Gun (NFA) Trust – Frequently Asked Questions

With the proliferation of Gun (NFA) Trusts, there are numerous questions relating to their construction, desirability, and function. This article is designed to answer most, if not all, of the possible questions that you may have.

Whether to use a Gun (NFA) Trust

1. How to decide between registering the firearm as an individual, trust, or corporation? We have complied an extensive article on the benefits and detriments to using all of these entities for registration purposes. See the article here.

2. What is the benefit of a Gun (NFA) Trust? 1. No yearly fee. 2. There is no filing requirement and the trust document and assets remain private. 3. No fingerprints, photos, or CLEO signature necessary. 4. Quicker processing since the fingerprints do not have to be sent to theFBI. 5. The ability of anyone who is a trustee to be able to lawfully possess the weapons.

3. What is the downside of a Gun (NFA) Trust? Currently, because trusts are just gaining popularity, the BATFE hasn’t decided whether to allow for a Form 5 transfer (tax free) upon the death of the grantor/settlor. While the BATFE does currently allow a Form 5 transfer if the firearm is registered to a trust or an individual and being transferred to a specified beneficiary, there is no regulation that the BATFE must do this. Hence, the BATFE may (1) either allow the tax free transfer in a trust/individual scenario or (2) may decided not to allow a tax free transfer for anyone.

4. Is there any benefit to placing non-NFA (Title 1) firearms into a Gun (NFA) Trust? Not specifically, although many clients find it useful to place all their firearms into one estate planning document so that the distribution is less likely to be contested. Also, some individuals are concerned that at some point in time, PA could pass legislation stating that a firearm (Title 1) could not be transferred or sold. In essence, this would allow the current possessor the right to keep the firearm, but at his/her death, the gun would likely be confiscated. By placing the firearms into a perpetual asset protection gun trust, it is possible for the firearms to be owned/possessed by the trust, which would never cease to exist. Hence, no future transfer would occur. However, it is unlikely that PA will enact such legislation since it is extremely gun friendly. Nevertheless, if PA or the Federal Government does look at enacting such legislation, there would be time to draft a perpetual trust and transfer possession of the firearms into it prior to the enactment.

5. Can my friend and I form one Gun (NFA) Trust and place all of our firearms into one trust? While it is lawful to do such, it is highly inadvisable. In such situations, both “friends” plan to be named as “settlor/grantor” and “trustee.” As a settlor/grantor, EITHER“friend” could lawfully transfer the firearms to him/herself personally, or to another trust or corporation, and the other friend would find him/herself with an empty trust. Everyone always says, my friend wouldn’t do that; yet, the court dockets are filled with “friends” that have done such for a milieu of reasons. Instead, each friend should enact his/her own Gun (NFA) Trust, where the other friend is listed as a trustee. In this scenario, a trustee cannot without breach his/her duties sell the firearms for his/her own purpose and if the friendship dissolves, the “friend” trustee can be removed by amending the trust, assuming it is a revocable trust. Even if the trust is irrevocable, it may be possible to remove the “friend” trustee.

6. If I currently own NFA firearms, can I transfer them into the trust without incurring a transfer fee? Unfortunately, the answer is no. The trust is a separate legal entity and the tax must be paid for any transfer into it.

7. Can a Gun (NFA) Trust be issued a Curious and Relics (C&R) License? No, due to the definition of a “person” for licensing purpose, a trust is not listed as a recognized legal entity. For more information, click here.

Drafting Considerations and Options

1. Can I just use Quicken Will and Trust Maker or a similar product?No, you should not use these types of products because they are not designed for use with NFA firearms and there are numerous problems with Quicken. For an overview of the problems associated with Quicken, see our article hereUPDATEThe BATFE has disapproved an invalid trust that it previously approved.

