I am often asked if regular firearms, such as pistols and rifles with barrels longer than 16 inches (here after referred to as “Title I Firearms”), can be placed into a NFA Trust. Any property, including Title I Firearms, can be placed into the trust, but this does not necessarily mean one should place the item into the trust. Here I will look at some of the common reasons clients are interested in owning Title I Firearms in trust and explain if there are any benefits in ownership through a trust.
Unfortunately today, the most common reason for wanting to assign Title I Firearms, and magazines, to a NFA Trust is to avoid future ‘transfers.’ Many gun owners today are legitimately worried about Congressional action that will make it illegal to transfer many Title I Firearms. They view NFA Trusts as a go to entity that will allow their children to possess the Title I Firearms without a future transfer. Will this work? That depends on what, if any, law is passed. Technically, if a trust owns the firearms, a transfer will not occur until the trust is terminated. If future laws mimic today’s NFA then owning Title I Firearms in a NFA Trust will be a good option.
How long can a trust last before it is terminated? That answer depends on many variables, but a normal trust life is around 90 years. In South Carolina a trust is not perpetual and it must end. (Some states allow perpetual trusts, and this is a relatively new introduction to trust law.) A properly designed trust can last the life of all named beneficiaries and an additional 21 years to ensure any unnamed beneficiaries reach 21 years of age. This is long enough to ensure that a clients children, and most likely grand children, can possess the firearm throughout their life without a transfer.
The second most common reason clients ask about placing Title I Firearms into a NFA Trust is to ensure they have named beneficiaries to receive their property at death. This is the intended use for normal trusts, but NFA Trusts are specifically constructed to allow possession of NFA Firearms while the Settlor and Trustees are alive. Many times both goals are accomplished in one document, but it is worthwhile assessing your situation to decide if your NFA Firearms and Title I Firearms should be treated differently. Here I will stress that a NFA Trust should not be a substitute for a proper estate plan. When drafting an estate plan (i.e. a will and accompanying documents such as a trust) much thought should go into how various assets will be divided, owned, transferred, cared for, etc. A NFA Trust, at best, only addresses firearms, and many times it only properly addresses NFA Firearms. (This isn’t a bad thing; after all, it is what the trust is designed to do.)
Before placing Title I Firearms into your trust, I encourage you to contact your attorney. He will be able to assess your situation and provide guidance that will later on protect those you leave behind. If you are looking at a NFA Trust in anticipation of what congress will do, then I suggest waiting longer for any potential law to take shape. And last, if you want to use a NFA Trust as part of an estate plan, or are wondering about an estate plan in general, then please feel free to contact me. I can help you create a plan that will take care of not just your property, but also your family: After all, they are your most important asset.