NFA Gun Trusts: Keeping Safe At The Range And In The Estate Plan
Learn what legal and tax advisors need to know about the ownership and management of Title 2 firearms, which include machine guns, silencers, short-barreled rifles and shotguns, destructive devices, and “any other weapon,” and learn how to implement and use a gun trust to best comply with the laws and maintain confidentiality and successorship for this weaponry. See bullet points below for more information.
- The National Firearms Act regulates special items such as machine guns, silencers (suppressors), and short-barreled rifles and shotguns. There are VERY few crimes committed with lawfully-owned NFA items.
- It is illegal under the NFA to possess any of these items unless it has been properly registered with the government.
- It is only legal for the registered owner to possess an NFA firearm.
- It is illegal to transfer an NFA item until an application (ATF Form 4 or 5) has been submitted and approved, and a transfer tax paid. Similar rules apply to making an NFA item (using Form 1).
- It is illegal for a prohibited person (such as a felon) to possess any firearm or ammunition.
- NFA items can be owned by trusts and business entities, in addition to individuals, and possessed by their Trustees, officers, and directors.
- Some states and local municipalities impose additional legal restrictions, or prohibit ownership of NFA items altogether. It is now legal to own suppressors in approximately 39 states. Many allow them to be used in hunting.
- The number of applications by trusts and entities that are not dealers went from 840 in 2000 to 40,700 in 2012. There is a growing market for NFA trusts, and a growing market for suppressors and other NFA items. There are many cheap trusts available, but they often have major drafting errors that can cause trustees to violate the law.
- A properly drafted NFA trust and accompanying documents will 1) Educate the client and other principals about the law, 2) Reduce or eliminate the chance that the trustees will violate the law, if they comply with the trust provisions, 3) Allow other persons to lawfully possess the trust property, and 4) Provide estate planning arrangements to be made for these items.
- A practitioner should charge a suitable fee for drafting an NFA trust, considering the amount of time it takes to confer with the client and do the job right, and the stakes involved. The client does not want to leave a gift for his loved ones that results in them going to prison.
- New Regulation 41P requires Trustees and other “responsible persons” to submit fingerprints and photos with each transfer application and to submit to a background check, replaces the requirement of a local law enforcement signature with a notification requirement, and allows personal representatives to lawfully possess NFA firearms during probate.
- Many clients are creating gun trusts for non-NFA firearms. One motivation is the fear that governments will impose future restrictions on any type of firearms.
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Jonathan G. Blattmachr is director of estate planning for Peak Trust Company, formerly Alaska Trust Company, and a director of Pioneer Wealth Partners LLC, a boutique wealth advisory firm in Manhattan. He is a retired member of Milbank, Tweed, Hadley & McCloy and of the New York and California bars. He is the author and co-author of eight books and over 500 articles, and has been chair of several committees of the New York and American Bar Associations and the American College of Trust and Estate Counsel. He is co-developer of Wealth Transfer Planning, a computerized system for lawyers that automatically generates estate planning documents such as wills and trusts, and provides specific client advice using a form of artificial intelligence. Jonathan served two years of active duty in the US Army, rising to the rank of Captain and was awarded the Army Commendation Medal. He is an instrument rated land and seaplane pilot and a licensed hunting and fishing guide in the Town of Southampton, New York.
Mr. Healy is an attorney in private practice in Tyler, Texas. He is the lead author of the book The Legal Guide to NFA Firearms and Gun Trusts, written with Alan Gassman, Jonathan Blattmachr and several other attorneys and published in 2016. This book was reviewed in the June, 2019 American Rifleman, a magazine which reaches over 2 million readers. It reached #1 on the list of Amazon Bestsellers in the category of Legal Self-Help. Mr. Healy authored a chapter on NFA trusts in the book Texas Perspectives on Firearms Law published by the Texas Bar Books in 2015. He is the NFA Editor for Interactive Legal, working with nationally-renowned estate planning attorneys to provide NFA trust forms and supporting knowledge to lawyers throughout the country through their Interactive Legal Suite.
Mr. Healy is Texas State Rifle Association’s General Counsel. He has also served as general counsel for two congressional campaigns, and as National Corporate Counsel for American Mensa. He was Course Director for the 2012 and 2013 State Bar Firearms Law Seminars, and has spoken at every annual seminar since then. He is a mediator for civil, family law, and child protective cases, a member of the American Arbitration Association's Panel of Mediators, and an arbitrator for the Better Business Bureau and AAA. During law school he served as an appellate advocacy instructor, and he previously served as a college instructor in business law.