2. My dealer is offering to draft a Trust for me, is that ok? No, unless your dealer is an attorney or is having an attorney draft each trust and the attorney discusses the options with you directly. Otherwise, this is the unauthorized practice of law and is illegal. While there are several dealers now offering this as a benefit of doing business with them, they are not cognizant of the laws regarding trusts, they do not have a legal degree, and cannot advise you of the potential pitfalls and other issues that may arise. Moreover, the trust formed by a non-attorney for you may result in the trust being invalid. If the trust is invalid and firearms have been transferred to it, the trustee will likely be in unlawful possession of a NFA item, because the entity to which they are registered does not exist. You should always seek out competent legal advice. See Attorney David Goldman’s article on this topic, here.

2. Can my infant son or daughter be a beneficiary of a Gun (NFA) Trust? Yes, provided that the trust document properly handles this situation. The trust can be designed so that either (1) the trust will continue to hold the firearm(s) until the beneficiary reaches a specified age of at least 18 years of age or (2) until the child is at least 18 years of age and the trustee makes and independent determination that the child is of the correct moral character and sophistication to understand the personal and legal obligations of ownership.

2. Can I be the sole trustee? No, you must have at least one other person listed as a trustee, as required by Pennsylvania’s Uniform Trust Code. The purpose for this requirement is that you will, unfortunately, die one day. The Legislature does not want the courts to be inundated with requests by trusts for appointment of trustees, because the Settlor listed only him/herself as sole Trustee.

3. Can I, the settlor/grantor, also be the sole beneficiary? No because that would frustrate the purpose of a trust and make it invalid. If there are several beneficiaries, the settlor/grantor can be a life beneficiary.

4. Can a trustee, other than the settlor/grantor, be the beneficiary? Yes, a trustee other than the settlor/grantor can be a beneficiary.

5. Can I amend my Gun (NFA) Trust? This depends on the type of trust that is instituted. We generally advise that clients use a revocable trust so that the trust can be amended at any time prior to the settlor/grantor’s death. An irrevocable trust may be suggested if there is a possible elective share issue, as discussed below. Regardless of whether you choose a revocable or irrevocable trust, you CANNOTchange the trust’s name. Because the gun is registered to the trust by name in the National Firearms Registration and Transfer Record, the only way to change the trust’s name would be to institute a new Gun (NFA) Trust with the desired name and then transfer the firearm(s) to the new trust, incurring a transfer tax for each NFA firearm.

6. Should I consider an Irrevocable trust? There may be scenarios where an irrevocable trust is a viable and better alternative than a revocable trust. Many individuals do not realize that a judgment creditor can attach to a revocable trust because the settlor/grantor can revoke the trust at any time. This means that professionals who have a high likelihood of malpractice suits or other judgments may find that their firearms are better protected by an irrevocable trust. The downside to an irrevocable trust is that it cannot be amended, except for in limited circumstances as discussed here. That being said, if you are concerned about future transfers being limited or judgments, you may want to consider our perpetual asset protection gun trust.

7. How many trustees may a Gun (NFA) Trust have? It may have as many as you desire; however, all trustees will have certain duties and obligations, as discussed below.

8. Can a trustee be removed? If it is a revocable trust, a trustee may be removed at any time. If it is an irrevocable trust, a trustee can only be removed by petition and approval of the court.

9. Will my beneficiary receive the firearms upon my death? The unfortunate and surprising answers is that it depends. Pennsylvania law provides that if an individual is married, upon the that individual’s death, the spouse may, at his/her discretion, take an elective share of the estate, which includes any revocable trusts. 20 P.A.C.S. § 2203. For more information, see our article on The Elective Share Issue in PA. However, this can be circumvented by an appropriately drafted waiver of this right.

10. May a trustee reside in a different state? Yes, a trustee may reside in a different state; however, the firearm cannot be taken out of the state where registered without the trustee having filed and received an approved application (BATFE Form 5320.20) to temporarily transport the firearm outside of the registered state.

Who May Possess

1. Who may possess a NFA firearm that is owned by a Trust? Only the trustee(s) or a life beneficiary may possess any NFA firearms owned by the trust.

