Texas residents often include trusts in their estate plans to avoid the probate process and ensure that their assets are distributed in accordance with their wishes after they pass away, but these legal arrangements can also be used to transfer the ownership of firearms or skirt federal gun laws. Gun trusts are a form of revocable trust that allow firearms or the money to buy firearms to be passed from one generation to another. They are popular because using a trust to transfer the ownership of firearms avoids most of the bureaucratic hurdles the process usually involves.
The National Firearms Act
Gun Trusts are also called NFA trusts because many people use them to skirt the provisions of the National Firearms Act. The NFA is a 1934 law that strictly regulates weapons considered especially dangerous including machine guns and short-barreled rifles and shotguns. Individuals who wish to acquire firearms regulated by the NFA must submit a photograph and fingerprint card to the Bureau of Alcohol, Tobacco Firearms and Explosives and inform their local law enforcement agency about the purchase, but these rules do not always apply to trusts. Grantors and trustees are required to meet NFA requirements because they are considered responsible individuals, but the trust’s beneficiaries are not obligated to do so.
Severe penalties for mistakes
This means that people who wish to use highly regulated weapons can do so without subjecting themselves to official scrutiny, but NFA gun trusts should be drafted with great care because even inadvertent violations of the law are punishable by up to 10 years in a federal prison. These estate planning documents also allow firearms to be passed to beneficiaries quickly and easily when the grantor passes away, but the ATF is still notified when a weapon regulated by the NFA changes hands.
Not much of a loophole
Gun trusts were once viewed as a way to avoid official scrutiny when purchasing heavily regulated weapons, but the loophole they once exploited has been closed for all parties except beneficiaries. Gun trusts can still be useful estate planning documents as they give grantors more control over how their assets will be distributed after they pass away, and they also allow firearms to be transferred without the need for probate.