Texas NFA Gun Trust FAQ


What is an NFA firearm?


Firearms regulated by the National Firearms Act (“NFA”), such as fully-automatic weapons (also known as “machine guns”), short-barreled rifles (“SBRs”), short-barreled shotguns (“SBSs”), and sound suppressors (also known as “mufflers” and “silencers”) are commonly known as “NFA firearms,” formally known as “Title II weapons,” and oftentimes incorrectly referred to as “Class 3” firearms or weapons. On the other hand, firearms that are not regulated by the NFA, but that are regulated by the Gun Control Act of 1968 (“GCA”) and other federal laws, are formally known as “Title I weapons.” To distinguish them from NFA firearms, Title I firearms are commonly referred to a “non-NFA firearms” or “regular firearms.”


How can I legally acquire NFA firearms?


Basically, there are two ways that an individual or a legal entity, such as a trust, corporation, limited liability company, or partnership, may legally acquire NFA firearms, if the individual or entity is not prohibited by federal, state, or local law from receiving or possessing firearms:

(1) by transfer after approval by the ATF of a registered NFA firearm from its lawful owner residing in the same state as the transferee (ATF Form 4); or

(2) by obtaining prior approval from the ATF to make NFA firearms (ATF Form 1).


What is a gun trust?


A gun trust is special type of trust (A trust is a fiduciary agreement that allows a party (known as a trustee) to hold assets on behalf of one or more beneficiaries) designed to address issues that are unique to firearms, which are one of the most heavily-regulated types of personal property in the United States. Many ordinary law-abiding citizens use gun trusts to acquire and enjoy NFA firearms. Most gun trusts are highly-customized revocable living trusts that address the rights and duties of the parties to the gun trust relating to the use, possession, and transfer of firearms. Most gun trusts determine how a single person or a married couple’s firearms are to be managed during his/her/their lifetime, in the event of his/her/their incapacity, and also upon his/her/their death. Because firearms in the gun trust pass privately to the beneficiaries outside of the probate court process, many people also assign their non-NFA firearms to their gun trusts. A well-written gun trust can serve as a comprehensive estate plan for all of the settlor or settlors’ firearms that are assigned to or acquired by the gun trust.


What are the main benefits of a gun trust?


Three of the most important benefits of a gun trust are:

(1) NFA firearms registered to a gun trust can be used and possessed by more than one person. The settlor of the gun trust can add or delete persons (co-trustees) who are allowed to use and possess the NFA firearms throughout his or her lifetime. NFA firearms registered to an individual can only be used and possessed by the registered individual during the individual’s lifetime.

(2) If your NFA firearms are owned by you individually and you are later deemed to be incompetent, your NFA firearms are subject to confiscation immediately since it is illegal for any other individual to take possession of your NFA firearms. On the other hand, if your gun trust owns your NFA firearms, any co-trustee can take possession of your NFA firearms to hold them on your behalf. In other words, you will not lose ownership of your firearms. As as result, you will retain the ability to either direct that the NFA firearms be sold and the cash returned to you, or that the NFA firearms continue to be held in trust for the beneficiaries to inherit when you die.

3) NFA firearms registered to a gun trust pass to the beneficiaries of the gun trust outside of the probate process according to the terms and conditions of the gun trust agreement prepared by the settlor. NFA firearms registered to an individual pass to his or her beneficiaries according to the terms of the individual’s last will and testament, which is probated in a probate court and provided to the ATF during the transfer process so the executor can prove to the ATF that the individual intended to transfer the NFA firearms to the beneficiaries.


Can NFA firearms be registered to other types of entities, such as corporations, LLCs, and partnerships, instead of a gun trust?


Yes, but there are several disadvantages to doing so. These types of entities are required to file federal income tax returns to the IRS and state tax returns and public information reports. Overall, a gun trust is the most flexible, most private, least expensive, and least maintenance-intensive method of registering NFA firearms.


Is a gun trust required to file any annual reports or pay any state franchise taxes?


No, gun trusts are not required to file any annual reports or to pay any franchise taxes in Texas.


Do I need to register or record a gun trust with the State of Texas?


No. Since the gun trust is a revocable trust, it does not need to be registered or recorded with the State of Texas or any county or local government entity. An NFA gun trust is not a public document, rather it is private, much like a will. However, when the trust files an application with the ATF to transfer or make an NFA firearm, a complete copy of the gun trust, any amendments, and any current appointment of additional co-trustee documents are filed with the application.


Can more than one person legally possess NFA firearms?


