What is an NFA Gun Trust?
The National Firearms Act (“NFA”) was enacted by Congress in 1934. The purpose of the law was to slow the sale or exchange of certain firearms. The NFA regulates several restricted firearms that are legal still legal for purchase in the state of Utah. These firearms include machine guns, short-barreled rifles, short-barreled shotguns, suppressors, destructive devices and other certain classes of firearms. Additionally, Congress enacted a $200.00 transfer tax to discourage the transfer of these firearms. The amount of this tax has not changed since 1934. See, 26 U.S.C. §5811. People are interested in the uniqueness and limited availability of NFA firearms, and they want to add them to their gun collection. In the state of Utah, any lawful person can purchase, own, or transfer an NFA item. A “person” is defined as a “partnership, company, association, trust, corporation, including each responsible person associated with such an entity; an estate; or individual.” See, 27, CFR 479.11. This basically means that there are three common ways that a “person” can own and use NFA items: (1) as an individual, (2) as a corporate entity, or (3) as an NFA Gun Trust. Many firearms enthusiasts consider an NFA Gun Trust to be the most flexible and cost-effective method of owning NFA items.
Do You Need an NFA Gun Trust?
An NFA Gun Trust offers the owner(s) a flexible and responsible means of ownership. If you currently own an NFA item as an individual or are thinking about purchasing an NFA item in the future, we recommend that you give us a call and see how an NFA Gun Trust can benefit you. For gun enthusiasts that do not own or are not considering purchasing an NFA item, there are still benefits to having a gun trust to ensure that your firearms are used and managed correctly.
What can I do with an NFA Gun Trust?
With an NFA Gun Trust from HEPWORTH & ASSOCIATES, you can own and use your NFA items freely. The Trust also allows for the simple addition and/or removal of additional trustees. This allows for multiple responsible people and family members to use and possess the firearms while the trust maintains ownership over your NFA items. Owning NFA firearms as an individual restricts the use and possession of the item to only the registered owner. Therefore, to allow another person to use your NFA item would be in violation of Federal law and can carry serious penalties. However, in an NFA Gun Trust, the entity maintains ownership of the item and all responsible people listed as trustees and successor trustees may lawfully possess the NFA item(s), and because the Trust maintains ownership over the NFA additional trustees do not have to pay the $200.00 transfer tax.
Are NFA Gun Trusts Revocable?
Yes! NFA Gun Trusts are freely revocable throughout the life of the trustor. The trustor is the person who initially sets up or “funds” the trust. As the trustor, you can list co-trustees at the time your NFA Gun Trust is set up and approved by the ATF. The trustor can also add additional trustee and remove trustee over time as circumstances and preferences change. As a revocable trust, the trustor can also revoke the NFA Gun Trust entirely and would then default back to owning the NFA firearms that were in trust as an individual. However, the trustor would incur the $200.00 transfer tax per NFA item should they elect to revoke the Trust.
Once the trustor dies or becomes incapacitated in any way the trust becomes irrevocable. Then the designated remaining trustees will be tasked with following the trustor's instructions regarding how the NFA items are to be maintained and distributed to the beneficiaries. This guarantees that the trustors NFA firearms are always in the possession of a responsible adult and that loved ones in the future will be safeguarded from the consequences of an accidental felony.
Recent changes to Gun Trust Laws
Our NFA Gun Trust attorneys are always staying up to date on the latest changes and developments in laws and rules affecting gun ownership, use, and NFA trusts. We can advise you on the current state of the law and make sure that you are in continuing compliance. Recent changes and updates to gun trust laws include:
In 2016 changes were made regarding the ATF’s requirement to have the local Chief Law Enforcement Officer (“CLEO”) certify the transfer of an NFA item. In the past gun owners were required to obtain a written certification from the CLEO. This requirement has now been replaced with a CLEO notification requirement. It is no longer necessary to obtain the signature or approval of the CLEO to transfer an NFA firearm. To comply with the new notification requirement the applicant or transferee must simply forward copies of ATF Form 1,4,5 and/or 53320.23 to the local CLEO. For purposes of NFA Gun Trusts, the local CLEO is considered the CLEO where the primary location where the firearms will be maintained.
In addition to notifying the CLEO on behalf of the Trust, any qualified “responsible person” trustees associated with the Trust must each submit documentation to the CLEO who has jurisdiction where the trustee lives, which might be a different jurisdiction from the Trust.
We can help advise and counsel you on the proper forms and requirements that you and any other trustee must complete with the AFT and local CLEO to properly set-up your NFA Gun Trust and/or transfer additional NFA items into an existing NFA Gun Trust.