2. How old must a trustee be to have lawful possession of a NFAfirearm? A trustee must be 18 years of age or older. The BATFE issued a determination that while an individual must be 21 years of age to purchase a NFA firearm through a dealer, an individual can make, own, and possess a NFA firearm at 18 years of age. The determination letter is here. Thus, where a dealer is not required for the transfer, such as an instate transfers between individuals, the tranferee only needs to be 18 years of age.

How to use a Gun (NFA) Trust for Registration of a NFAFirearm

1. How do I fill out a Form 1 or Form 4 using a Gun (NFA) Trust? We have complied an article with attached pictures so that our clients and their dealers can see how to properly fill out a Form 1 or Form 4 when the transferee is a Gun (NFA) Trust. See the article here.

2. What must I submit to the BATFE when having a NFA firearm transferred to the trust? You must submit a copy of your entire trust. Some individuals have claimed success in just submitting the certificate of trust. However, in the newly amended NFA Handbook, the BATFE declares, “ATF requires that the Form 4 or Form 5 include documentation evidencing the existence of the entity. This documentation would include, without limitation, partnership agreements, articles of incorporation, corporate registration, a complete copy of the declaration of trust, schedules or attachments referenced in the trust, etc.” UPDATE: The BATFE, on page 5 of the November 2008 Newsletter, has stated that a certificate of citizenship is not required. Moreover, items 13, 14, 16, and 17 (transferee’s information, photograph, and CLEO signature) of the Form 4 do not have to be filled out. However, the settlor/grantor/trustee must sign item 15 on the Form 4, which is for the transferee’s signature.

3. When submitting a check to the BATFE for the Trust, who should the check come from? The check can come from you personally, your trust (if it has a bank account) or you can use a U.S. Postal Money Order.

4. What is the current address to send a Form 4?

Bureau of Alcohol, Tobacco, Firearms and Explosives National Firearms Act Branch P.O. Box 530298 Atlanta, GA 30353-0298

5. How long will it take for the BATFE to process my application?There is no reliable answer to this question. The duration will be based on what examiner is assigned to your application, how many transfers that examiner has, and if there are any occurrences that will slow the approval of your application (AKA forgetting to sign the Form).

6. How are examiners assigned? Effective July 1, 2011, examiners are assigned by geographical location (aka State). Currently Nicole Dudash is assigned to PA. For a list of the examiners assigned to specific states, see here.

7. What are the marking/engraving requirements for making a Suppressor, Short Barreled Rifle/Shotgun, or Any Other Weapon? See our article on the requirements hereUPDATE: The BATFE has just decided that trust names CANNOT be abbreviated. Although they were allowing abbreviations in the beginning, they have, effective 1/20/09, reversed that decision. Ironically, an individual on Ar-15.com recently posted an error letter, dated 1/20/09, for his application because he abbreviated his trust’s name. See the error letter here. However, one may be able to obtain a variance from theBATFE for the required marking. If information on marking variances, see Guide to Marking Variances.

Post-Gun (NFA) Trust Enactment

1. What if the trustee wants or needs to transport the firearm(s) across state lines, either temporarily or permanently? For the temporary or permanent transport of NFA Firearms, the trustee must file a BATFE Form 5320.20 and receive an approved copy back from the BATFE. Each location requires pre-approval. Furthermore, the BATFE is currently allowing the duration of the transport to be up to 1 year, in the case of temporary transport. The 5320.20 Form can be faxed into the BATFE at 304 616-4501.

2. When the Form 1 or Form 4 comes back approved, what do I do with it? Because of the inaccuracies of the National Firearms Registration and Transfer Record (NFRTR), it is imperative that you keep extra copies of the approved Form. One copy should ALWAYSaccompany the firearm, incase a law enforcement officer would ask to see the registration. If we have drafted a Gun (NFA) Trust for you, we will gladly scan your approved Form and keep an electronic copy incase it would be lost.

