FIREARMS AND ESTATE PLANNING

by Dawn M. Dale on Dec. 03, 2018

Estate 

Summary: Important legal issues can arise with regard to the ownership and transfer of firearms for estate planning purposes.


FIREARMS AND ESTATE PLANNING

Important legal issues can arise with regard to the ownership and transfer of firearms for estate planning purposes. Gun owners and fiduciaries dealing with firearms should seek legal advice to ensure they do not inadvertently commit a felony or other violation in storing and/or transferring firearms to a trust or beneficiaries.

The rules and regulations that apply will vary, depending on whether the weapon is regulated by the National Firearms Act (“NFA”), Pub. L. No. 73-474, 48 Stat. 1236 (codified at IRC Ch. 53) (June 26, 1934). A violation of the NFA is a felony, and the resulting penalties are severe.

National Firearms Act (NFA)

Virtually all “household guns” (e.g., hunting rifles, sporting shotguns, revolvers, and semi-automatic pistols) are not subject to regulation by the NFA. Most antique and unserviceable weapons are not regulated by the NFA. The NFA also does not regulate most semi-automatic weapons, including assault rifles.

Generally, the NFA regulates the following six classes of weapons:

  • Short-barreled rifles (barrel length under 16 inches);
  • Short-barreled shotguns (barrel length under 18 inches);
  • Fully automatic machine guns;
  • Suppressors (silencers) and components to build them; and
  • Destructive devices (including grenades, missiles, devices that propel a projectile by explosive with a barrel exceeding one-half inch in diameter).

The NFA requires registration of all NFA firearms with the Secretary of Treasury, and each firearm transferred must be registered to the transferee by the transferor. Any person possessing a registered firearm must retain proof of registration, available to the Secretary of Treasury upon request. All transfers and manufacture of NFA weapons must be approved by the ATF, which can be a lengthy process involving an application, fingerprints, background check, etc.

Generally, a $200 tax is imposed by the NFA on the transfer of a firearm. However, firearms may be transferred on a tax-exempt basis to a “lawful heir” of a decedent’s estate, provided ATF Form 5 (5320.5), Application for Tax Exempt Transfer and Registration of Firearm, is filed by the executor as further discussed below.

ATF Final Rule 41F

Prior to a recent change in the ATF regulations, gun trusts were frequently used to shortcut the process for purchasing or transferring NFA weapons because the prior regulations did not require trusts or legal entities to provide fingerprints, photographs and law enforcement certification. This loophole has since been closed by ATF Rule 41F, which went info effect on July 13, 2016.

Rule 41F now requires “responsible persons” (e.g., a trustee of a gun trust) to (1) complete ATF Form 5320.23 (the National Firearms Act Responsible Person Questionnaire) and (2) submit photographs and fingerprints when the trust or legal entity (a) files an application to make an NFA firearm or (b) is listed as the transferee on an application to transfer an NFA firearm.

A new section, 27 C.F.R. § 479.90a, was also added to guide executors through the disposition of NFA firearms from a decedent’s estate, which essentially allows the executor to possess a firearm registered to a decedent during the term of probate without such possession being treated as a ‘‘transfer’’ as defined in Rule 41F, provided that:

  • No later than the close of probate, the executor must submit an application to transfer the firearm to beneficiaries or other transferees in accordance with § 479.90a.
  • If the transfer is to a beneficiary, the executor must file an ATF Form 5 (5320.5), Application for Tax Exempt Transfer and Registration of Firearm, to register a firearm to any beneficiary of an estate in accordance with § 479.90. The executor must identify the estate as the transferor and sign the form on behalf of the decedent, showing the executor’s title (e.g., executor, administrator, personal representative, etc.) and the date of filing.
  • The executor must also provide documentation of their appointment as executor, administrator, personal representative or as an authorized person, a copy of the decedent’s death certificate, a copy of the will (if any), any other evidence of the person’s authority to dispose of property, and any other document relating to, or affecting the disposition of firearms from the estate.

