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Why Do People Create Gun Trusts and What are They?

Why Do People Create Gun Trusts and What are They?Gun Trusts are created for estate planning purposes to enable firearms (whether restricted or not) to be passed on outside of probate and to enable restricted firearms to be used by more than one person, legally. Essentially, a Gun Trust is a revocable living trust created to hold legal title to firearms. The trust is managed by a trustee, who is typically the individual who created the trust, also known as the trust maker. The trustee has the authority to control the trust assets and make decisions about their use. The beneficiaries are those who can receive the guns at a future date. This may help the owner and other loved ones and friends from committing an “accidental felony”.

  • Estate Planning – creating a Gun Trust is important when you own firearms that you want to pass down after your death. A Gun Trust can provide clear instructions for loved ones regarding what they can and cannot do if a gun owner becomes incapacitated. Without a trust, family members may come into contact with restricted weapons, which could put them at risk of inadvertently violating federal or state law. The gun may be kept in trust even after the owner’s death. This enables the grantor/owner to pass on weapons, e.g. a collection of firearms, in the manner they desire.
  • Sharing National Firearms Act (NFA) Firearms with others – A Gun Trust makes it possible to share the fun and benefits of shooting NFA Firearms. Without a trust, the person that holds the Tax Stamp (proof of registration) and purchased the NFA Firearm MUST BE PRESENT and in possession of the NFA Firearm when it is being used by another person. However, with a Trust, any Co-Trustee and possibly a beneficiary can use a NFA Firearm. A Gun Trust can help you to get the most out of your Tax Stamps. Whether you only own one NFA item or intend to fill your safe with SBRs (short barrel rifle) and silencers, a trust will give you more freedom than owning the items as an individual.

Why Do People Create Gun Trusts and What are They?What is an NFA Firearm? It is a defined term that expands or contracts with legislation that currently contains fully-automatic firearms (termed “machineguns”), rifles and shotguns that have an overall length under 26 inches, rifles with a barrel under 16 inches, shotguns with a barrel under 18 inches, and firearm sound suppressors (termed “silencers”), “destructive devices” (primarily explosives and the like, but also including firearms over .50 caliber, other than most shotguns) and revolving-cylinder shotguns and one semi-automatic shotgun. is

What you leave behind for your loved ones needs to be accounted for and processed correctly meaning it should be100% legal, especially when it comes to firearms. You do not want something to happen that can put your family in uncertainty or inadvertently commit a crime. Sorting out all matters in your estate and creating a Gun Trust to make sure all those matters are controlled is one of the most significant things you can do for your loved ones, who might not be as educated as you are when it comes to firearms. If you get to a point where you need to ask yourself is a Gun Trust worth having, the answer is likely, yes. Guns held in a trust will avoid the probate process altogether at the gun owner’s death, making the estate administration easier on the executor. Additionally, because items contained within a Gun Trust avoid probate, the contents of the Gun Trust and how and to whom they are distributed will remain totally private.

There are two types of Guns Trusts, NFA Gun Trust and a Single Shot Trust or Standard Gun Trust; and they can be revocable or irrevocable.

  1. NFA trusts are specifically drafted legal entities designed to hold NFA Firearms. This type of trust can hold an unlimited amount of NFA items within the same trust. This means you only need to keep track of one trust, but it can create complexity and additional steps when adding new items to your trust. In addition, any trustee, or responsible persons you add to your trust will need to be included in any future NFA applications with all required documents submitted to the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).
  2. The Single Shot Trust or Standard Gun Trust in comparison is designed to be the simplest way to create a trust for maintaining a single NFA Firearm. It combines the ease of filing as an individual with the flexibility granted by placing your NFA item in a trust. The cons are each NFA Firearm has its own trust, meaning you cannot combine firearms in the same trust. You will need to create a trust for each of the NFA Firearms that you own.

The ATF does not have to formally approve a Gun Trust. However, a Gun Trust must be sent to the ATF when the trust is applying for a tax stamp. A tax stamp is the proof of registration of your NFA Firearm. A Gun Trust is the applicant applying for a tax stamp and will become the owner of the NFA Firearm when it is approved. Each NFA item requires an NFA tax stamp.

People often ask if they can buy multiple suppressors with the same tax stamp. The answer to that is no, each suppressor and NFA Firearm needs their own individual stamp. However, with a Trust, any co-trustee can use the suppressor. A Gun Trust can help you to get the most out of your NFA tax stamps. Whether you only own one NFA item or intend to build a large and varied collection, a Gun Trust will provide more freedom than owning the items as an individual. The requirements of a Gun Trust put out by the ATF are straight forward and covered by a separate article (we will be publishing in the next two weeks) and at the ATF’s website. https://www.atf.gov/.

In conclusion, most Gun Trusts are revocable, meaning that they can be amended or revoked in their entirety.  Gun Trusts can also be irrevocable, which would make it difficult to remove your weapons from the trust once they are included in your trust documents. The biggest benefit of creating a Gun Trust is that it can last throughout your life and for future generations. Gun Trusts, like all trusts, are subject to the Rule Against Perpetuity, but in Arizona that is currently 500 years, which covers many generations.

 

Glossary of Term

 

ATF – The Bureau of Alcohol, Tobacco, Firearms and Explosives https://www.atf.gov/

ATF Form 1 – Application to make and register a firearm https://www.atf.gov/file/11281/download

ATF Form 4 – Application for tax paid transfer and registration of firearm https://www.atf.gov/file/61546/download

ATF Form 5 – Application for tax exempt transfer and registration of firearm https://www.atf.gov/file/11371/download

CLEO – Chief Law Enforcement Officer – Visit your local Police Department for more info.

Form 5320.23 – National Firearms Act Responsible Person Questionnaire https://www.atf.gov/file/107266/download

FD-258 – Fingerprint card – https://www.atf.gov/node/30071

Final Rule 41FMachineguns, Destructive Devices and Certain Other Firearms; Background Checks for Responsible Persons of a Trust or Legal Entity with Respect to Making or Transferring a Firearm, amending the regulations regarding the making or transferring of a firearm under the National Firearms Act (NFA) https://www.atf.gov/rules-and-regulations/final-rule-41f-background-checks-responsible-persons-effective-july-13

GCA – the Gun Control Act of 1968 placed “destructive devices” (primarily explosives and the like, but also including firearms over .50 caliber, other than most shotguns) under the provisions of the NFA https://www.atf.gov/rules-and-regulations/gun-control-act

NFA – National Firearms Act https://www.atf.gov/rules-and-regulations/national-firearms-act

NFRTR – National Firearms Registration and Transfer Records – https://www.atf.gov/file/58201/download

RAP – Rule Against Perpetuity https://en.wikipedia.org/wiki/Rule_against_perpetuities

Responsible Person – Persons with the power or authority to direct the management and policies of the trust include any person who has the capability to exercise such power and possesses, directly or indirectly, the power or authority under any trust instrument, or under state law, to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of, the trust. https://www.atf.gov/rules-and-regulations/final-rule-41f-background-checks-responsible-persons-effective-july-13#Who%20is%20a%20Responsible%20Person

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Meet Margaret Tritch Buonocore

Margaret Tritch Buonocore began her legal career in Los Angeles as a litigator. She then moved to London where, after completing her LLM, she worked in international business and finance for almost a decade structuring corporate finance transactions, equity offerings, debt, and derivative instruments focusing on contract and securities law issues. Learn More…

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