may be lawfully purchased, possessed, and used by any trustee or “manager” of the trust.
Example: You own a machine gun as trustee of your NFA trust. You, your spouse, and your adult child are all trustees of the trust. Any of you may use and transport the weapon without the others present.