It is the responsibility of the executor to maintain custody and control of the NFA firearms, and to transfer the firearms registered to the decedent. The firearms may not be transferred to another party (such as a firearms licensee) for consignment or safekeeping, as this would be a transfer subject to the requirements of the NFA.

If there are unregistered NFA firearms in the estate, these firearms are contraband and cannot be registered by the estate. The executor of the estate should contact the local ATF office to arrange for the abandonment of the unregistered firearms.

For additional information on transfers of NFA firearms in a decedent’s estate, please refer to this ATF letter of instruction and visit the ATF website.

Gun Control Act

In addition to the NFA, the Gun Control Act of 1968 (the “GCA”), Pub. L. No. 90-618, 82 Stat. 1213 (codified as amended at 18 U.S.C. §§ 921–931 (2012)), regulates the interstate transportation of firearms, and prohibits the sale of firearms and ammunition to felons and certain other prohibited persons.

Under the GCA, a firearm means:

  • any weapon (including a starter gun) which will or is designed to or may readily be converted to expel a projectile by the action of an explosive;
  • the frame or receiver of any such weapon;
  • any firearm muffler or firearm silencer; or
  • any destructive device. Such term does not include an antique firearm.

Under the GCA, an “unlicensed person” (i.e., any person other than a licensed importer, licensed manufacturer, licensed dealer or licensed collector) is prohibited from transferring a firearm to an unlicensed person who does not reside in the state where the transferor resides. Generally, for a person to lawfully transfer a firearm to an unlicensed person who resides out of state, the firearm must be shipped to a Federal Firearms Licensee (FFL) within the recipient’s state of residence. The unlicensed person can then receive the firearm from the FFL, upon completion of ATF Form 4473 and an NICS background check.

The GCA provides an exception from this prohibition for temporary loans or rentals of firearms for lawful sporting purposes (e.g., a friend visiting from another state borrows a rifle to go hunting).  Another exception is provided for transfers of firearms to nonresidents to carry out a lawful bequest or acquisition by intestate succession. This exception would authorize the transfer of a firearm to a nonresident who inherits a firearm under the will of a decedent (or from the intestate estate, if the decedent died without a will) and from a decedent’s revocable trust. See 18 U.S.C. 922(a)(5).

For additional information, see the ATF’s Top Ten FAQ’s on owning and transferring firearms and additional information provided on the ATF website.

Utility of Gun Trusts under Current Law

Gun trusts are still a useful tool for responsibly holding title to NFA firearms during the gun owner’s lifetime and incapacity and for transferring NFA firearms at death, provided the trustee and/or successor trustee is a “responsible person” eligible to own an NFA firearm. A properly drafted gun trust can also help avoid an accidental felony transfer by setting forth how the NFA firearms held by the trust can be used, possessed and transferred.

The trust is typically revocable during the grantor’s lifetime, with the gun owner/grantor as the initial trustee and beneficiary. The trust should make specific reference to the intent to comply with the NFA and the Gun Control Act. The trust should also expressly state the grantor’s intent to comply with local, state and federal laws on firearms in its administration and interpretation.

For a handy checklist of things to consider when drafting a gun trust, and a more detailed discussion of the applicable NFA transfer rules, please refer to this helpful article, Michael A. Sneeringer, “Gun Trusts—What’s All the Fuss?” Probate & Property Magazine: Volume 31 No. 02 (March 2017).  See also, Mark V. Pascucci, “Recent ATF Rule Targets Gun Trusts,” Virginia Bar Trusts and Estates Newsletter, Volume 22, No. 14 (Summer 2016),

Avoid Traps for the Unwary

Because the rules and regulations pertaining to firearms are a trap for the unwary and penalties for violation can be severe, gun owners wishing to properly transfer and hold NFA firearms in trust, as well as fiduciaries of a decedent’s estate or trust holding firearms, should consult with legal counsel or contact the ATF or NFA Branch directly with regard to properly storing and transferring these special assets. Our office is happy to help. Don’t Worry, We’ve Got This!

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