What is a Gun Trust?

Introduction to NFA Gun Trusts:

NFA Gun Trusts are a fairly recent invention in American law. Over the past few years, gun-owners across the country have created and used Gun Trusts to acquire and use firearms that are tightly regulated by the National Firearms Act (“NFA”) and the Gun Control Act (“GCA”). Under these laws, the Bureau of Alcohol, Tobacco, Firearms and Explosives (commonly known as the ATF or BATFE) requires that certain types of weapons and accessories be registered in the National Firearms Registration and Transfer Record. These weapons are commonly called NFA firearms/weapons, Title II firearms/weapons, or Class 3 firearms/weapons.

Traditionally anyone wishing to own a firearm regulated under the NFA had to register it in his or her individual name. However, the wording of the NFA currently allows for legal entities such as corporations and trusts to register NFA firearms in the name of that legal entity. There are several benefits that come from the use of a Gun Trust:

Benefits of using an NFA Gun Trust:

(1)     NFA firearms owned by a Gun Trust can be accessed and used by the Trustee(s) of that Gun Trust. Because the trustees of normal trusts have the right to manage the trust property, trustees of Gun Trusts have the right to handle and manage the property of the Gun Trust (i.e. any NFA firearms). Because the NFA firearms are registered in the name of the trust, the creator of the Gun Trust can name multiple people as trustees and thus grant them legal authority to use those NFA firearms. However, each trustee of the Gun Trust must submit to a background check with the ATF before they will be authorized to use any NFA firearms owned by the Gun Trust.

 (2)     Trusts, unlike other legal entities such as corporations or LLCs, do not require registration fees or similar expenses in order to remain valid. Trusts are also more private and confidential.

 (3)     After your death, a properly drafted Gun Trust can provide helpful instructions to the person administering your Estate in how to properly distribute your NFA firearms without breaking the law and risking criminal prosecution. Although not necessary, a Gun Trust can also be used to distribute your regular firearms to your designated heirs.

Frequently Asked Questions:

 Q.   What is an NFA firearm or Title II weapon?

A.     Under 26 U.S.C. § 5845 (2012), the following categories of weapons are highly regulated by federal law and require registration with the ATF:

(1)        Machine Guns – this term includes any firearm which can fire more than 1 cartridge per trigger pull, as well as the receiver for any such weapon, or any weapon that is “readily convertible” to a machine gun.

(2)        Short-Barreled Rifles – this term includes any firearm with an overall length under 26 inches or a barrel or barrels under 16 inches.

(3)        Short-Barreled Shotguns – this term includes any shotgun which has a smoothbore barrel and either an overall length of less than 26 inches or a barrel of less than 18 inches in length.

(4)        Suppressors (a.k.a. Silencers) – this term includes any portable device designed to muffle or disguise the report of a portable firearm.

(5)        Destructive Devices – this term includes (A) devices such as grenades, bombs, explosive missiles, poison gas weapons, and (B) any firearm with a bore over 0.50 inch, except for shotguns or shotgun shells which are generally recognized as particularly suitable for sporting purposes.

(6)        “Any other weapon” – this term may include any weapons or devices capable of being concealed on the person from which a shot can be discharged through the energy of any explosive. Examples of such weapons include, but are not limited to, concealable weapons disguised as pens, cigarette lighters, knives, cane guns, and umbrella guns. Such weapons may also include smoothbore handguns designed to fire a fixed shotgun shell.

Q.   What is a Class 3 weapon?

A.    Technically, there is no such thing as a “Class 3” weapon. This term is often incorrectly applied when referring to NFA firearms or Title II firearms (as in Title II of the Gun Control Act). This misnomer likely comes from the fact that gun dealers who wish to sell NFA firearms must obtain Class 3 Special Occupational Tax (SOT) status.

Q.   Can I transfer the NFA firearms I already own to my Gun Trust?

A.     Yes, but you will need to complete and submit the ATF’s Form 4 and pay the transfer tax of $200 for each firearm, just as you would in transferring the firearm to another person.

Q.   Can I name anybody as a Trustee of my Gun Trust?

A.     Not just anybody. Before naming anyone as a Trustee, you should reasonably satisfy yourself that that person is not a “prohibited person” as defined under 18 U.S.C. § 922(g) (2012). Prohibited persons commonly include persons convicted of any felony or a domestic violence misdemeanor, drug addicts, mentally ill persons, illegal immigrants, and persons subject to a protective order (aka restraining order). Additionally, your Trustees should generally be 21 years of age or older since many states may vary in the minimum age requirements of persons allowed to possess a firearm. Anyone you appoint as Trustee must also pass a background check with the ATF, which requires submitting fingerprints and photographs for each applicant.

Q.    Does Alabama law ban any NFA firearms?

A.     No. It is legal to own NFA firearms in Alabama as long as you comply with federal law.

Q.     Does a Gun Trust require its own Tax ID number (EIN)?

A.     No. As long as the Settlor (i.e. the person who created the trust) is also a Trustee, then that person’s Social Security Number is used instead of an EIN. Banks usually request an EIN when setting up a trust account.

Contact Us:

If you are interested in learning more about Gun Trusts or having one created, contact Zach Guyse at 256-534-2205 or by email at zguyse@wolfejones.com.

DISCLAIMER

            The laws and regulations governing NFA firearms are subject to frequent change. As such, the information contained in this document may become outdated from time to time, and should not be relied upon without first consulting with an attorney familiar with the laws referenced herein.

            No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers.