I currently own 2, soon to be 3, SBRs. Lately I’ve been doing some estate planning. If I were to pass, what would the process be for my wife? Or rather, what options would she have?
I’m concerned that by not having a trust I put her in a difficult position. However I have confirmed that in order to transfer to a trust (once I pay to get that done) I’d have to transfer each firearm to the trust at a cost of $200 a piece.
Is there a specific form or process a beneficiary must go through in the event that the owner passes?
Thank you. So I believe this is the selection that applies:
Although these distributions are not treated as “transfers” for
purposes of the NFA, Form 5 must be filed by an executor or administrator to register a firearm
to a lawful heir and the form must be approved by ATF prior to distribution to the heir. The
form should be filed as soon as possible. However, ATF will allow a reasonable time to arrange
for the transfer. This generally should be done before probate is closed. When a firearm is being
transferred to an individual heir, his or her fingerprints on FBI Forms FD-258 must accompany
the transfer application. The application will be denied if the heir’s receipt or possession of the
firearm would violate Federal, State, or local law. The law enforcement certification on the form
need not be completed. The form should also be accompanied by documentation showing the
executor’s or administrator’s authority to distribute the firearm as well as the heir’s entitlement
to the firearm. Distributions to heirs should not be made until Forms 5 are approved. Executors
and administrators are not required to have estate firearms registered to them prior to distribution
to lawful heirs.
So I guess my question is, who holds the firearms in the meantime? E.G. I pass away, do they have to go to someone as a temporary hold or can my wife continue to possess them until the Form 5 is approved?
I realize these are odd questions, but I’m working on doing some estate planning and want to make sure that all of this info is documented.
Thanks for posting this information. I had always assumed that a $200 transfer would apply for each NFA item I have. Now knowing that it doesn’t, I’ll stick with doing the transfers as an individual.
There are reasons for having a trust. Aside from the fact that there is no need to do a Form 5 in the event of a death, anyone listed on the trust may possess the items. When I was overseas this meant that my wife had access to my safe, and the contents inside. She could also possess them without violating the law.
The trust also helps with issues of probate as I recall as well. When in doubt consult a KNOWLEDGEABLE attorney who does trusts and evaluate the merits.
If you die without a Will you come under your states intestate rules. Your spouse has priority to serve as the personal representative/ executor and is covered by the rules cited above. The problem is you have not named an heir for the firearm/suppressor. The intestate rules make your spouse the primary heir, your kids next, etc. If this is not what you want you need to put together a will at a minimum. You went to a lot of trouble to get your SBR, this is the easy part to finish.
That’s exactly what I want. We are quite young, and haven’t had a need for a will up until now, I’ll get one completed within the next year or so to make sure it’s air tight. Thanks for the info!
Absent exceptionally unusual circumstances, beneficiaries cannot acquire or dispose of trust property. Trustees acquire and dispose of trust property. If the trustee wanted to dispose of an NFA item, then it is a Form 4 transfer.
OP said he does not have a trust and wondered what happened to his NFA items upon death. Whether he has a will or not, the NFA items will be temporarily held by the executor or administrator of the estate until a beneficiary of the estate is determined. If there is a will, the beneficiary should be determinable from the terms of the will. If there is no will, then the beneficiary is determined by the decedent’s state’s intestate succession laws. The executor/administrator can then transfer the NFA items to the beneficiary of the estate via Form 5, all the same formalities of a Form 4 transfer (CLEO, photo, prints, etc.) but no $200 transfer tax. When the smoke clears, the NFA registry will show the transferred NFA item in the beneficiary of the estate’s name.
You are confusing beneficiaries of an estate with beneficiaries of a trust. Wills and trusts are two separate and distinct legal instruments.
No one inherits anything from a trust. It is not an applicable or relevant action with regard to a trust. Either a grantor or creator contributes NFA items to a trust via Form 4, or a trust acquires NFA items via Form 1 or 4. Depending on the terms of the trust, the trustee(s) and beneficiary(s) of the trust can then enjoy the NFA items. If a creator/grantor in a revocable trust, or a trustee later decides to dispose of an NFA item out of the trust, the disposition is a Form 4 transfer.
Your statement would be mostly correct if revised to state that “when the will/estate is executed [or administered] the beneficiary inherits the guns, a Form 5 is completed.”
If my wife and I are on the same trust, and I pass away. There is no need to do anything. That is what I was referring to. The 2nd part of the statement was regarding possession of trust items by those listed on the trust.
Why not use a pour over will into testamentary trust. You die and your weapons go into a trust under a form 5 theoretically. The trust is the recipient under your will. I assume that would avoid the requirement of the $200 tax stamp per item.
Could say for the benefit of your kids for life and then to grand kids upon the death of all children. Name all your kids as trustees.
Anybody tried this or know what the atf would say?
I have used this approach with client planning, but have not yet had a client die with this planning in place, so all I can give is my thoughts of what I think will happen. First, this is cleanup planning, using a properly drafted trust to acquire the NFA item is always a better choice. If my client already acquired the NFA item in their personal name, this becomes a way to try and fix a problem. I set up a trust for them while alive, then name the trust as an heir under a will. In part I base my planning on the following language from the ATF handbook:
9.5.3.1 Distributions to heirs. Although these distributions are not treated as “transfers” for
purposes of the NFA, Form 5 must be filed by an executor or administrator to register a firearm
to a lawful heir and the form must be approved by ATF prior to distribution to the heir. The
form should be filed as soon as possible. However, ATF will allow a reasonable time to arrange
for the transfer. This generally should be done before probate is closed. “When a firearm is being
transferred to an individual heir”, his or her fingerprints on FBI Forms FD-258 must accompany
the transfer application.[/u] The application will be denied if the heir’s receipt or possession of the
firearm would violate Federal, State, or local law. The law enforcement certification on the form
need not be completed.
The language in the middle of the paragraph in quotes is what I am looking at, if they specify what happens with an “individual heir” by implication, there must also be “non individual heirs” or for our purposes, a trust. It makes sense and if you are worried about it working, name an individual heir as a backup if this is not allowed. Worst case, it transfers to the named heir.
Again, I see this as an attempt to fix a problem, I much prefer to use a good trust to start with and avoid all of these questions.
In some states, especially a few decades past, trusts could not outright own property as you know. Drafters of the deeds would get around that by granting the property directly to the trustee, but state that he was in a trustee status. For example - Bob, Jr., as Trustee under the Will of Bob, Sr.
I guess then the puzzle is whether Bob, Jr., would have to transfer via form 4 or 5 or no form at all, to the trust directly or to a successor or co-trustee or the beneficiary upon final dissolution. Makes my head hurt.
I’m sure the atf is wondering how 41P is going to be applied to issues like this. Wonder if the atf is second guessing it’s decision to inject itself into each state’s jurisdiction concerning probate law.
With regard to the will to testamentary trust, there may be some upcoming rule making.
rule–RIN: 1140-AA43–impacts trusts that hold firearms regulated under the National Firearms Act. The rule requires trusts, corporations or legal entities possessing the guns to produce a “responsible person” who can undergo a background for guns in probate, before they are passed to a descendant. This person would “complete a specified form” and “submit photographs and fingerprints” simply to hold the guns while the estate is settled.
