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Posted: 2/19/2008 11:27:42 AM EDT
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I have trust set up for my kids that contains mostly firearms and NFA items. I have a few NFA items that are on a personal form 4. Being that I want to br prepared should a bad incident happen to me, I am in the process of doing form 5s on all of my personal NFA items. My preference would be that they transfer into the trust so both of my children and hopefully their children would have access to them. Is there any problem with doing this on a form 5? I would rather not pay the $200 per to do it now on Form 4s Thanks |
I'd think that you can probably leave the firearms to the trust itself in your will. However, you might want to check with ATF first to be sure it's okay. I'd just send a letter asking if a trust can be considered a heir for a tax-free Form 5 transfer. Assuming they say yes, keep the reply letter with your will and pre-filled Form 5s as a CYA measure. Mike |
| A Form 5 covers the tax-exempt transfer of an NFA firearm. If you have personal guns not yet in the Trust and would like to move them into the Trust now, then they need to be transfered on Form 4s since a transfer tax is due. The Form 5 would cover the estate transfer of the NFA guns to your heirs upon your death. |
Thanks I understand that they would need to go form 4 while I am alive Im wondering more about after I pass on Ill write a letter to BATF requesting clarification |
That is a great question. An estate transfer from you the individual direct to your heir is on a tax-exempt Form 5. But my guess is that since a Trust is a separate entity altogether and requires a tax-paid Form 4 transfer into it, even by you the Trustee, then the outgoing transfer of the gun or guns pursuant to the will will also require a Form 4 rather than a form 5. |
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A few thoughts here .... Trusts are legal entities set up to pass assets one time, from the grantor to heirs. Most states' laws prohibit revokable trusts from functioning in perpetuity -- they are designed to pass assets from one generation to the next, and upon the grantor's death, revokable trusts cease to exist. If your trust is revokable, I would strongly urge you to contact an attorney versed in your state's law. My layman's understanding is that in most cases, such a trust ceases to exist when you die -- and thus, any Form 5's you prepare in advance to transfer items into the trust for use after your death will be void, since the trust will no longer exist. Willmaker et al creates only revokable trusts. Irrevokable trusts often can be multigenerational, but my very expensive attorneys tell me irrevokable trusts are not good vehicles for NFA ownership. I want my NFA toys to be available to my grandkids, great-grandkids, great-great-grandkids, etc. The very competent and expensive lawyers I consulted said the only way to guarantee legal NFA ownership in perpetuity is via a corporation. Your state may be different -- but I wouldn't state my NFA investments to something I read on the internet. I would talk to a professional. YMMV. 
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Tony, So do transferable NFA items move from Trust to heir on a Form 4 or a Form 5? Seems to me that since the Trust is a different entity entirely from the Grantor as an individual (where a Form 5 would cover the estate transfer to an heir) and even the Grantor must move pre-existing NFA items into the Trust on a Form 4, that outgoing transfers from Trust to heirs would need to be on Form 4s as well. |
Good question. After my attorney, with his hourly meter running, explained to me why a corporation was better suited for my requirements than a trust because corps are multigenerational and revokable trusts are not, I did not see any reason to continue to pay him to explain the function of an option I had just dismissed. My educated layman's take is that since the trust is a separate, non-breathing legal entity, Form 4s must be used (and the $200 tax per item paid) when the grantor dies and the trusts's assets are transferred to the new owners. Perhaps an attorney who deals with trusts can shed some light on this. Anyone? |
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