A National Firearms Act trust is similar to a regular trust in that its ultimate use is to transfer the trust property upon the Settlor’s death or within a specified time period thereafter. The NFA trust is unique in that the trust assets are, among other things, NFA firearms. Part of the initial funding of the trust may be, upon approval by AFTE approval, NFA firearms.
These firearms are machine guns lawfully registered before the May, 1986 ban under the Firearms Owners Protection Act. The other NFA property is generally comprised of short-barrel rifles, shotguns and suppressors, which may be integral or separate.
The settlor (who creates the trust), who becomes a trustee of the trust, may appoint other co-trustees. The NFA trust is revocable by the Settlor in his lifetime. Nevertheless, the co-trustees may also possess and use the NFA firearms so long as they are not prohibited from possession by state or federal law. This is even in the event the Settlor becomes incapictated.
Upon the settlor’s death, the successor trustee or the person designated in the trust, transfers the NFA firearms to the beneficiaries. Ultimately, therefore, the main benefits of an NFA trust are the use of the NFA weapons by co-trustees, use of the NFA firearms by co-trustees, even after the incapacity of the Settlor, and guidance for proper transfer of the NFA firearms upon the Settlor’s death.
This post was written by attorneys at Dixon & Moseley, PC. It is not intended to be legal advice. This is an advertisement.