We had a great show today on KFNN 1510 Money Radio. I was Trevor Whiting’s guest, filling in for Matt Dana on Estate Planning with the Dana Law Firm. The focus of our discussion was NFA Trusts, which is one of the hottest topics in estate planning these days.
We started with a brief overview of the National Firearms Act (the “NFA”) and the types of weapons that are regulated pursuant to its provisions. This includes silencers, short-barreled shotguns and rifles, automatic machine guns, etc. These weapons need to be registered by the owner or purchaser with the Bureau of Alcohol Tobacco Firearms & Explosives (the “ATF”) and are subject to myriad restrictions due to their inherently dangerous characteristics.
The problem that owners of NFA weapons face is complex. Upon death, for instance, the law generally deems the executor or personal representative of the decedent gun owner’s estate to be in “constructive possession” of the weapon, which the ATF could argue is a violation of the NFA since the executor is not the registered owner of the weapon. Furthermore, transfers of ownership to the heirs or transportation of the weapon across state lines could also result in severe fines and penalties.
NFA Trusts are a specialized type of revocable trust that are specifically designed to solve these problems. Since the trust will be the registered owner of the weapon, any trustee, co-trustee, or successor trustee would be legally authorized to possess, transfer, or even use the weapon. There are specific provisions of a properly drafted NFA Trust that are not found in a typical estate planning revocable trust, so it is important to note that NFA weapons should not be transferred to the family trust alongside other assets like stocks and real estate.
Feel free to give our office a call if you have any questions about NFA Trusts. Also, for more information, see my previous article on NFA Trusts here.