NFA Items and Inheritance -- i.e: What to do with grandpa's Machine Gun

[Sam1911]

We have many requests for answers on how to deal with machine guns and other NFA items owned by a relative who has passed away.

The BATFE has written an open letter on the subject which can be found here: http://www.atf.gov/press/releases/1999/09/090599-openletter-nfa-estate-transfers.html

Department of the Treasury
Bureau of Alcohol, Tobacco and Firearms, Washington, DC 20226

September 5, 1999

Transfers of National Firearms Act Firearms in Decedents’ Estates
The National Firearms Act (NFA) Branch continually responds to questions regarding NFA firearms in decedent’s estates. We often find that Federal firearms licensees are involved in assisting the executors in disposing of these firearms. We believe some general information and discussion of procedures will help licensees in these situations.

As you may be aware, the registration information we maintain is tax information and any disclosure of this information is generally prohibited. We may lawfully provide registration information to the executor of an estate. If there is any question regarding the registration status of the firearms in the estate for which you are assisting the executor, advise the executor to contact the NFA Branch directly and provide proof of his or her appointment as executor.

If there are unregistered NFA firearms in the estate, these firearms are contraband and cannot be registered by the estate. The executor of the estate should contact the local ATF office to arrange for the abandonment of the unregistered firearms.

For registered NFA firearms in the estate, the executor should take action as soon as possible to arrange for the proper registration of the firearms. Possession of an NFA firearm not registered to the possessor is a violation of Federal law and the firearm is subject to seizure and forfeiture. However, we do allow the executor a reasonable time to arrange for the transfer of the registered firearms in a decedent’s estate. This generally should be done before probate is closed.

It is the responsibility of the executor of the estate to maintain custody and control of the firearms and to transfer the firearms registered to the decedent. The firearms may not be transferred to another party, such as a firearms licensee, for consignment or safekeeping. This would be a transfer subject to the requirements of the NFA. The licensee may assist the executor by identifying purchasers and acting as a broker.

The firearms may be transferred on a tax-exempt basis to a lawful heir. The executor would apply on ATF Form 5, Application for Tax Exempt Transfer and Registration of a Firearm, for a tax-exempt transfer to a lawful heir. A lawful heir is anyone named in the decedent’s will or, in the absence of a will, anyone entitled to inherit under the laws of the State in which the decedent last resided. NFA firearms may be transferred directly interstate to a beneficiary of the estate. When a firearm is being transferred to an individual heir, his or her fingerprints on FBI Forms FD-258 must accompany the transfer application. However, if any Federal, State or local law prohibits the heir from receiving or possessing the firearm, ATF will not approve the application.

ATF Form 4 is used to apply for the taxpaid transfer of a serviceable NFA firearm to a person outside the estate (not a beneficiary). ATF Form 5 is also used to apply for the tax-exempt transfer of an unserviceable NFA firearm to a person outside the estate. As noted above, all requirements, such as fingerprint cards for transfers to individuals and compliance with State or local law, must be met before an application may be approved. If an NFA firearm in the estate was imported for use as a “sales sample,” this restriction on the firearm’s possession remains. The NFA firearm may only be transferred to a Federal firearms licensee who has paid the special (occupational) tax to deal in NFA firearms or to a government agency.

For further information, contact:

Bureau of Alcohol, Tobacco, Firearms & Explosives
National Firearms Act Branch
244 Needy Road
Martinsburg, West Virginia 25405 USA
Voice: (304) 616-4500
Fax: (304) 616-4501
Revised: February 23, 2006

I've bolded the section having to do with UNREGISTERED weapons. I will add that, especially since these firearms are extremely valuable, if registration paperwork cannot be located and the heirs are unsure whether the item was registered upon making or during an amnesty period, it makes good sense to have an attorney contact the BATFE and determine its status.

Remember, an unregistered NFA Title II weapon is completely illegal. Keeping one you find opens you to federal felony charges for which the criminal sentences can include TEN YEARS in federal prison and up to $250,000 in fines.

 

[Swing]

Good point. Once thing worth mentioning is proposed legislation about just that. Info at NFAOA.

 

[kell490]

Just wanted to point out another option for grandpop's UN-registered machine gun is to cut the receiver per ATF instructions to de-activate it, and the parts can be sold. It's a better option then turning it into the ATF.

 

[Spats McGee]

What follows is not legal advice, but merely commentary. If you want legal advice, go buy some.