3. Should I insure the firearms? Yes, we recommend that all firearms be insured, especially with the high cost of NFA firearms. Since there are firearm specific insurers, such as Historic Firearms, the trust can insure the weapons even for damage. This will ensure that even if a trust firearm breaks during a trustee’s use, the firearm will be fixed by the insurer, so long as the parts can be found or made. For exotic and one of a kind firearms, this should be a consideration as to whether to allow the trustee to use all the weapons of the trust or to specify which weapons may be used. I have also been told that State Farm has firearm policies and that they are quick on paying claims when one is made.

4. What should I do if I made a SBR/SBS with the trust and now wish to convert it back to Title 1 status? You must contact the BATFE and request that they modify the NFRTR record for your firearm. For an example of such a letter, see here.

Trustee Duties and Obligations

1. Duty to Administer Trust: When an individual accepts the position of trustee, he/she must administer the trust in good faith, in accordance with the provisions and purposes and the interest of the beneficiary(ies) and in accordance with applicable law.

2. Duty of Loyalty: The trustee must administer the trust in the SOLEinterest of the beneficiary(ies)

3. Duty of Impartiality: If a trust has two or more beneficiaries, the trustee must act impartially in investing, managing, and distributing the trust property, giving due regard to the beneficiaries’ respective interest in light of the purpose of the trust.

4. Duty of Prudent Administration: A trustee must administer the trust as a prudent person would, by considering the purposes, provisions, distributional requirements and other circumstances of the trust and by exercising reasonable care, skill and caution.

5. Record-keeping and Identification of Trust Property: A trustee must keep adequate records of the administration of the trust. A trustee MUST keep trust property separate from the trustee’s own property. For a further discussion of this obligation, see our article here.

6. Duty to Inform and Report: a. A trustee must promptly respond to a beneficiary’s reasonable request for information related to the trust’s administration. b. No later than 30 days after the date on which the trustee of an irrevocable trust learns that the settlor has died, the trustee must send notice as described in 20 PA.C.S. 7780(i) to the current beneficiary(ies). c. A trustee must send notice as described in 20 PA.C.S. 7780(i) to the beneficiary(ies) each time there is a change in trusteeship.

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35 Comments

Filed under Firearms Law, Gun Trusts

35 responses to “Gun (NFA) Trust – Frequently Asked Questions

  1. Wayne

    What yearly fee are you taking about?
    “2. What is the benefit of a Gun (NFA) Trust? 1. No yearly fee. …………….”

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  2. steve rorabeck

    How do I amend a revocable trust, and can I change the name of my trust before I put any NFA items in the Scheduled A

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    • Amending any trust is going to depend on the laws of the state in which you reside. Generally, it requires a formal amendment; however, depending on what is being amended (aka addition/removal of trustees, changes to terms of the trust…etc) there may be additional notice and other requirements. With regards to the name, the first issue is whether your state allows for the amending of a revocable trust’s name. Secondly, the name of a NFA Trust cannot generally be amended because of it being registered in the National Firearms Registration and Transfer Record (NFRTR) when you submit your first application (Form 1 or Form 4). If the state law allows for amending of the name and there are no pending applications and no prior approvals, you may be able to amend the name, but you would need to speak with an attorney that is knowledgeable in both the state’s trust laws and the NFA, GCA, and FOPA.

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  3. Ben

    Very few of the links work on the page.

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  4. Pingback: Gun Trusts: pass on your guns and more - Page 4

  5. Steve

    How exactly do you remove a beneficiary from your trust ?

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    • It will depend on the type of trust (revocable or irrevocable). Depending on type, you may not be able to remove a beneficiary or at least, not easily. You need to consult with an attorney to determine whether you can remove a beneficiary.

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  6. Nathan

    If Im 20 years of age and hire you to draft me a trust, will the trust be able to purchase NFA items from an FFL? Clearly there will be trustees over the age of 21. So basically if the Grantor is under 21 is that a no-go?

