Zachary B. Setzer
As the nation debates stricter gun laws, Charlotte area gun collectors are creating dedicated trusts to preserve and protect the ownership of their machine guns, some assault rifles and other similar firearms, creating an increased demand for specialized legal counsel.
The national trend is driven by the National Firearms Act (NFA), which regulates the transfer or sale of certain guns and other weapons, in part by requiring a sheriff or police chief to approve the transfer with an authorized signature. However, NFA Gun Trusts allow firearm enthusiasts and gun collectors to legally bypass the law enforcement signature requirements and transfer ownership of their weapons without a local police chief or sheriff approval. It also bypasses the need for fingerprints.
The Law Office of Zachary B. Setzer PLLC, located in Union County, North Carolina, has seen increased business as interest in NFA Gun Trusts has grown while the country debates stricter gun laws.
“This is an important legal and estate planning tool for gun collectors to consider,” estate planning attorney Zachary B. Setzer says. “Without proper planning, this signature requirement frequently becomes a roadblock to the transfer of NFA weapons.”
The NFA regulates the making and transfer of machine guns, short-barreled shotguns, short-barreled rifles, silencers, and many other weapons. Unlike ordinary handguns, shotguns, and rifles, transferring an NFA weapon requires the recipient to submit an application to the federal Bureau of Alcohol, Tobacco, and Firearms (ATF). As part of the process, the applicant sends a photograph and fingerprints to ATF, which then runs an FBI background check. The applicant must also obtain a signed certification from the Chief Law Enforcement Officer (CLEO) of the jurisdiction where the applicant lives—either the chief of police or the county sheriff.
Setzer explains that the National Firearms Act is designed so certain firearms can’t be transferred between individuals without local law enforcement verifying the transfer is legal. However, many law enforcement chiefs, including many in North Carolina, choose to deny all transfers. This makes it impossible for gun owners to pass ownership to a family member or another collector.
“Fortunately for firearm enthusiasts and gun collectors, the NFA provides a way around the law enforcement signature requirement,” Setzer says. “The NFA specifically exempts non-human entities like corporations and trusts from the signature requirement. Because they are non-human, these entities are also exempt from the fingerprinting and photo requirements.”
The pervasiveness of the law enforcement signature problem has led estate planning attorneys to create the NFA Gun Trust, a specialized trust that is designed specifically for buying and owning NFA weapons.
This specialized gun trust offers gun owners additional protection not available in typical revocable living trusts that are often used in estate planning.
“Using a typical revocable living trust can cause unintended consequences,” Setzer says. “ In a worst-case scenario, a trust that lacks firearm provisions might cause an illegal transfer of an NFA weapon, resulting in illegal possession.”
The possible penalties include up to ten years in prison, a fine of up to $250,000, and confiscation of the NFA weapon.
In contrast, a properly drafted NFA Gun Trust ensures that trustees will abide by all applicable laws when transferring trust-owned NFA weapons and that they will never transfer a weapon to anyone who is prohibited to have them.
In addition to facilitating NFA weapon transfers, an NFA Gun Trust is also an estate planning tool that allows an individual to choose what happens to the NFA weapons at the time of death. It can be designed either to transfer ownership to beneficiaries or to hold the NFA weapons permanently. NFA Gun Trusts may even protect gun owners against future changes to laws regulating firearm transfers.
“While this technique works with both corporations and trusts, trusts have become the preferred vehicle for bypassing the signature requirement,” Setzer says. “Unlike corporations, trusts do not have annual fees and do not need to file annual reports with the Secretary of State. Creating the trust is a one-time expense because a single NFA Gun Trust can hold an unlimited number of NFA weapons. Trusts are also highly flexible and can be customized to meet specific needs.”
About the Law Office of Zachary B. Setzer
The Law Office of Zachary B. Setzer PLLC is an estate planning and asset protection firm in Monroe, NC. The firm practices primarily in the areas of wills, trusts, estate tax planning, and estate administration. Mr. Setzer graduated with honors from Washington and Lee University School of Law. He was Lead Articles Editor of the Washington and Lee Law Review and received the James C.C. Treadway law scholarship. Mr. Setzer is also a graduate of the University of North Carolina at Chapel Hill with degrees in Religious Studies and Political Science.
