Gun Trust in Estate Planning

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 What is a Gun Trust?

Federal, state and local laws may impact a person’s ownership, possession and transfer of firearms. In order to comply with the laws concerning the transfer of firearms, many owners have created gun trusts to allow them to legally transfer their firearms to their beneficiaries.

As in any regular trust, the property in a gun trust is held by one person, the trustee, for the benefit of another, the trust beneficiary. In this way, a gun trust helps a person’s heirs inherit the person’s firearms safely, privately, and perhaps most importantly, in full compliance with the law.

Per the National Firearms Act (NFA), a person violates federal law if another person knowingly has the potential to access or control any of their NFA firearms. Failing to respect the NFA runs the risk of incurring the maximum criminal penalties, which include:

  • Up to 10 years in jail;
  • Up to $250,000 in fines;
  • The confiscation of a person’s NFA guns.

The types of weapons that are regulated by the NFA include silencers and suppressors, short-barreled rifles and shotguns, and machine guns, i.e. fully automatic weapons.

A gun trust is the legal solution to the problem created by the NFA regarding allowing other people to have access to a person’s firearms. It allows the people who are named as beneficiaries in a person’s trust to lawfully handle the person’s NFA firearms, avoiding the potential legal problems that may arise in situations where the weapons are used in an emergency or at the person’s convenience.

Gun trusts can also protect a person in the event they are incapacitated. Or, they can be utilized as an element in a broader estate plan for delivering a person’s assets to their heirs. For example, a person’s family may have a collection of guns that has been passed down through generations. The person wants the guns to stay in the family and be passed along to future generations as well. A gun trust can accomplish this goal.

A gun trust allows a person to transfer their guns to their heirs as intended and ensure that the heirs do not inadvertently break the law by receiving them. As with any trust, it is important to consult with an attorney who has experience setting up these types of trusts. An improperly created trust can result in serious legal consequences for a person’s beneficiaries.

What Are the Advantages of a Gun Trust?

First, gun trusts allow transfers of firearms that comply with the law. They are also a tool for avoiding probate. A gun trust that remains in effect after a person’s death has other advantages.

The purpose of the NFA is to discourage and control transactions involving firearms because they are used so frequently in criminal activities. The NFA imposes a $200 transfer tax on transfers of registered NFA weapons (and they must be registered), and also requires getting approval from the Bureau of Alcohol, Tobacco and Firearms (ATF). These transfer requirements are avoided by placing the weapons in an NFA gun trust.

So, because the firearms are being held in trust, the NFA transfer requirements should not apply to the beneficiary, or beneficiaries, of a gun trust. In effect, the gun trust protects the grantor, the trustee and beneficiaries of the trust who may not be familiar with gun laws and, therefore, may unintentionally violate the law by receiving a grantor’s firearms.

A gun trust also allows a person to name more than one person to possess the firearms under the trust. Also, to some extent, it may offer protection from future changes in the law.

What Are the Elements of a Gun Trust?

Trusts can be revocable or irrevocable. A gun trust allows the grantor, the person who sets up the trust and owns the assets in it, if it is revocable, to transfer possession of their guns under circumstances they choose. For example, if the gun owner is incapacitated, they may want to create a revocable trust which can be changed during their lifetime.

It also allows the gun owner to name themselves as the trustee, or the person who manages the trust assets, in this case, firearms. If the gun owner intends to permanently transfer the guns to their heirs, they may want to set up an irrevocable trust, or one that cannot be changed once it is created.

Whether a trust is irrevocable or revocable, it should be created by observing all the formalities required by the laws of the state in which the grantor resides. The trust document, or the paperwork that establishes a trust, should clearly state the owner’s specific purpose in setting up the trust and that it includes the intent to comply with the NFA and other applicable laws.

The grantor will name an eligible trustee and successor trustees in the event the trustee can no longer serve. Eligible trustees should be people who are allowed to own guns under the applicable law with which the trust was created to comply. The trust documents should state explicitly whether it is a revocable or irrevocable trust and the conditions under which modifications may be made and by whom.

The firearms that are to be held in the trust should be carefully identified. The grantor may include an attachment or schedule to the trust document that lists the specific firearms to be placed in the trust. The trust should also include language that allows the trustee to satisfy the goal of the trust.

So, for example, the trustee may be directed to undertake a criminal check to determine if the heirs can own firearms under the law. If the intended heirs cannot own the firearms legally, the trustee may be charged with disposing of the firearms in another manner that complies with the law.

How Should I Prepare Myself When Setting Up a Gun Trust?

Before meeting with an attorney for help in setting up a gun trust, a person should be prepared with the following information:

  • Who does the person want to name as the initial trustee and possibly successor trustees?
  • What is the contact information for the grantor, the trustee and successor trustees, and all of the beneficiaries?
  • Are all of the beneficiaries legally eligible to possess the firearm, e.g. are they old enough?
  • Has the person completed a list of firearms that will be transferred?
  • An attorney may require additional information, but this checklist is a good start.

Should I Consult an Attorney If I Want to Set Up a Gun Trust?

The purpose of gun trust is to allow you to transfer your NFA firearms to your heirs and have them take possession without violating the law. A gun trust is somewhat similar to a regular trust, but there are important differences. Therefore, you should consult with an experienced estate plan attorney who can help answer your questions and set up a gun trust that works for you.

A gun trust may have multiple trustees. It might be intended to last for more than one generation. It also has to take into account both state and federal weapons laws. If a person wants to leave guns in trust, they would be well-advised to consult a lawyer. They should choose a lawyer who has plenty of experience with the state and federal laws that govern who can legally use and possess weapons as well as how they can be transferred.

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