03/27/2012

Trusts and the National Firearms Act

The National Firearms Act of 1934 (NFA) was originally enacted as a tax law with an underlying purpose of severely limiting possession and trade in “gangland” weapons. It applied to what are now called Title II weapons*.  The law required anyone possessing or transferring an NFA weapon to register it with the Secretary of the Treasury and pay a tax of $200 per weapon, a large and onerous sum at the time.

Constitutional challenges arose on the grounds that the requirement to register an unregistered firearm violated the possessor’s privilege from self-incrimination under the Fifth Amendment.  The Gun Control Act of 1968 in turn prohibited the use of any information from an NFA application as evidence of violation of the law.  It also required all NFA items be registered with the Bureau of Alcohol, Tobacco, Firearms, and Explosives (BATFE).

Under the revised law, private owners wishing to purchase an NFA item must obtain approval from the BATFE and pay the tax which remains at $200.  The registration process includes obtaining a signature from the chief law enforcement officer of the jurisdiction and passing an extensive background check with a photograph and fingerprints.  After registering the weapon, the owner must have written permission from BATFE before moving the firearm across state lines. Many times law enforcement officers will not sign the NFA documents, and there have been unsuccessful lawsuits by persons denied BATFE approval for a transfer.  The penalty for errors in the documentation or handling of the classified weapons can be criminal prosecution, fines of up to $250,000, ten years in prison and the seizure of the weapons.

You ask where a trust fits into this law.  NFA items may also be transferred to corporations and other legal entities such as a trust, without the requirement for a signature from local law enforcement, fingerprint cards or photographs with the transfer request. Some gun owners have opted to create LLCs as the legal entity to own the weapons although this requires initial corporate paperwork and an annual filing fee.  If the business entity ever dissolves, it must it must transfer its NFA firearms to the owners. This would be would be subject to a new transfer tax.

An NFA trust is a trust document that has been customized to deal with the specific legal issues surrounding the transfer, possession, and use of firearms restricted under the NFA.   It shields the owner from a law enforcement official’s refusal to sign the transfer application, provides some privacy in lieu of the background investigation and streamlines the application process with BATFE.  More importantly, it offers a mechanism for a successor trustee to legally take possession of the NFA weapons in case of the trustmaker’s death or incapacity.  The trust allows the maker to designate authorized users and co-owners of the weapons to protect against legal charges of unlawful transfers and constructive possession. 

 *Title II of the Gun Control Act of 1968 defined firearms subject to NFA to be silencers, short-barreled rifles, short-barreled shotguns, machine guns, destructive devices and “Any Other Weapon”.  Latter “Any Other Weapon” is further defined as:

  • Any weapon or device capable of being concealed on the person from which a shot can be discharged through the energy of an explosive;
  • A pistol or revolver having a barrel with a smooth bore designed or redesigned to fire a fixed shotgun shell;
  • Weapons with combination shotgun and rifle barrels 12 inches or more, less than 18 inches in length, from which only a single discharge can be made from either barrel without manual reloading; and
  • Any such weapon which may be readily restored to fire.

Law Office of Eileen Guerin Swicker 20 W. Market St. Suite E, Leesburg, VA 20176

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