NFA firearms must be titled in the name of an individual or an entity, much like other real property (land) and some types of personal property, such as cars, trucks, boats, and airplanes. However, unlike almost any other kind of titled property, the ATF has never allowed more than one person’s name to appear on the ATF tax stamp, which is effectively a title certificate. As a result, if an NFA firearm is titled in the name of an individual, only that specific individual may possess it. One of the chief advantages of registering NFA firearms in the name of a gun trust, rather than in the name of an individual, is that more than one person may legally possess and use the NFA firearms. In Texas, any person at least 18 years of age who can legally possess firearms may agree to be included as a trustee of the gun trust and, thereby, legally possess the NFA firearms assigned to the gun trust.

For a married couple, it almost always makes sense for an NFA firearm to be registered in the name of a gun trust. For example, suppose the husband owns a suppressor, which is legally registered with the ATF in his own name. The husband goes to work and leaves his suppressor at home. If the wife stays at home that day and could have access to the suppressor, she is committing a federal felony offense that carries a prison sentence of up to 10 years and/or a fine of up to $250,000. 26 U.S.C. §§ 5861, 5871; 18 U.S.C. § 3571(b). Further, the suppressor is subject to seizure and forfeiture. 26 U.S.C. § 5872. If convicted, the wife loses her right to own or possess any kind of firearms in the future. In addition, if the husband instead left the suppressor in the wife’s vehicle, the vehicle is subject to seizure and forfeiture. If the husband had simply registered the suppressor in the name of a gun trust and appointed his wife as a co-trustee of the trust, this situation would have been prevented. Additionally, the husband could appoint other individuals, such as friends and family who may legally possess firearms as co-trustees of the trust, as long as the other individuals agree in writing to be co-trustees.


What happens to the NFA firearms assigned to the gun trust when the settlors die?


The trust property assigned to the trust passes to the beneficiaries of the trust without being subjected to the probate process. Until the trust property is distributed to the beneficiaries, the trustees of the gun trust continue to hold and possess the trust property in trust for the beneficiaries.


How does the buying process for a silencer from a Class 3 Dealer work using a gun trust?


If you already have your gun trust prepared, the process of buying a silencer from a dealer is as follows:

First, you visit your Class 3 dealer and pick out the silencer that you want to buy.

Next, you pay the dealer for the cost of the silencer plus sales tax.

After that, the Class 3 dealer will partially prepare an ATF Form 4 application requesting permission to be allowed to transfer the silencer from the dealer to your gun trust. The Class 3 dealer will provide the partially completed ATF Form 4 to you.

Next, you will complete the rest of the ATF Form 4 application. On page 2 of the ATF Form 4 application, you will identify the Chief Law Enforcement Officer (“CLEO”) where you live. The CLEO is usually your sheriff or police chief. Every time an NFA firearm is transferred from one party to the other (such as from the dealer to the gun trust), the ATF charges a $200 tax. On page 3 of the ATF Form 4 application, you will indicate whether you are paying the transfer tax by check, cashier’s check, money order, or debit or credit card. Also, on page 3 of the ATF Form 4, you will need to identify all “Responsible Persons” in your gun trust. The Settlor (you) and the Initial Trustee (you) are considered a “Responsible Person” under the ATF’s definition of the term. In addition, any person whom you appointed as an Additional Co-Trustee using the Appointment form (and who is still serving as an Additional Co-Trustee) is considered a “Responsible Person.” Beneficiaries and Successor Trustees identified in the gun trust are not considered to be “Responsible Persons,” unless you have later appointed them as Additional Co-Trustees using the Appointment of Additional Co-Trustee document. In other words, if an individual, other than you, has not signed an Appointment of Additional Co-Trustee document, he or she is not a “Responsible Person.”

In addition, each “Responsible Person” will be required to complete a Responsible Person Questionnaire. Each “Responsible Person” will need to provide two (2) fingerprint cards and one (1) passport photo. Each “Responsible Person” mails a copy of his or her complete Responsible Person Questionnaire to the CLEO where he or she lives. The CLEO does not need a copy of the photograph or fingerprint cards.

You mail a copy of the ATF Form 4 application, each Responsible Person Questionnaire (including the photographs and the fingerprint cards), and a complete copy of the gun trust to the ATF at the address indicated near the top of page 1 of the ATF Form 4. If you are paying the $200 transfer tax by check, then the check is included in the package that you mail to the ATF.

After the ATF receives the ATF Form 4 transfer application, it takes the ATF several months before the application is processed and approved.