I took a quick look at the CFR, the underlying statutes and the BATFE site. (And, given the search strings that I ran, I expect the black helicopters to show up any minute. . . .) Not an exhaustive research process, but I just didn't see any "threads" to chase down. With that said, looking at the BATFE's site, the only mention of destruction of machine guns is in the context of importation. You can import certain machine guns, but only if you have the right licenses, the right stamps, and the item has been chopped up . . .

I found no exception that would allow the finder of a machine gun to possess it long enough to cut up the receiver and sell the parts. Possession of an unregistered machine gun, without the proper registration and stamps, is a crime. Plain and simple. I did find one itty-bitty wiggle spot, though, which is what I'd use to advise a client if (a) I had private clients; and (b) one of them called me to say he'd found a machine gun.

Here's the underlying statute:

It shall be unlawful for any person-- . . . .
(b) to receive or possess a firearm transferred to him in violation of the provisions of this chapter; or
(c) to receive or possess a firearm made in violation of the provisions of this chapter; or
(d) to receive or possess a firearm which is not registered to him in the National Firearms Registration and Transfer Record; or
(e) to transfer a firearm in violation of the provisions of this chapter; or . . . .

26 U.S.C.A. § 5861 (West)

Here's the CFR section:

As provided by 26 U.S.C. 5812 and 26 U.S.C. 5822, an application to make or transfer a firearm shall be denied if the making, transfer, receipt, or possession of the firearm would place the maker or transferee in violation of law. Section 922(o), Title 18, U.S.C., makes it unlawful for any person to transfer or possess a machine gun, except a transfer to or by, or possession by or under the authority of, the United States or any department or agency thereof or a State, or a department, agency, or political subdivision thereof; or any lawful transfer or lawful possession of a machine gun that was lawfully possessed before May 19, 1986.

27 C.F.R. § 479.105

Ok. Take a quick look at the parts I bolded. Now let's turn to 18 USC 922(o).

(o)(1) Except as provided in paragraph (2), it shall be unlawful for any person to transfer or possess a machinegun.
(2) This subsection does not apply with respect to--(A) a transfer to or by, or possession by or under the authority of, the United States or any department or agency thereof or a State, or a department, agency, or political subdivision thereof; or (B) any lawful transfer or lawful possession of a machinegun that was lawfully possessed before the date this subsection takes effect.

18 U.S.C.A. § 922 (West)

Note the inclusion of the word "lawful" in regards to transfers and possessions that happened before May 19, 1986. Note also that the word "lawful" is not used in the section regarding transfers to the government. If I were advising my hypothetical private client, I'd tell them to sit tight while I contacted the BATFE to hand over the machine gun. Those statutes don't apply to "a transfer to the United States or an agency thereof, or to a State, or department, etc. etc." My client's possession of the gun is illegal, but I'd call it a "transitory possession." And the transfer to law enforcement isn't covered. There's a line of caselaw out there on felons having transitory possession of firearms, and I think it's been held as an exception to the normal "felon in possession" rules, where the felon either: (1) uses a firearm in defense of self or others; or (2) immediately surrenders the firearm to law enforcement.

If you hire an attorney to contact the BATFE on your behalf, the attorney doesn't necessarily have to tell them who's got the gun, at least not until he has some agreements in place (preferably in writing, signed in triplicate, and delivered by Certified Mail, Return Receipt Requested, with Restricted Delivery . . . ) to protect you when you hand the gun over. And just calling the BATFE doesn't give the BATFE any reason to believe that the attorney has the gun . . . .

 

[Aaron Baker]

For what it's worth, I had a recent conversation with an ATF bureaucrat when I called up inquiring about a client who had possession of a silencer originally owned by his father-in-law. No proper paperwork had been done when the father-in-law passed, and my client didn't take possession until the mother-in-law passed almost a decade after that.

The ATF bureaucrat opined that they have no interest in pursuing people legally who mistakenly find themselves in possession of an unregistered NFA item (including ones that were registered, but not to the possessor.) She said that the ATF's main interest is in getting the firearm legal, by doing whatever transfer paperwork was necessary to make that happen. Obviously that's not possible in the case of unregistered machine guns, but she did even mention the possibility of transferring a gun like that to a museum if it had historical significance. (Obviously there would be hurdles if it were going to remain functional, since a non-governmental museum could no more legally possess it than anyone else.)

Point is, though, that if your interest is in turning over an illegal, unregistered machine gun to the ATF, they're not going to want to prosecute you for doing the right thing.