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  7. Pingback: Trust question

  8. John S.

    Regarding moving to a new NFA-allowed state on a permanent basis with an NFA trust elsewhere, can you clarify this a bit more? Will I need to file a 5320.20 yearly or is there a way to normalize the situation? Considering that the BATFE may disallow future trusts, this seems very important.

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    • The 5320.20 can be filed either a temporary or permanent move of the firearms. Further, there is nothing pending that would permit ATF to refuse to accept trusts for purposes of NFA ownership, as a trust is part of the legal definition of a person, as enacted by the Congress. ATF cannot invalidate statutory language; only the Congress could change the statutory text.

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  9. steve

    Do I need a CLEO sign off on a Form 1 to make an SBR if I live in WI? Also on the Form 1 application number 4H(Additional Description) What goes here? Is this where I put what I will be engraving on the receiver?

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    • steve

      Sorry I forgot to include on the comment above that I am using a Trust.

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      • As we aren’t licensed to practice law in WI, I cannot give you legal advice on WI law. What I can say is that under Federal law, a fictitious entity (trust, LLC, corp…etc) does NOT currently have to submit a CLEO signature. This may change with ATF 41P.

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  10. Pingback: Silencer shop trust link - Page 4

  11. Pingback: The ATF Sucks balls - Sick of them and their stupid decision changes

  12. Nader Rahmanian

    Can a subordinate trustee appointed by the settlor handle the NFA item legally? Is there anyway other family members or friends can handle or use the item in your presence without being appointed as a trustee? Many attorneys advocate setting a trust bank account to pay for the NFA item purchase and the tax, or other forms of NON-PERSONAL payment indicating that it would otherwise be individual purchase and not trust purchase. Why do you feel this is not required? Do I send a copy of appointment of subordinate trustee and any other additions or removal of other trustees in the past with the trust document to BATFE each time I apply for a stamp?

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  13. Brandon kronenbitter

    I have a trust with my brother in az. How ever I work in private personal security in CO. Am I able to use the SBR for work ?

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  14. Gary

    I have a notarized NFA Trust, who(m) do I file it with?

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  15. rich

    I just bought property in a state where suppressors are legal but I still maintain my legal residence in a state where they are not. Can I use an NFA trust to buy and keep a suppressor at my property where they are legal?

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  16. SFoote

    10. “…the firearm cannot be taken out of the state where registered without the trustee having filed and received an approved application (BATFE Form 5320.20) to temporarily transport the firearm outside of the registered state.”

    This is not entirely accurate.
    5320.20’s are not required for Silencers when traveling interstate. 5320.20’s are only required for Destructive Devices, Machine Guns, SBR’s, and SBS’s.

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  17. Evan A.

    Can I have a residence in both NJ and FL but keep my NFA weapons in FL? Would my form 1 address then be the FL address?

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  18. Pingback: Hunting with Silencers in PA is Legal! | Prince Law Offices, P.C.

  19. Brian Reed

    How much are individual nfa trust running now cost wise? And what’s turn around time to receive from you? Thank you

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  20. Mike S

    After July 13th and the rule goes into effect, can I still add or delete trustees without having to do print cards or photos since the trust is technically being amended/changed b/c of persons listed? I am NOT adding any items (Form 1 or 4).

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  21. I am on a gun trust with a friend in FL (who is the main holder of the trust) and I am in NJ. Hypothetically speaking, if I were say visit FL, could I buy a regular title 1 / non-NFA gun with the trust as long as said firearm is legal in NJ?

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  22. FDR

    If the NFA was just a taxing scheme instituted on dangerous weapons why do we have to wait months for government approval? When you file the paperwork you have to pay the tax due. Once it’s been paid where does the authority of the government come from that allows the delay? Congress knew in the 30’s that they couldn’t just ban those weapons because the second amendment said they couldn’t. So they passed a tax that at the time accomplished the same thing.
    Now days that tax isn’t as big a burden so they make buying or building these weapons as difficult as possible.

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