Guns & Estate Planning
So, you have decided to take the plunge into the Class 3 Weapons World (NFA), and you’re planning to start buying Suppressors, SBR’s, and other fun toys. But one looming decision you must make is: How are you going to file for ‘ownership’? With a Gun Trust, or as an Individual?
Let me start with my definition of Estate Planning:
An ‘Estate Plan’ is a lifelong pursuit of taking care of the ones you love, both when you are alive and after you have passed away. It gives WHAT you want, to WHO you want, WHEN you want, HOW you want, with the least amount of fees possible.
Upon further research, you realize that a ‘Gun Trust’ can be expensive and wait times can take longer for the ATF to approve your purchase than if you just filed as an individual. In some cases, it can take as much as one to two extra months with a trust. That said, there ARE advantages to having a ‘Gun Trust’ compared to owning them individually. For one, you can add ‘Co-Trustees’ to your Trust which allows your co-trustee to legally possess your NFA items without you being present. Second, you can list beneficiaries on your Trust which means when you pass away, the beneficiaries can easily take possession of your class 3 items. The bottom line is that an NFA Trust may be a good fit for your estate plan for these and other reasons.
I want to debunk some common fears in NOT using a trust. So, what actually happens to your NFA items when you die if they were filed as an ‘Individual’? There are so many misconceptions on this subject. Some worry that the government will “take control” of their NFA items. Others fear “large expenses” in changing ownership and new tax stamps. Even if you filed as an Individual, and not as a Trust, you can still pass NFA items down to your heirs. Below is a “How To” in accomplishing this:
What do I need to do if my NFA items are listed in my name only (individual) and not as a Trust?
1. First, at a minimum, you want to include each NFA item in your ‘Will’. That way all your NFA items will be passed down to your stated heirs. This is where having an estate planning attorney comes into play. Everyone needs a Will anyways, so this is just making sure your NFA items are included. My suggestion is to do them as an “addendum,” that way if you add or subtract from your collection, you just update the addendum and don’t have to completely re-write the will. Full disclosure, I am not a fan of just stopping here with estate planning. Do not miss the need for “Advanced Directives” like POA’s, Living Will, HIPPA, and Revocable Trusts as the base line for a solid estate plan.
2. Second, you should speak to a reputable Class 3 Dealer who is knowledgeable about the paperwork for NFA items. Once you pass away, the NFA items will need to be transferred to the heirs of the Will. They will need to complete a Form 5 tax free application for each NFA item and submit them to the ATF for approval. The Form 5 application guarantees a tax-free transfer. That way there will be no need to pay the $200 tax stamp for each NFA item again.
3. You are required to have all your NFA items secured in a safe location with the address associated with the Form 4’s. They will need to be secured safely until the Form 5 paperwork is approved.
Once the Form 5 applications are approved, the heirs will be able to legally take possession.
General Info:
· Form 5 application is the form that allows for a tax-free transfer of your NFA items to your heirs named in the will.
· Form 5 approval turnaround times vary, but currently take approximately 30 days. It’s the government, so don’t be shocked if you google this tomorrow and that has changed.
· The heirs listed in your Will are the ones eligible to apply for the Form 5’s.
Summary:
Even though your NFA items will transfer down to your family on a Form 5 (tax free) application, I would still recommend a Gun Trust. Having a Gun Trust will simplify the transfer process upon your death. As with your other assets owned in a ‘Revocable Trust’ it is just more efficient to use a Trust. There is a cost savings with avoiding probate, a privacy consideration of not having everything you own published on the county website, and potentially a considerable time savings in estate processing. Whomever is listed as your beneficiaries/Co-trustees, will be the ones taking sole possession of the NFA items without the need to go through the Will or probate. However, even with having your NFA items in a Trust, your heirs (beneficiaries) will still have to submit the Form 5 tax free application to legally take possession.
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