You may know that handling firearms wisely involves some important steps such as participating in gun safety training and purchasing secure gun storage. However, you may not know that handling your firearms wisely also concerns your estate planning and how your firearms are titled. You see, guns are an asset and depending upon the collection, these can be a valuable part of your estate.
One option for wisely planning your estate concerning the ownership of certain types of firearms is the NFA Gun Trust. This article will discuss the basic uses of the NFA Gun Trust and then will examine the recent changes in the law.
What is an NFA Gun Trust?
NFA refers to the National Firearms Act which was passed by in 1934 and gave the Congress an authority to tax firearms but had an underlying purpose unrelated to revenue collection.
The historical purpose of the NFA was to curtail, if not prohibit, transactions in certain types of NFA firearms. A $200.00 tax on the making and transfer of certain firearms was considered quite severe and adequate to carry out Congress’ purpose to discourage or eliminate transactions involving these firearms which were also known as Title 2 Firearms or Class 3 Firearms. The NFA has undergone a couple of amendments since 1934, most recently in July 2016, but the basic provisions (including the $200.00 tax) have never changed.
Structure of the NFA Gun Trust
Advantages of a Gun Trust
Among the benefits of the NFA Gun Trust are that it enables the use of class 3 firearms and accessories among the trustees. The trust also protects against future regulatory restrictions AND provides for the orderly transition of the assets upon death by avoiding the probate process. This type of trust is set up to be very flexible as to who owns and controls the firearms.
A key benefit to the NFA Gun Trust is that the trust is the registered owner of the guns and this preserves maximum flexibility and assures the easy passage of the firearms to the beneficiaries. Another benefit is the protection of family privacy is the case with any other type of revocable living trust in Florida. If the NFA Gun Trust is established as part of a revocable living trust, the trustees, the beneficiaries and the gun ownership may be changed as long as the grantor has capacity.
Another important estate planning consideration is whether to include your NFA Gun Trust in your business continuity succession plan in Florida. This option would be most applicable to owners of class 3 firearms who are also private dealers or engage in resale opportunities. Finally, an NFA Gun Trust could be included in a Florida special needs trust for a beneficiary who is receiving SSI disability benefits. This would allow guns to be sold and proceeds used for the beneficiary without disqualifying them from these important benefits.
July 2016 Updates to the NFA Gun Trust
The new updates as of July 2016 are based upon a new regulation called 41F which was enacted by the Obama administration. This regulation went into affect July 13, 2016, and requires fingerprints, pictures, and notification to be sent to local law enforcement when setting up an NFA Gun Trust.
Even though there is more “red tape” when setting up one of these trusts, the other aspects of the NFA Gun Trust remain relatively unchanged. For example, beneficiaries may still own and control firearms pursuant to the trust when they reach the age of a legal adult in that jurisdiction. The NFA Gun Trust, remains a valuable Florida estate planning tool for those who purchase and maintain a collection of class 3 type firearms.
This article is an update of the original article published on May 8, 2013.