Do I need a Gun Trust? Yes for NFA Firearms and Devices
Should I put my current collection into a Trust? Absolutely not.
A Trust is a legal entity created by a legal document that a “Grantor” signs to convey specific property and grant special powers and authority to “Trustees” to hold, use, and dispose of that property pursuant to the instructions in the trust document. Trusts have been around for hundreds of years and have been used for many purposes.
For example, a 2013 article by Attorney David Goldman advocates using a Gun Trust for many purposes, including to protect your entire firearms collection from your creditors, avoiding probate after you die, and for acquiring so-called NFA Class 3 firearms and devices, such as machine guns, SBR’s, and suppressors. While some people who can not afford to pay their debts might benefit from Attorney Goldman’s “asset protection” type services, most lawyers would first recommend a good, current Last Will for conveying your regular firearms and all of your other property after you pass away, because with a Last Will you to keep legal control of everything until you pass away.
For NFA Class 3 firearms and devices, a dedicated NFA Firearms Trust is appropriate under many circumstances, but the ONLY assets that should be conveyed to that Trust are NFA Class 4 firearms and devices. All other assets should always be handled separately.
The benefits of using a dedicated NFA Firearms Trust currently include the ease of acquisition and approval and allowing all trustees and beneficiaries to legally use these restricted firearms and devices. Trusts do not need to provide fingerprints, or photographs, or obtain Chief Law Enforcement Officer (“CLEO”) approvals.
The Department of Justice published on January 4, 2016, a new federal regulation which will become effective on June 28, 2016. Trusts and other legal entities applying after that date will be required to submit the new BATFE’s Form 1 (for making a NFA firearm such as a SBR) or Form 4 (for acquiring a NFA device such as a suppressor). The revised forms will require an FBI fingerprint card and a 2 “x2” current photo for each “Responsible Persons” listed on a Trust, Partnership, Corporation, or other Entity applicant.
“Responsible Persons” will be very broadly defined to include “any grantor, trustee, beneficiary, partner, member, officer, director, board member, owner, shareholder or manager who possesses, directly or indirectly, the power or authority under any trust instrument, contract, agreement, article, certificate, bylaw, or 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 or entity.”
But after June 28, 2016, the current CLEO approval requirement will be downgraded to a notification only provision, requiring each applicant to simply send a completed copy of the Form 1 or 4 to their CLEO.
NFA Class 3 firearms and devices effectively includes only machine guns, short barreled rifles and shotguns, and suppressors. The sale, possession, use and transfer of these are regulated far differently than other normal firearms and other property. Therefore, including other unregulated firearms into a gun trust is NEVER appropriate. The same is true for other types of property.
Your estate planning attorney might suggest another type of trust for your regular firearms, or for your some of your other property, but that other trust will have different provisions because it will have different purposes.
The trust document available at NFAFirearmsTrust.com is specifically designed and drafted for NFA Class 3 firearms and devices. The document fully complies with the current law and regulations and will be amended as needed to specifically conform to the New Federal Regulations which will become effective on July 28, 2016. But these new federal regulations do not apply to ordinary firearms, or to any other property, so there is no reason to voluntarily make them subject to such provisions.
At NFAFirearmsTrust.com we also NEVER RECOMMEND that the Grantor list other firearms in their trust documents. That is a very bad practice, but still frequently recommended by other so-called “gun lawyers,” and results in the Grantor giving a list of his or her entire collection to the BATFE every time they acquire a new NFA Class 3 firearm or device. Why would anyone want to voluntarily send a list of their collection to the BATFE?
So while a NFA Firearms Trust remains an excellent idea for NFA Class 3 firearms and devices, and will continue to be an important tool even after the new federal regulations become effective on June 28, it should be used exclusively for that purpose.