I asked if the ATF's preference, in case this silencer couldn't be legally transferred, would be to turn it over to the local field office. The answer to that was a resounding no. That creates all sorts of paperwork and storage requirements for them. They have to find a place to keep that silencer now, and record that they have it. She said they have enough illegal guns that they're seizing to keep track of that they don't want to voluntarily accept more unless that's the only option. She said the preference, if there was no desire to keep it or no way to get it legal, would be for my client to destroy it. (Through crushing for an aluminum silencer, or torch cutting for a steel one, she said.)

The message I came away with is that the ATF isn't out to get you if you find yourself in this situation, and that they will be as helpful as they can be. I do, however, think it's wise to use an attorney as an intermediary. An attorney doesn't have possession of the firearm and has a duty of confidentiality to his client, and thus the ATF has no idea whose door to kick in. It's just better to have that buffer there until a solution is worked out.

Aaron

 

[Spats McGee]

. . . .I do, however, think it's wise to use an attorney as an intermediary. An attorney doesn't have possession of the firearm and has a duty of confidentiality to his client, and thus the ATF has no idea whose door to kick in. It's just better to have that buffer there until a solution is worked out.

Aaron

Thank you for your input. That's an excellent point about having an attorney as a buffer. I'm going to add just a couple of small notes to clarify that, for the benefit of later readers. These all operate on the assumption that we're talking about a client in simple, rather inadvertent possession of an unregistered NFA item, not one in which the client intends to use said item in a crime spree.

• Under the Model Rules of Professional Conduct (which, AFAIK, are fairly uniform across the country) the attorney has a duty of confidentiality to the client. The attorney would not be permitted to disclose the client's identity to the BATFE under those rules. IMHO, doing so would: (a) open the attorney up to a lawsuit by the client; and (b) put his law license in jeopardy.
• Even a one-attorney operation may have dozens of clients at any given time. Large firms may have clients in the hundreds. The BATFE isn't going to know which client it may be. It won't even know whether the attorney has a written file on said client, unless the attorney happens to mention it.
• The BATFE isn't going to go kick down an attorney's office door without a warrant. That's just BEGGING to get the agents sued. They could find themselves in violation of the First, Fourth, Sixth, and Fourteenth Amendments, and those are just the ones that I can name off the top of my head.
• If we're talking about simple possession, BATFE's not going to go get a warrant, either. It would have to go to a judge (who is a lawyer), and ask the judge to allow it to rummage through a whole bunch of files, all of which are protected by a longstanding privilege (attorney-client communications), and subject to constitutional protections, just to see if they (the BATFE) can figure out which one has the gun. Nope. Not gonna happen.

 

[kell490]

I found this written by an attorney

https://blog.princelaw.com/2007/09/25/grandpops-machine-gun-in-the-chest/

While the BATFE desires to dispose of the weapon, in entirety, including parts, which in themselves are NOT machineguns, the BATFE allows for a weapon to be decommissioned. The preferred method for destroying a machinegun receiver is to completely sever the receiver in specified locations by means of a cutting torch that displaces at least one-quarter inch of material at each cut location.11However, A machinegun receiver may also be properly destroyed by means of saw cutting and disposing of certain removed portions of the receiver.12 The BATFE has published preferred procedures for the destruction of specific machineguns.13 By destroying the receiver, you are enabling the estate to sell the parts, which could constitute a significant amount of money.

I think using an attorney who specializes in NFA weapons, and estate planning is a good idea.

 

[lustus]

Yeah but attorneys are so expensive. They'll charge you an arm and a leg for a 10 minute phone call.

 

[TRX]

I have three NFA firearms. My will gives them to three different friends in three states. I have a codicil that summarizes the various regulations that covered NFA firearms up to that date, where to find current information, and reasons why they might not want to accept ownership of an NFA firearm.

 

[SGW Gunsmith]

My stuff all has tax stamps and are registered to an LLC, when that could still be done. Not sure if that's allowed any longer:

 

[kell490]

I would have liked to register the tax stamp to a trust but back in 1994 that wasn't an option as far as I remember or no one did it maybe it was an option back then. Now it's common place as far as I know can still be done because how would a business register an NFA weapon has to be a way using an LLC or corp? My understanding the better way to go is a living trust don't you have to file K-1 every year for an LLC? Now at this point I would have to pay $200 each machine gun to transfer into the trust since I don't have any kids if I pass on my wife knows what to do or my other family members. I plan on selling before I get too old or have any medical problems so don't have to deal with the issues. What I'm concerned about is the taxes I might have to pay in the future because of the value increase. Most buyers are dealers these days being a business they have to report tax on any check they write someone over certain amount.

