Beneficiary possessing NFA item?

[Ryanxia]

A question recently came up that I did not know the answer to. Can a beneficiary of a Trust be in possession of the NFA item(s)?

Upon searching, the most obvious answer I got was 'it depends on your Trust language' so I looked at mine and it did not see anything that references it at all. Of course State laws can all be different but is there a general consensus on this?

If the answer is no, could one name the beneficiary as a Trustee? (it sounds like it would contradict the point of having a Trust but in the case of NFA it really doesn't).

 

[pjeski]

I think the most obvious answer,"it depends on your trust language", is the correct one. A trust should outline what each party is responsible for and entitled to.

My trust has specific language that ensures beneficiaries can possess the NFA items, and that trustees may also use the items without worry of not holding up their responsibility to preserve the value of the items for the beneficiaries. And when I have questions like this, the attorney that drafted my trust explains the answers for me, referring me to the language in the trust the addresses the issue.

In my trust, an individual can have multiple roles. I have one individual who is the successor trustee, residual beneficiary and a trust beneficiary. These roles are all explained in the language of the trust.

So in other words, ask the attorney that drafted it.

Was your trust self prepared, online trust-o-matic, or attorney prepared?

 

[Ryanxia]

It's not my Trust specifically I'm asking about, my beneficiary has no desire to use my NFA items.

The question is, 'If there is no language in the Trust, does it default either way that a beneficiary can or cannot possess the NFA items?'.
And the follow up would be similar, 'If there is no language in the Trust either way, can a beneficiary be listed as a Trustee?'

 

[Aaron Baker]

The answer is definitely "it depends on the language of your trust."

My legal opinion is that, generally, beneficiaries have only a future interest in trust property. (Their interest, in legal terms, has not yet "vested.") Thus, without any specific language allowing it, they would not be authorized to possess the trust property.

Think of it by analogy to a standard revocable living trust holding money. Grandpa is the grantor, bank is the trustee, and grandkids are the beneficiaries. Without any specific language to the contrary, grandpa can revoke or change the trust any time before he dies, bank can manage the money (with a duty to help it grow), and beneficiaries don't get anything until grandpa dies. They don't have any right to force (in court) the bank to hand over money. Until grandpa dies, he could decide any time he wants to remove the grandkids as beneficiaries. That's the reason they have no power until he dies and the trust becomes irrevocable.

In much the same way, unless an NFA trust says otherwise, beneficiaries have no claim on the NFA items, and thus no right to possess them.

But as I said, it depends on the language of your trust. Your trust may allow the beneficiaries to possess, by its specific terms.

Your second question is easier. A person can absolutely be both a trustee and a beneficiary. Basically, any person can fulfill multiple roles on the trust. The grantor can be both a grantor and a trustee, and a trustee can also be a beneficiary. The only real restriction is that the grantor can't be their own beneficiary. (Which is pretty obvious, if you think about it, since the beneficiary inherits when the grantor dies...)

Hope that info helps!

Aaron

 

[Ryanxia]

Thanks a lot Aaron! I was hoping you would chime in. So as long as they are listed as a Trustee as well the beneficiary can be in possession. That's good because I know some people do a Trust so their wife can be home with it all laying around and of course their wife is the beneficiary.

I'm glad the government keeps us safe by making is go through all this to cut 1/2" from our rifle barrel or to reduce gun shots to non hearing damaging levels... /end sarcasm

 

[Aaron Baker]

So as long as they are listed as a Trustee as well the beneficiary can be in possession. That's good because I know some people do a Trust so their wife can be home with it all laying around and of course their wife is the beneficiary.

Yep--on a standard revocable living trust, if a person is listed as a trustee, they can be in possession. And they can also be listed as a beneficiary with no issues.

In my practice, it's pretty common for a husband to name his wife as both a trustee and beneficiary.

Aaron

 

[CraigC]

In my trust, one cannot be a beneficiary without being a trustee.

How can one be a beneficiary if they can't possess the items in the trust???

 

[MachIVshooter]

How can one be a beneficiary if they can't possess the items in the trust???

See:

generally, beneficiaries have only a future interest in trust property.

You can put anyone as a beneficiary of your NFA trust, including minor children, but only persons who are over 21 and not prohibited can be legitimate trustees.

 

[Aaron Baker]

How can one be a beneficiary if they can't possess the items in the trust???

Because beneficiary means that a person is in line to inherit the items when you die. That doesn't require them to have the right to possess them while they're trust property. When you pass away, the property is transferred to the beneficiaries on an ATF Form 5. Then the trust ceases to exist. Once the tax stamp is approved, the beneficiaries become the owners and can take possession because it's their property.

If the beneficiaries are not also trustees, they have no right to possess the property before you die (unless your trust is written to specifically allow beneficiaries to have possession). In a traditional trust, you must be a trustee to have a right to possession while the grantor is alive.

You can put anyone as a beneficiary of your NFA trust, including minor children, but only persons who are over 21 and not prohibited can be legitimate trustees.

Correct, except that one only has to be 18 to be a trustee.

NFA items, much like handguns, can be possessed or bought in private face-to-face transactions by anyone who is 18 years old. One only has to be 21 years old to buy one from a dealer.

Aaron

 

[pjeski]

My trust has language that indicates it can continue to exist long after my death.

 

[Aaron Baker]

My trust has language that indicates it can continue to exist long after my death.

In that case, you may not have a revocable living trust (which the vast majority of NFA trusts are), but some other type of trust. That's fine, but it makes it even more important to consult your lawyer when you have questions, since most talk about NFA trusts on the internet will be about a different type of trust than yours. It could also be that your trust is a revocable living trust, but is written to be perpetual after your death. I don't write perpetual trusts, so I can't speak to that.

Aaron

 

[pjeski]

My reason for mentioning it is that from what I've seen, trusts vary wildly. People ask questions about their trusts and they get answers, even from knowledgeable attorneys, that may not apply to their trusts. Even your response to me includes two alternatives. Anybody who has questions about their trust should ask the attorney that drafted it. If you didn't have an attorney draft it, it's never too late to consult with one with your trust in hand.

IMHO and IANAL.

 

[Aaron Baker]

Anybody who has questions about their trust should ask the attorney that drafted it. If you didn't have an attorney draft it, it's never too late to consult with one with your trust in hand.

Absolutely.

But generally, if folks are using an off-the-shelf trust, it's a pretty standard revocable living trust setup. The standard answers are generally suitable for that type of trust. But the caveat is always check with your lawyer if you have one.

Aaron

 

[villagelightsmith]

Pjeski's signature "IANAL" had me 'fuddled for a bit. "I Am Not A Lawyer."
Good on you, Mate!
My own family were slaves who ran away to sea, and after a generation or two of pirating and slave trading were driven ashore in the new world. Casting about for their futures, they quickly realized they must either ignore the law and run for the border, or write the laws and run for office. It matters not which they chose; I descended from a pack of scoundrels.

 

[Aaron Baker]

I descended from a pack of scoundrels.

And it often pays to have a scoundrel in your employ. They're familiar with the battle field and can best advise you.

That's why I recommend that people ask their own lawyer for advice on their trust whenever possible.

Aaron