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NFA Gun Trust
With pending changes to federal gun regulation coming later this year, many gun enthusiasts and collectors are inquiring about so-called NFA gun trusts. With that in mind, we created this page in order help Arizona residents better understand the subject and answer some of the most commonly asked questions.
Handguns are not typically considered in this class of firearm, which originally included machine guns, sawed-off shot-guns and silencers.
What is a NFA gun or a Title II firearm?
The first federal gun law in American history was the National Firearms Act of 1934 (NFA).[1] The law was passed shortly after the repeal of Prohibition and was, in part, a response to the gangland violence that had plagued large American cities during the Prohibition era.[2] The NFA’s main goal was to constrict the circulation of “gangster type weapons,”[3] these included machine guns, sawed-off shot-guns and silencers.[4] The NFA sought to accomplish this by imposing an excise tax on the manufacture and transfer of these firearms. As well as mandating registration for the production and distribution of them. The Act imposed a $200 dollar tax to be paid during the sale or transfer of any item specified in the Act. At the time of passage, the $200 transfer tax would have been extremely burdensome,[5] exceeding the price of the firearm itself in most cases. Congress, however, did not index this tax for inflation, and the $200 tax remains in effect today. In the years following the end of Prohibition and the passage of the NFA, crime rates decreased. And as the crime rate receded, so did the demand for further gun control. However, three decades later the nation would revisit the issue of federal gun control.
In the wake of a series of high profile assassinations—John F. Kennedy, Martin Luther King, Jr., and Robert Kennedy—the public mood again swung in favor or stricter gun laws. Congress responded by passing the Gun Control Act of 1964 (GCA).[6]
The GCA contains two major titles. Title I addresses federal regulation of handguns and long guns. Title II incorporates and revises provisions of the original NFA and regulates the same types of weapons as the as the NFA with the addition of “destructive device[s].” Moreover, the Title II bars certain people (referred to in the law as “prohibited persons”) from owning or possessing the firearms regulated in it. The types of firearms that are regulated under Title II are commonly known as NFA guns or Title II firearms.
It’s important to note that the vast majority of firearms in circulation are not Title II firearms. The GCA leaves the regulation of firearms such as handguns, rifles, and shotguns primarily up to state and local authorities. There is no need to acquire a tax stamp or go through the Title II process with the Bureau of Alcohol, Tobacco, Firearms and Explosive (ATF) for the purchase or transfer of most firearms or accessories.
What is a NFA trust?
A NFA trust (also known as a gun trust, Title II trust, ATF trust, or Class 3 trust) is simply a legal entity created for the ownership, transfer and possession of federally restricted (but legal to own) firearms. The basic framework of a NFA trust is no different than other trust. The trust document designates a trustee who holds the trust property as a fiduciary for the named beneficiaries of the trust. The trust is the legal entity to which the firearms are registered. The trustees and beneficiaries may use the property owned by the trust under the conditions set forth in the trust document and in accordance with federal and local law.
Contrary to popular misconceptions, gun trusts do not exploit a loophole in, or circumvent, federal gun laws. In fact, the purchase and ownership of Title II firearms by trusts and other legal entities is specifically provided for in the law. Additionally, no party associated with the trust is insulated from criminal liability for the violation of any gun law.
What are the advantages of having a NFA gun trust?
First and foremost, a NFA trust can function as testamentary device for anyone who owns Title II firearms. Because the use and transfer of Title II firearms is so tightly regulated, simply leaving your NFA firearms in your estate for your loved ones to try and figure out what to do with them in the event of your death or incapacity can be problematic. For starters, if the Title II firearms have not been properly registered, they will be considered contraband. If this is the case, your estate will be unable to register the firearms and your estate will have to forfeit the firearms. Additional problems may arise if your executor or administrators is ignorant of the ATF transfer process. He or she may unintentionally carry out an illegal transfer of Title II firearms, which could result in a violation punishable by up to ten years imprisonment and a fine of up to $250,000.[7] A well drafted NFA trust will help the trustee and beneficiaries avoid these problems by instructing the parties on how the firearms should be handled and transferred in the event of the death or incapacity of the principle party.
Proper possession and handling of firearms is important, and a gun trust can help protect certain individuals from violating federal law inadvertently.
Second, a trust can provide clear instructions for all of the parties to the trust on how the firearms are to be handled. Again, the use and possession of Title II firearms is highly regulated. Without having some understanding of federal gun law, it may be easy for owners to inadvertently break the law. For example, only the registered owner may be in possession of Title II firearms. Furthermore, “possession” may be either actual or constructive. [8] This means that simply being in a house with the firearms while the registered owner is away with knowledge of and access to their location could put a loved one in danger of breaking federal gun law. A NFA trust could reduce some of this risk by providing the parties to the trust with clear instructions on how the firearms should be handled to avoid breaking state or federal law.
Third, a NFA trust can expand the number of people allowed to exercise control over your Title II firearms. While a non-trust gun may only have one legal owner, a trust can be drafted in such a way as to allow multiple people to enjoy the use of the firearm without breaking the law.
Finally, transferring NFA guns through a NFA trust allows applicants to skip certain portions of the registration process (at least until July 13, 2016, when new regulations take effect). Trust applications do not need to include pictures and fingerprints, and the signature the “Chief Law Enforcement Officer” (CLEO) in their area is not required to complete the application. After July 13, 2016, these requirements will change and the process will become more uniform.
What kind of property can I put in a NFA trust?
Trusts are fairly flexible legal instruments. A trust can be created to hold almost any kind of property. However, if a trust is created in order to hold Title II firearms, it’s advisable that the trust only contain restricted guns to avoid unnecessary confusion and complexity.
Please note that the preceding information is informational only, and it is not intended to be legal advice. If you or someone you know would like start a NFA gun trust, or needs help with any other legal matter, contact the experienced Tucson attorneys at Harlow Spanier & Heckele PLLC. (520) 495-0869 or [email protected]
[2]See Greg S. Weaver, Firearm Deaths, Gun Availability, and Legal Regulatory Changes: Suggestions from the Data, 92 J. Crim. L. & Criminology 823, 824 (2002).
[8]See United States v. Booth, 111 F.3d 1, 2 (1st Cir. 1997)( “Constructive possession exists when a person knowingly has the power and the intention at a given time of exercising dominion and control over an object or over the area in which the object is located”); United States v. Turnbough, 114 F.3d 1192 (7th Cir. 1997)
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