 

[dogtown tom]

My stuff all has tax stamps and are registered to an LLC, when that could still be done. Not sure if that's allowed any longer:

It is.

 

[dogtown tom]

I would have liked to register the tax stamp to a trust but back in 1994 that wasn't an option as far as I remember or no one did it maybe it was an option back then.

It's always been an option.

Now it's common place as far as I know can still be done because how would a business register an NFA weapon has to be a way using an LLC or corp?

A business of any type can apply for a tax stamp, the entity that is the applicant depends on how the business is structured.
Trusts, corporations, etc may have multiple "Responsible Persons" that would need to submut fingerprints and photos. The definition of an RP is on the Form 4.

My understanding the better way to go is a living trust don't you have to file K-1 every year for an LLC?

A K-1 is for income tax purposes and earning by a trust. I would hope your attorney was smart enough to write a separate trust expressly for the purposes of NFA firearms possession.

Now at this point I would have to pay $200 each machine gun to transfer into the trust since I don't have any kids if I pass on my wife knows what to do or my other family members. I plan on selling before I get too old or have any medical problems so don't have to deal with the issues. What I'm concerned about is the taxes I might have to pay in the future because of the value increase.

$200 to transfer into a trust solves any problems with a Form 5. On your death the trust continues to possess the MG.

Most buyers are dealers these days being a business they have to report tax on any check they write someone over certain amount.

Cash buyers only!

 

[CapnMac]

Yeah but attorneys are so expensive. They'll charge you an arm and a leg for a 10 minute phone call.

I am reliably informed by a qualified individual, that the reason attorneys are so expensive is because "they are cheaper than the alternative."

 

[AlexanderA]

What I'm concerned about is the taxes I might have to pay in the future because of the value increase. Most buyers are dealers these days being a business they have to report tax on any check they write someone over certain amount.

The increase in the value of a machine gun, during the period of time that you own it, is "unrealized capital gain." If you sell it, that becomes "realized capital gain" and it could result in a large and unexpected income tax bill. On the other hand, if you die and it's passed on to your heirs, they get the benefit of a "stepped up basis" to the fair market value on the date of your death, and as a result could sell it virtually tax free. Unfortunately, if you transfer it to a trust or LLC before your death, it's no longer an estate asset and therefore doesn't qualify for "stepped up basis." The original basis carries over.

 

[Texasgrillchef]

Nope. Not gonna happen.

Not if Nancy Pelosi and her cronies in congress get her way! Lol

 

[Texasgrillchef]

Its sad that any historical nfa gun has to be destroyed if it wasnt registered.

However with gun control lobby at its peak right now to get a law passed that would allow these valuable weapons to get registered. Someone shouldnt have to take that as a loss to their estate.

 

[Texasgrillchef]

Just a thought....

But if you find an unregistered machine gun that grandpa used in ww2 or korean war or even vietnam war hidden when he passed, and you didnt know about it, obviously no one else does either. Its managed to go 50+ years without it being discovered and confiscated and grandpa going to jail.

Either disassemble it, dispose of the receiver. And sell the parts. Since the parts arent illegal. Or go hide it somewhere that a question of who it belongs too or who is in possession of it is unprovable.

I own a 1000 acres, unless the ATF or police know where to look. I doubt they could ever find anything! Lol

Sadly Im not lucky/unlucky enough to ever come across something like this lol

 

[Jeb Stuart]

The Liberals most likely would like to dig Grandpa up and put him in jail along with the OP.
I am not a lawyer, but ignorance of the law is not a excuse. And since when do laws and the constitution make any difference anyway? The sad part is Lawyers do not have a clue either. And they can cost you a bundle and have no problem having you put a second mortgage on your house and land to continue to finance themselves in some effort to keep you and Grandpa out of jail. . I would take the pain and just destroy the weapon.

 

[AlexanderA]

I would take the pain and just destroy the weapon.

Fortunately there's a distinction between the receiver (the serial numbered part) and the rest of the parts. (On Browning guns, for example, the serial numbered part is the right side plate.) Save the rest of the parts. FA parts sets are going for a fortune these days. Even dummy guns made up on parts sets can be worth thousands. https://www.ima-usa.com/collections/original-machine-guns#listpage

 

[Texasgrillchef]

Fortunately there's a distinction between the receiver (the serial numbered part) and the rest of the parts. (On Browning guns, for example, the serial numbered part is the right side plate.) Save the rest of the parts. FA parts sets are going for a fortune these days. Even dummy guns made up on parts sets can be worth thousands. https://www.ima-usa.com/collections/original-machine-guns#listpage

Most all machine gun parts of any machine gun from the Vietnam error or older can easily be legally sold, and will sell for very good prices as a seller. One should keep or sell all the parts possible for any unregistered machine gun except for the unregistered receiver. That part can be destroyed or made inoperable.

