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Best practices for passing on your NFA collection?


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Folks, I hope I'm around for many years to come. However, life has slowed down enough lately that I'm getting around to putting some of my house in order. Part of that process is wanting to make sure my NFA items are passed along with a minimum of troubles for my surviving family members.

 

I'm wondering if any of you could share what steps you have already taken to help provide for a smooth transfer of these regulated yet valuable items. I know everyone's situation is different. Some items are held by individuals and some by trusts, corporations, FFL's, etc. We all live in different states with different laws. And of course, lets not forget that families have conflicts, especially when considering individual items that may range from 15K-70K, etc. But lawyers are expensive too and don't always know how to deal with NFA items. In my family, I'm the one who has taken the time to learn the laws to obtain my NFA items but I can guarantee my wife doesn't have the slightest interest and is just hoping I take care of it all. I'm thinking the entire NFA community could benefit by a discussion of others experiences and what arrangements they have made for the passing along of our NFA items. I realize this is a personal and private issue and many may not want to participate. But it never hurts to ask.

 

Anyone care to share their thoughts or legal plans on how to pass along our collections?

 

 

 

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The problem is a trust allows possession, but does not transfer ownership once you're gone (depending on how the trust is worded) and the transfer can be contested by other family members in probate. Leave specific instructions in a will, then it's legally binding. "I want my son Bill to have my MP-40 serial number 123456". If it ain't in the will, it doesn't mean anything. I had a friend pass, and he told me and his widow that he wanted me to have his Thompson. But as he didn't leave it in his will I'm SOL!

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The successor trustee is in charge of the NFA Gun Trust upon the death of the settlor and the co-trustees. In a NFA Gun Trust you must appoint a successor trustee. The successor trustee can play multiple roles, meaning the successor trustee can also be a beneficiary/and or a co-trustee in the NFA Gun Trust. The successor trustee is not a responsible persons in the NFA Gun Trust, unless he is named as a co-trustee. If he isn't a responsible person and named as a co-trustee, the successor trustee is not allowed use the NFA firearms. They are also not required to submit a passport photo, FD-258 fingerprint cards and the ATF 5320.23 Responsible Persons Questionnaire for the NFA Gun Trust. They are in charge of distribution of the trust contents to the beneficiaries when the trust can no longer be managed by the settlor and/or co-trustees.
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All the trust planning in the world isn't worth a nickel unless your first step is completing a will. A will for your estate is essential along with an appointed executor. This is especially true when multiple family members are involved.

Next have copies of all your NFA paperwork in an easy to locate and accessible place such as a safe deposit box. In addition, for god's sake tell someone where they are. One of the biggest issues I had when assisting with an estate years ago was that the wife did not have a clue where all the paperwork was which caused a months long search to find them. ATF was very helpful in this situation telling me that as long as we were looking for the paperwork they would allow us all the time we needed to complete the search.

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Guns in a trust are not part of your estate. They belong to the trust which is a separate juridical entity. It would be inappropriate to mention them in your will. The trustees have the right and power to dispose of them in accordance with the trust when the trust ends. Typically, that is years after the settlor dies.

Edited by DZelenka
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That's all well and good, but it may not hold up very well in a contested probate court. That's why a will is so important.

A will can only dispose of those things owned by the decedent. Items in a trust are owned by the trust. I do agree that a good will is invaluable. You needd to update it as your situation changes (kids grow, new assets acquired, etc.)

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The legal aspects of this can become very complex very quickly and I suppose be endlessly debated. That's why it's so helpful to hear from members who have already been through the process to see how it played out and if they would advise any changes.

 

RoscoeTurner, I appreciated your comments about having all the paperwork in one place and someone who knows where it is. In my situation, I have all my Form 4's in one folder in a fireproof safe and then I have digital copies both on my computer as well as regularly backed up to a thumbdrive which goes in another fireproof safe. The thought being that if my computer is stolen, I'll have the thumbdrive, if the safe is stolen, I still have my computer, etc. My friend just loads to the cloud and it's probably easier that way. I just don't like having all my info floating around on the web.

