Some of my clients count a valuable firearms collection among their estate assets. When deciding how to handle firearms within an estate plan, several factors should be considered above and beyond the monetary value of the firearms. Among the most important considerations are the numerous federal laws that apply to the sale, purchase, and possession of certain firearms. Those laws can make the transfer of ownership of firearms after the death of the owner more complicated than the transfer of other assets. For clients who own an extensive firearms collection, I often suggest the addition of a North Carolina NFA gun trust into their comprehensive estate plan.
What Is an NFA Gun Trust?
An NFA (National Firearms Act) Gun Trust is a specialized type of revocable living trust. As the name implies, a Gun Trust is created for the sole purpose of purchasing, selling, possessing, and/or passing down firearms. Like any other revocable living trust, the creator if the trust (the “Settlor”) appoints a Trustee who manages the trust assets and names at least one beneficiary. In the case of an NFA Gun Trust, the Settlor is also typically the Trustee. Firearms and related assets owned by the Settlor are then transferred into the trust. Because a trust is considered a separate legal entity, assets transferred into the trust are legally owned by the trust once the transfer is complete.
Why Might I Need an NFA Gun Trust?
Although certain firearms can legally be bought, sold, and possessed, they are heavily regulated by the National Firearms Act (NFA). Examples of firearms and related equipment that fall under the purview of the NFA include:
- Shotguns having a barrel or barrels of less than 18 inches in length.
- A weapon made from a shotgun if such weapon as modified has an overall length of less than 26 inches or a barrel or barrels of less than 18 inches in length.
- Rifles having a barrel or barrels of less than 16 inches in length.
- A weapon made from a rifle, if such weapon as modified has an overall length of less than 26 inches or a barrel or barrels of less than 16 inches in length.
- Machine guns
- Silencers (as defined in section 921 of title 18, United States Code).
What Are the Benefits of Creating a North Carolina NFA Gun Trust?
There are several important benefits you gain by creating a Gun Trust. Transferring ownership of firearms into an NFA Gun Trust separates the owner from legal ownership of the firearms and makes it easier to transfer ownership if the owner dies or becomes incapacitated. A Gun Trust also decreases the likelihood that you, or your heirs, will inadvertently violate state or federal law and allows the assets held in the trust to bypass probate.
Whether because of your death or incapacity, it may eventually become necessary to transfer ownership of your firearms to beneficiaries and/or legal heirs. It is very easy to unintentionally violate federal laws governing the transfer of assets covered by the NFA which can lead to illegal possession of an NFA weapon, a crime that is punishable by a maximum of 10 years in prison and/or a fine of up to $250,000. Using a Gun Trust to facilitate the transfer ensures that the transfer will be accomplished properly and without violating state or federal law. Finally, purchasing firearms is typically a more streamlined process when an NFA Gun Trust is the purchaser.
Note that if you, or your beneficiaries/heirs, are prohibited from purchasing or possessing NFA firearms or weapons it would be a violation of federal law to use an NFA Gun Trust to purchase or possess them.
Contact our Trust Attorney in Chapel Hill, NC
If you have additional concerns or questions about a North Carolina NFA gun trust, please contact our trust attorney in Chapel Hill at Clarity Legal Group by calling us at 919-484-0012 or contact us online.
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