 

[RetiredUSNChief]

Yeah but attorneys are so expensive. They'll charge you an arm and a leg for a 10 minute phone call.

I am reliably informed by a qualified individual, that the reason attorneys are so expensive is because "they are cheaper than the alternative."

As I once told someone going through a particularly nasty divorce, who also had this same concern:

"You cannot NOT afford to have an attorney."

There are times when you need to do whatever it takes to get an attorney working for you. It may take a few years of payments, but bite the bullet and do it.

 

[GaryNC]

As I once told someone going through a particularly nasty divorce, who also had this same concern:

"You cannot NOT afford to have an attorney."

There are times when you need to do whatever it takes to get an attorney working for you. It may take a few years of payments, but bite the bullet and do it.

From someone that has been divorced twice, get the best attorney that you can.
In a divorce, let her have as much as she wants that your attorney agrees with.

 

[CapnMac]

Sorry im new to this. What makes a firearm NFA?

The National Firearms Act of 1934 separated firearms into two broad Types.
Title I covers most firearms.
Title II covers firearms that are defined as Machine Guns, Short-Barreled Rifles (SBR), Short-Barreled Shotguns (SBS), Destructive Devices, silencers, and Any Other Weapon (AOW)--which only means things not specifically Title I firearms. By change of the Code of Federal Regulations, "bump stocks" were added to Title II.
Clear as mud yet?

"NFA" is used, at least in the context of this thread to mean full and selectively automatic weapons, and certain military items, like mortars, bazookas, grenades, and the like.
NFA also includes other things, like silencers/suppressors, many riot-control devices, shortened barrel weapons and a host of other things.
I hope that helps.

 

[Gaujo]

Just a thought....

But if you find an unregistered machine gun that grandpa used in ww2 or korean war or even vietnam war hidden when he passed, and you didnt know about it, obviously no one else does either. Its managed to go 50+ years without it being discovered and confiscated and grandpa going to jail.

Either disassemble it, dispose of the receiver. And sell the parts. Since the parts arent illegal. Or go hide it somewhere that a question of who it belongs too or who is in possession of it is unprovable.

I own a 1000 acres, unless the ATF or police know where to look. I doubt they could ever find anything! Lol

Sadly Im not lucky/unlucky enough to ever come across something like this lol

I don't think I would, as I have other NFA items and this action puts all of them at risk. If I knew for a fact it was unregistered, I would destroy the receiver, and have it remade with all the original parts as a semi-automatic on a new receiver. Or, have it made into a non firing replica. It would still be grandpa's gun with all those parts and way better than selling as a parts kit or leaving behind to cause more trouble for your descendants. Remember that a charge like this probably means you loose all your firearms and your right to possess them in the future.

The one thing I logged in to add is this: If you find one, do as others said and use a lawyer as an intermediary. Give them the gun model and serial number, and a likely range of when it could have been registered. If it's a war bringback, that's the mid 40s for WWII, early 50s for Korea, etc. Then mention it could have been reregistered in the amnesty in 1968 i believe that was. The ATF is capable of validating if an item is on the NFA registry if they still have their records, and I do not know this for sure, but it may be possible for that lawyer to get a copy from the ATF if the lawyer is the executor of the deceased's estate. Unfortunately old ATF records seem to be missing some of the time according to the ATF's own court testimony, so without your original form 4 copy this is a maybe, but it's worth trying.

This is the key bit: "We may lawfully provide registration information to the executor of an estate. If there is any question regarding the registration status of the firearms in the estate for which you are assisting the executor, advise the executor to contact the NFA Branch directly and provide proof of his or her appointment as executor."

Stating that you believe it's registered and are simply trying to get a replacement of the lost form 4 may also place you on more solid legal footing as well in the interim. I don't now though, as I'm not a lawyer. In any case I would break it down into it's components as much as reasonably possible such that it's clearly not a functioning firearm in the meantime. You should maintain control and possession of the receiver and only what you cannot easily disassemble from it, and store the rest of the parts at another secure facility you do not have access to, such as a relative's safe you do not know the code to.