 

RoscoeTurner, I'm wondering if you would share how the process worked for the transfer of the items. (Not asking for any names, just how the system worked) Were the NFA items held in a trust, in a persons name such as those held in C&R's, held in a company, etc. And then what steps where required to conclude the transfer. Did someone have to apply for a transfer and new tax stamp, did a responsible person have to be added to an LLC, etc.

 

And then, having helped someone through the process, did you learn anything that made you think, hmmmm, if I had to do it all over again . . ., what would you change about the way you are planning to pass along your NFA collectibles?

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If the firearms are held in a trust, nothing has to be done as long as there is a surviving trustee or a successor trustee. Do not set up a trust without a successor trustee or at lease enough trustees to ensure someone survives the settlor. A one person trust without a named successor is asking to have extreme problems because there is no one remaining to sign a transfer form. Provideing there is a trustee, the trust just continues to own the firearm until the trust ends. I set up mine to end 20 years after teh death of the settlor because that gives sufficient time for any juvenile beneficiaries to reach the age of majority.

 

If your NFA firearms are owned personally, it is best to have a will although they will pass to your heirs without one. In order to transfer a firearm from an estate to an heir (form 5) or to a third party (form 4) you will need the following Supporting Documentation:

 

Death Certificate.

Last Will & Testament.

Proof of Executorship.

Letter of Administration, Testamentary, small Estate Affidavit or State statue statement permitted.

Statement regarding status of probate (Never opened, open, closed etc.) is necessary.

 

This provides ATF with documents to assure that the person signing the transfer is legally authorized to do so and that the correct person is receiveing the firearm.

 

Dan

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Also anything in a trust will require a transfer tax at some point. I have some personal stuff and some corp owned stuff. The Corp stuff can sit there indefinitely adding or subtracting members as needed as long as the entity is maintained. The personal stuff does have to go somewhere before the estate settles which can seem like a long time, but in NFA time it's really not that long. There are things that will be lost for sure. Some projects have/ will not be complete and some things like SBR's will be lost in the shuffle since they have zero value anyhow and it's difficult for someone unskilled in the NFA to look at one gun and see two or possibly 3 forms that go with what appears to be one gun.

 

Most estates I've seen where larger collections are involved are a total mess unless someone knowledgeable is brought in, and those people are difficult to find and no one wants to spend the money, so guns/registrations are lost and parts kits become the final plan. Back in the day I bough into a couple, and without myself and a partner they would have lost tens of thousands in value. While we paid less than retail, we bought things that may not have been saleable at all and a problem down the road, thus in the end the money for the estate probably was about the same and we did all the work and the executors just signed forms that were properly filled out and breezed right thru NFA branch.

 

I don't have a will yet cause A. I don't have time to put into that right now B. It's not really MY problem and the wife and kids should put one together if they are concerned, but oddly they don't seem to be? I have contingency plans for all of them though? Funny how that all works?

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My father age 88 had no will, no plans at all

 

We hired a lawyer who specializes in living trusts. A way to protect the estate if they end up in a nursing home. His house is now in my name. The trust owns his bank accounts.

 

Dont wait Johnson!! If youve got $$ you need to get it done. They were located in Brookfield , wi. Not far from you

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My estate will be a nightmare for someone unfamiliar with the NFA. I own NFA firearms individually, in a trust and in an LLC. There are also transferables, pre samples and post samples. I have good records, but it will take someone with experrience to maximize value. My plan is to liquidate most of my collection before I die. They can have the cash I don't spend. If I die suddenly, I am sure it will be a mess.

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At the moment the odds of me making it to a nursing home are pretty slim with my current lifestyle. As things change an estate plan may be an option when time permits. Already gave away a house, and it's just cash, a pile of guns and an auction for all the biz stuff. They can divvy all that up without my input and without entering it all into an estate or probate proceedings, kind of like a monopoly game at the beginning.

