The following article is by Peter J. Reilly, a Forbes Contributor
Taxes are a heavy component of estate planning, but it is important to be alert for other issues. Even though much of my practice is in a right-to-carry state (Florida), it hadn’t ever crossed my mind that guns require special attention in estate plans until I received a heads up from Allen J. Margulis of Total Counsel Law Group. I asked Attorney Margulis if he would like to do a guest post on the subject of gun trusts and he was gracious enough to provide the following:
People may collect guns for self‐defense, target shooting or hunting. Guns may be investments or heirlooms. Many gun owners want their guns to be used responsibly and be passed on to those who appreciate them. Certain firearms and accessories are federally restricted. A state may restrict them further. For example, short‐barreled rifles, automatic weapons, silencers and other such items, require a federal tax stamp to acquire as well as the approval of the local Chief Law Enforcement Officer (CLEO.) There are many regulations and issues surrounding passing guns down to one’s heirs that are not present with a bank account, chair, picture or other type of property. We must consider not only where the beneficiary lives, the laws of that state, the laws of the state where the items are located, the eligibility of the beneficiary to be in possession, but also:
- Is it a good idea to put a weapon in the hands of the beneficiary? Are they mature and responsible enough?
- If not, what will we do?
A Gun Trust is a special purpose revocable living trust. A Gun Trust is written to hold only firearms. The owner of the gun is the trustee and the beneficiary. The owner appoints successor trustees and lifetime and remainder beneficiaries. The trust can be amended or revoked at any time and the owner can name and remove beneficiaries. In the past, Gun Trusts were created primarily for NFA restricted firearms (Title II items ‐ silencers, short-barreled rifles, shotguns, and machine guns) but lately they have attracted the attention of those who own “assault weapons” .
Gun Trusts are used for two main reasons. The first is to expedite a transfer of a National Firearms Act firearm. Using a trust means you do not have to obtain the approval of your local Chief Law Enforcement Officer (CLEO) and the application can be sent directly to BATF. This saves a lot of time. Registration of a NFA firearm to an individual or corporation takes approximately one to three months to complete. The firearm cannot be handled or transported by any other private individual unless the firearm’s registered owner is present. However, NFA items owned by properly drafted trusts may be legally possessed by any Trustee and a beneficiary may use the item in the presence or under the authority of the Trustee. The second reason is to provide detailed instructions over disposition of one’s gun collection.
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