NFA trust

A NFA trust is a legal trust that is used in the United States to register NFA firearms with the Bureau of Alcohol, Tobacco, Firearms, and Explosives. The ownership of NFA firearms is heavily regulated in the United States, and a NFA trust is used to eliminate some of the red tape to acquire NFA firearms. The use of a NFA trust to apply to the ATF to manufacture or transfer a NFA firearm avoids the necessity of attaching a fingerprint sample, passport-style photograph, and a signature of the Chief Law Enforcement Officer (CLEO) in the applicant's area that approves the applicants ownership of a NFA firearm, as would be required of an application submitted by an individual rather than a NFA trust.

Definition

A NFA trust is a trust that is drafted specifically to hold guns. NFA trusts were created and are predominantly used for the acquisition and ownership of NFA Firearms, which include: Silencers, Fully Automatic Guns, Short-Barreled Rifles, and Short-Barreled Shotguns (SBS)). The ownership of NFA Firearms is legal in most states, but is heavily regulated by the United States Federal Government. A NFA trust is an estate planning tool that is specialized toward acquiring and transferring National Firearms Act regulated items. The rise in the popularity of the NFA trust has led to an increase in the submission of applications to manufacture or transfer an NFA item. In 2005, the ATF processed 41,579 NFA applications of all types. By 2014, that number had increased to approximately 235,000.

Origin

The NFA trust was popularized as a method of obtaining NFA firearms by providing "less hoops to jump through in your registration with the ATF." Many people faced difficulties in the acquisition of NFA firearms as a result of the inability to get a CLEO to sign off on the necessary paperwork to send an application in to the ATF. The NFA trust avoided these difficulties and is able to circumvent much of the red tape surrounding the ownership of NFA firearms.

Purpose

The purpose of a NFA trust is to use the trust to register manufactured or transferred NFA items with the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF). A NFA trust allows prospective purchasers of NFA items to avoid some of the federal transfer requirements that would otherwise be imposed on an individual. By applying to the ATF as an individual for the transfer or manufacture of a NFA item as an individual, certain requirements must be met for the ATF to process the application. The application must be accompanied by a Chief Law Enforcement Officer (CLEO) signature that approves your ownership of the NFA item, it must contain a passport-style photograph, and fingerprints. Through the use of a NFA trust, the application to the ATF does not require the attachment of a CLEO signature, passport-style photograph, and fingerprints.

Function

A NFA trust is a specialized trust, specifically drafted by an attorney for the acquisition and ownership of NFA items. The gun trust is sent to the ATF along with the appropriate ATF application form (which varies depending on if the applicant is seeking to manufacture NFA items or transfer an NFA item to themselves). After the application is accepted by the ATF, the applicant will receive a tax stamp and certified copy of the ATF application approving the manufacture or transfer of the NFA item listed in the application. The gun trust itself allows the creator of the trust to select the ultimate beneficiaries of the trust and the trustees who will manage the trust assets. Generally, a NFA trust must contain a Grantor, Trustee, and Beneficiary. The grantor creates the trust, the trustee holds legal title to the property for the benefit of the beneficiary. The grantor can designate a beneficiary of their choice, and does not have to designate anyone else to be the trustee; but the grantor can also be the trustee. Once the NFA trust is properly filled out and notarized in accordance with State law then a bank account can be set up for the trust in order for the trust to purchase NFA firearms rather than the grantor purchase the items individually. However, the setting up of a bank account is not necessary for the operation of a NFA trust. Additionally, in order to submit an application to the ATF to have a NFA firearm transferred into the trust or manufactured, the NFA firearm's model and serial number must be listed on the ATF application; or if a NFA firearm is being manufactured, the item to be manufactured must be accurately described. Once the NFA trust and the appropriate ATF form are mailed into the ATF, along with a $200 certified check or money order for the NFA transfer tax, the applications will be processed by the ATF in a window ranging anywhere from thirty days to six months.

Types of Gun Trusts

Generally, there are three types of NFA trusts: one created by a NFA trust lawyer specifically for an individuals unique circumstances, one created specifically for the acquisition and ownership of NFA weapons, and one that is a general living trust that is not specifically catered towards NFA weapons but is capable of use for the acquisition of ownership of NFA firearms. A NFA trust drafted by a lawyer that is specialized in estate planning and an expert in gun laws that is drafted specifically for each individual's circumstances will offer the most protection. This kind of NFA trust will also be the most expensive. The second most affordable option is a NFA trust that was drafted by a lawyer specialized in estate planning and an expert in gun laws, but created for general use rather than individually catered. These kinds of NFA trusts can be found online and are generally cheaper than hiring an attorney. The general living trust that is used for the acquisition and ownership of NFA firearms is the cheap and least effective option. A NFA trust that was not specifically designed to hold NFA weapons would pass along the contents of the trust (NFA firearms) in a way that would cause the recipients to commit a felony.

A NFA trust is used in the application process with the ATF that is required to purchase NFA firearms. There are different kinds of NFA trusts that can be used in the application process, and the different kinds of NFA trusts range in effectiveness and degree of protection for the grantor.