After approval, the ATF sends a copy of the approved application (commonly referred to as the “ATF tax stamp” or the “tax stamp”) back to the dealer. The ATF tax stamp serves as proof that the $200 transfer tax has been paid and that the dealer has the ATF’s permission to transfer/sell the silencer to the gun trust. What you thought was a sale when you paid the dealer many months ago was really just a deposit.

After the dealer receives the ATF tax stamp, the dealer contacts the customer to come pick up the silencer. Any trustee of the gun trust who is at least 21 years old may pick up the silencer. When the trustee picks up the firearm from the dealer, the trustee provides the dealer with his or her driver’s license, and optionally, his or her concealed handgun license (CHL), and completes an ATF Form 4473, which is the same ATF form a person would fill out if he or she were buying any a non-NFA firearm from a dealer.

After that, the dealer hands the ATF tax stamp and the silencer to the trustee, and the trustee walks out the door.


Does a gun trust eliminate the need for a background check?


No. As part of the ATF application process, the ATF conducts a background check on each “Responsible Persons” to ensure that each “Responsible Person” in not prohibited from receiving and possessing firearms and ammunition. In addition, when the trustee visits the dealer, the trustee provides the dealer with his or her driver’s license, and optionally, his or her concealed handgun license (CHL), and completes an ATF Form 4473, which is the same ATF form a person would fill out if he or she were buying any a non-NFA firearm from a dealer.


Can convicted felons use and possess NFA firearms registered to a gun trust?

NO!


Our gun trusts explicitly provide that no person who is ineligible to possess trust property, which may include NFA firearms and non-NFA firearms, regulated by federal firearms laws or applicable state firearms laws may serve as a trustee or receive firearms as a beneficiary. Moreover, if any trustee becomes ineligible to possess such trust property, the trustee is disqualified to serve as a trustee and is deemed to have resigned immediately upon ineligibility.


Does a gun trust provide the ability to manufacture machine guns?


No. Under Federal law, only machine guns (fully automatic firearms) made before May 1986 are allowed to be owned by individuals and gun trusts.


Does a gun trust eliminate the ATF’s $200 tax?


No. Each time a gun trust applies to transfer or to make an NFA firearm, it must pay the $200 tax for each NFA firearm to be transferred or manufactured.


Do I need a separate gun trust for each NFA firearm?


No. In most cases, all of your NFA firearms would be assigned to the same gun trust.


Do I need to make any changes to the gun trust to add another NFA firearm to my gun trust?


To add another NFA firearm to the gun trust, you simply use the gun trust to complete another purchase. You do not need to change the gun trust. The ATF tax stamp itself is the official U.S. government document that is indisputable evidence that the NFA firearm is owned by the gun trust. There is no other additional document that you need to create prove that the NFA firearm is trust property.


Can non-NFA Firearms (Title I Firearms) be assigned to the gun trust?


Yes.


How do I assign non-NFA firearms to the gun trust?


We will provide you with a simple form that you can use to assign non-NFA firearms to the gun trust.


Can I add someone as a trustee on an NFA gun trust who lives in a state where NFA firearms, such as silencers, short barreled rifles (SBRs), short barreled shotguns (SBSs), and machine guns, are illegal?


Yes. However, the trustee will not be able to use and possess the NFA firearms in a state that does not allow possession of NFA firearms. The trustee will only be able to use and possess the NFA firearms in a state where possession of NFA firearms is legal. Some states only allow possession of specific types of NFA firearms.


Who are the parties to a gun trust?


There are three parties to a trust —

Settlors: The person who creates the trust, and is usually the person who provides the funding for the trust and assigns personal property, such as firearms and cash, to the trust.

Trustees: The person who is allowed to use and possess the firearms assigned and acquired by the gun t

rust. A trustee MUST be at least 18 years old, and a trustee MUST agree in writing to serve as a co-trustee.

Beneficiaries: The person who receives said property upon death of Settlor. The settlor is usually the beneficiary of a revocable living trust during his or her lifetime. After the settlor dies, the settlor’s wife is usually the primary beneficiary and the settlor’s children are usually the secondary beneficiaries. Although the settlor may designate anyone as the beneficiary.


Do I need to carry proof of registration for my NFA firearm?


It is a good idea to always have a copy of the ATF tax stamp for each NFA firearm in a trustee’s possession, a copy of the gun trust, including all amendments, if any, a copy of the trustee’s appointment document, and a driver’s license.


If I want you to prepare a gun trust for me, how do I get started?


Please call The Montgomery Law Firm during our business hours, Monday-Friday 9:00 a.m. to 5:00 p.m. My office number is (325) 704-4357. Or send me an email at attorney@jtmfirm.com.

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