Folks like to complicate a lot of things. I've bought and sold houses with a one page quit claim deed transfer......bam, check exchanged, no title policy, just mail it in, quicker than an doing an NFA transfer. I've sat at numerous closings with attorneys checking the i's and t's, with a mountain of forms. Most all of it was to exclude some other party from some liability but nothing for me the buyer. Went through one three times before the check got handed over.....

There will be some form 5's, but one of my kids is pretty smart and she'll figure it out, especially if there's cash involved! There's no urgency to any of this if I suddenly leave, and like every other life decision, if it needs to be done very quickly, you had made some not so great choices and will take a beating if things have to be liquidated quickly. I'm not at 11.58 million today so estate tax is not on the radar for me, but I'm sure there's a few here that will need to make arrangements to build some shelters. One bad election and that could easily go to 1 million and then things get ugly for a lot of people.

 

DZelenka has a good plan to liquidate which is probably the best plan, course the best laid plans........
There's one two stamp pre-may here that is like a bastard step child, which will give someone fits. That will need two form 4's, which these days might not even get approved at the same time! That's something only .gov could invent.

Liquidation for me doesn't appear to be an option since I seem to be attached even to crap guns? Hopefully that will change!

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I am an FFL/SOT. I have all NFA items and my license papered to a corp. In my case, in the event I die, my wife will have full control of the Corp. All of our assets, real estate, trucks, cars, etc. are titled to both of us to avoid having to go through probate later.

 

She is familar enough with the NFA items to put in transfer forms, granted on paper, not e forms, and dispose of the NFA items lawfully. She is also familar enough to close my books out and surrender my license, if she so chooses to do either.

 

Assuming she is not around, there are attorneys that are familar enough with closing out FFLs estates you can appoint to do so.

 

My old man died without a will. It was very difficult to deal with his estate. I recommend doing estate planning in your particular state with an estate planning attorney. The legal fees upfront will be less than probate fees later.

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I wish someone would invent the equivalent of a "Life Estate" for NFA items. It would work like this:

1) Young guy pays old guy for a MG

2) old guy gets to keep and shoot said MG until he dies or gives up

3) transfers to young guy without another signature

 

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My FFL contacted be in early March to advise he had a customers wife bring in a nice Uzi stating her husband recently passed away and she wished to sell the gun with my friends assistance. The price was good so he contacted me immediately. I purchased the gun and he assisted her by contacting the NFA for information necessary to the sale. These papers were sent off and after about 4 months there was the obligatory 'problem'. Long story short the paperwork problem was quickly resolved and received the gun (form 4 Trust) within 155 days. This is what it looked like.

 

IMG_1114.jpg

 

 

 

 

Edited by RogerD
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I know everyone intends to give good and correct information, but some of the things that have been written are wrong.

I am not a lawyer, but I have friends who are. If you were in Michigan I could have you contact them, but each state is different in their estate procedures.

I have a Lady Bird deed for my house (I believe there are only four states in the union who allow you to use this). Look it up.

 

As Dan K said; Hire a lawyer,( yes they can be expensive) but it will stop any wrong and costly moves on our part and your future beneficiaries.

Wills go to probate, Trusts do not. Again Look it up.

 

Dan Z is correct. When you die, your NFA toys will be passed to the family with NO tax. I bought two NFA weapons from a widow), and the ATF helped her with the paperwork, I paid the transfer tax.

 

Merry Ploughboy stated; Do not put off Estate planning. Great advice. Look at all the people who bought firearms recently and now they can not find the lead they need. Poor planning on their part.

 

Reading in fundamental, but hiring an expert in very important.

Thanks Moose

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  • 2 weeks later...

I hired a lawyer to form an estate trust, kids get the earnings from the trust investments

Part of the deal is an agreement with a private banker ( division of Wells Fargo) to manage the estate sale ( for a %fee) including the NFA items. They also manage the estate trust investments.

 

Both the lawyer and private banker had experience with NFA items, that was part of the discussion.

 

Kids were happy they dont have to deal with it.

 

All my original ATF form 1 & 4 are in individual slip sheets in a notebook in the safe.

Edited by Ready.fire.aim
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