For gun owners, especially those interested in acquiring or managing firearms regulated under the National Firearms Act (NFA), understanding the concept of a gun trust is essential. A gun trust offers a legal framework for owning and transferring firearms outside of probate which are or may be regulated by the government. Here, we’ll dive into what a gun trust is, how it works, and why hiring a lawyer to establish one is a wise investment. Thank you to a general counsel lawyer for contributing this article.
What Is A Gun Trust?
A gun trust is a legal entity created to hold and pass ownership of firearms. A gun trust holds ownership of all types of firearms but the main benefits come from NFA items, such as suppressors, short-barreled rifles (SBRs), or destructive devices. Instead of owning the firearms as an individual, the trust becomes the legal owner, offering unique advantages in terms of compliance, flexibility, and estate planning.
How Does A Gun Trust Work?
A gun trust works by acting as the legal owner of firearms. The trust has one or more trustees, but each acting trustee is considered a responsible person. Each responsible person has to submit information for background checks every time a new asset is added to the trust. Essential to creating a trust is beneficiaries, who can inherit the assets according to the trust’s terms. Here’s an outline of how it typically functions:
- Creation: A trust is created by notarizing the documents. A trust is a private entity, there are no registration requirements.
- Acquisition: NFA firearms are purchased by the trust.
- Trusteeship: The trust can have multiple trustees who are responsible for the safekeeping and administration of the trust.
- Estate Planning: The firearms can be passed to the beneficiaries without probate or tax complications.
Benefits Of A Gun Trust
- Compliance With Complex Laws
NFA firearms are heavily regulated. Other types of firearms may soon be heavily regulated or even banned. Possession or transfer without proper ATF approval can lead to severe penalties. A gun trust avoids the complex entanglement of firearms regulations by automatically passing them to heirs, without the need for approval from the ATF.
- Shared Use Of Firearms
Unlike individual ownership, where only the registered owner can legally possess NFA firearms, a gun trust allows multiple individuals to share access. This is ideal for families or groups of responsible individuals who may need to handle or use firearms.
- Estate Planning Advantages
A gun trust helps avoid common estate planning pitfalls, such as inadvertently passing firearms to ineligible heirs. With a trust, you control who inherits your firearms and ensure compliance with all laws, protecting your family from potential legal risks. However, the trust will not shield individual criminal liability for illegal transfers. The most important factor for gun trusts is that it acts as a tax savings device for your heirs. Each NFA item is subject to a $200 tax stamp every time it is transferred. If you own NFA items individually, then your heirs will have to pay that tax again to take ownership when you die. A trust allows beneficiaries to take ownership of the NFA items automatically without paying a tax stamp for each item again.
- Privacy
Transfers of firearms within a trust are often more private than individual transfers, helping maintain confidentiality.
Why A Lawyer Is Worth The Price For A Gun Trust
- Customized Legal Advice
Every state has different laws regarding firearm ownership and trusts. Some states are moving to ban commonly owned firearms. A trust customized by an attorney may be able to help mitigate the risks of state legislation. An attorney experienced in firearms and probate law ensures your gun trust complies with both federal and state laws while meeting your specific needs and answering your questions.
- Avoid Costly Mistakes
Incorrectly drafted trusts can result in severe penalties, including felony charges for illegal possession or transfer of NFA firearms. A lawyer ensures that your trust is legally sound, reducing the risk of errors.
- Tailored Estate Planning
An experienced attorney helps you integrate your gun trust with your broader estate plan, protecting your assets and ensuring a smooth transfer to your heirs. You should have a will that refers to your gun trust for planning purposes.
- Saving Money
Firearms can be an expensive hobby. NFA items are made even more expensive through the tax stamp regime. Having your trust prepared by a local attorney ensures that your beneficiaries will not be financially burdened by inheriting your firearms.
- Peace Of Mind
Knowing your firearms are legally protected and there is a private inheritance plan in place is invaluable. A lawyer provides that peace of mind by ensuring your trust is comprehensive and compliant.
The Bottom Line
A gun trust is an essential tool for gun owners, especially those with NFA firearms. While the upfront cost of hiring a lawyer may seem significant, the trust may pay for itself in tax stamp savings to the beneficiaries. Investing in professional legal assistance ensures your firearms are properly managed, offering long-term peace of mind.
If you’re considering setting up a gun trust or need guidance on firearm ownership and estate planning, reach out to an attorney with our friends at Volpe Law LLC. Your future self—and your heirs—will thank you.