Amy & Dan Smith's Planning for Life: Guns and Estate Planning "Gun Trusts"

Due to the growth of gun ownership in the United States, there is the increased likelihood that estates will include guns. A thorough discussion of the application of federal and state gun laws is not possible in this article. However, responsible estate administrators can unknowingly violate gun laws, leading to “accidental felonies.” Thus, some information may be helpful.

There are two categories of weapons as to which different restrictions apply. The highly regulated category is referred to as “NFA Weapons.” These include short-barreled rifles and shot guns, fully automatic machine guns, silencers and components to build them, any other weapon (eg, pen and cane guns), and destructive devices (eg, grenades and missiles). All transfers of an NFA weapon must be approved by the ATF (Bureau of Alcohol, Tobacco, Firearms and Explosives). Thus, if an executor innocently delivers an NFA weapon (or even loans such a weapon) without ATF approval, he/she has committed a felony which carries possible imprisonment and significant fines.

All NFA weapons must be registered. An unregistered NFA weapon (eg, a German machine gun grandfather brought back from WWII) is contraband and cannot be registered by the estate. The local ATF office should be contacted to arrange for abandonment.

Virtually all household guns, such as hunting rifles, sporting shotguns, revolvers and semi-automatic pistols, are non-NFA weapons. However, regulations still apply and can be traps for the unwary. For example, it is unlawful for certain persons, known collectively as “prohibited persons,” to possess firearms, and it is a felony to transfer a firearm to a person who the transferor knows or “has reasonable cause to believe” is a “prohibited person.” The prohibited person list includes anyone who has ever been convicted of a crime punishable for more than a year; is an unlawful user of or addicted to any controlled substance; has been adjudicated as a mental defective or committed to any mental institution; has ever renounced his/her US citizenship; is subject to a court order restraining the person from harassing, stalking or threatening an intimate partner or child of the intimate partner; or who has been convicted of a misdemeanor crime of domestic violence.

As an example, assume that Dad’s estate contains some non-NFA shotguns which Dad used for hunting. The transfer of these shotguns does not need to be registered with the ATF because they are not NFA weapons. However, the estate administrator, one of Dad’s sons, gives one of the guns to his brother who the administrator has reason to believe is abusing a controlled substance. In such case, the administrator is guilty of a felony.

The Gun Trust is a trust created to purchase and hold firearms. Usually a Gun Trust is used for NFA weapons, although it can hold non-NFA weapons as well. The Gun Trust is designed to prevent inadvertent violation of gun laws. It will include requirements for Trustee conduct, specifically to conform to existing state and federal laws, and will contain directions for the transfer of weapons following the death of the grantor of the trust.

An ATF official stated to your writer recently that, in his estimation, it is likely that only 4-6 percent of all weapons privately possessed in the US are NFA weapons. The vast majority of guns are of the household type. Accordingly, the need for Gun Trusts is rather limited. He also stated that there is a proliferation of Gun Trust forms being downloaded and submitted with applications for transfers of NFA weapons. The forms are the same, even to the point of having the same fictitious beneficiaries. (See this column, Do It Yourself Legal Products – Bargain or Trap, June 1, 2016).

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com).

Amy V. Smith Wealth Management, LLC is an independent firm.  Amy V. Smith, CFP, CIMA offers securities through Raymond James Financial Services, Inc., member FINRA/SIPC.  Her office is located at 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176.  (Tel: 703-669-5022, www.amysmithwealthmanagement.com). Any opinions are those of Amy and Dan Smith and not necessarily those of Raymond James.  Raymond James does not guarantee that the foregoing material is accurate or complete and does not provide legal advice.  Dan Smith is not affiliated with Raymond James.