NFA Trust
An NFA trust is a legal instrument which must be properly drafted to be valid. It is an estate planning tool which can be used to acquire NFA (Class 3) weapons, suppressors and destructive devices. The trust instrument is usually a revocable trust which can be changed or modified at any time before the maker's death. This form provides flexibility. Trustees or beneficiaries can be added or deleted. Property can be transferred to or from the Trust. Such transfers must be documented in writing. A gun trust may own many NFA items. There is no need to set up a separate trust for each NFA item acquired. NFA items are transferred into the trust by means of an ATF Form 4. Non-NFA item such as paintings, collectables, rifles, pistols and shotguns are transferred to or from the trust by means of a bill of sale. The Form 4 and bill of sale document the transfers of property to and from the trust. This is very important as the Trustee who eventually distributes the trust assets upon its termination needs to know what the trust owns at a time when there is no one left alive to ask. It is these documents which provide a legal chain of title and evidence of ownership in the Trust.
Class 3 Gun Trusts Can Last Several Generations
Unless the trust property is transferred out of the Trust it remains a trust asset until the trust terminates. This provides a continuity of ownership for several generations. A gun trust usually provides for disposition of property much like a will but the assets remain in the trust for several generations. A typical well written NFA gun trust will last years after those who created it have passed away as well as the initial beneficiaries.
NFA Trust Property Distributed When Trust Terminates
When the trust terminates, typically about 70 years after it is formed, the assets on hand are distributed by the trustee to the beneficiaries. These are usually the grantor's grandchildren. NFA items distributed at the end of the trust are taxed. Each transferee must pay the $200.00 transfer tax for each Class 3 item. This is different from a decedent's estate where Class 3 items pass tax free to one's heirs. The heirs (or their transferees) must pay the $200.00 transfer tax when they sell or transfer their inherited NFA item.
Trustee Administers Trust Assets for Trust Beneficiaries
Trustee(s) administer the trust's assets for the benefit of the beneficiaries. When the Trustor/Grantor (creator of the Trust) dies the trust usually continues with a successor Trustee administering the trust for the remaining beneficiaries. Because the trust lasts such a long time, successor Trustees and contingent beneficiaries should also be designated. Such trusts are often used when the Chief Law Enforcement Officer (CLEO) of an NFA buyer's home city refuses to sign a Form 4 authorizing the transfer of an NFA weapon. CLEO signoffs have become an ever increasing problem in today's security conscious world. An NFA trust or corporation is a separate legal entity. It is the actual purchaser of the NFA item and not an individual. Since an individual is not the purchaser (transferee) on the Form 4 (NFA transfer document) no CLEO approval is required. No fingerprint cards or photographs are required for transfers of Class 3 items to a trust.
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