Transferring NFA trust items to out-of-state beneficiary?

[Elkins45]

This is an NFA question but since it's mostly a legal one I thought I would post it here first.

I own a few short-barrelled rifles and silencers as part of an NFA trust that lists myself and my wife as trustees. The primary beneficiary who will eventually receive all my NFA items is her brother who lives in another state. I'm reasonably certain I will die before her and I'm 100% certain she has no interest in retaining all my gun stuff after I'm gone so I'm trying to put together instructions for her.

What's the correct way to effect the transfer upon my death? Does she as trustee just submit a Form 5 for each? I'm pretty confident she can't just hand them over to him. I thought about adding him as a trustee so he could possess them without a transfer, but then wouldn't he need to fill out the out of state permission forms every year?

I'm in KY and he's in FL if that makes a difference.

 

[AlexanderA]

One of the purposes of the trust is to avoid a Form 5 transfer upon the death of the trustee. The trust just continues with the alternate trustee.

 

[rust collector]

Depending upon the trust language, you may be able to add the brother in law as a trustee. No transfer necessary upon your demise--guns stay in the trust which continues on its merry way with successor trustee. Wife could resign, although the better practice is to have at least a couple other trustees designated and each one added must be qualified (in this case sooner rather than later).

 

[Elkins45]

Depending upon the trust language, you may be able to add the brother in law as a trustee. No transfer necessary upon your demise--guns stay in the trust which continues on its merry way with successor trustee. Wife could resign, although the better practice is to have at least a couple other trustees designated and each one added must be qualified (in this case sooner rather than later).

The trust’s address is in Kentucky. Can he take them to Florida permanently with no transfer? Or can he just change the address of the trust?

 

[AlexanderA]

The trust’s address is in Kentucky. Can he take them to Florida permanently with no transfer? Or can he just change the address of the trust?

Assuming that the items are legal under Florida state law, he would file ATF Form 5320.20 for a permanent interstate change of location. That's not a "transfer."

 

[12Bravo20]

And if you decide not to add your brother in law to the trust then everything would transfer through the executor of the will as discussed in the following thread. \

https://www.thehighroad.org/index.php?threads/another-inter-state-transfer-question.922150/

The difference in your case is that a tax free Form 5 would have to be filed for each NFA item. And the executor would hold on the the NFA items until the approved Form 5's come back.

 

[AlexanderA]

And if you decide not to add your brother in law to the trust then everything would transfer through the executor of the will as discussed in the following thread.

Whoa. Trust assets are not part of the probate estate and don't pass under the terms of a will. Therefore the executor is an irrelevant party here. In fact one of the reasons for setting up a trust is to avoid probate.

The referenced thread did not address a situation where the guns were held in trust.

Depending on the provisions of the trust, the surviving trustee (presumably the wife, in this case) could appoint an additional trustee. The trustees (again, pursuant to the provisions of the trust) could opt to terminate the trust, or to continue the trust. If the trust is terminated, then a Form 5 would be filed for a tax-free transfer to the beneficiary.

Note that if the trustees and beneficiaries are exactly the same (which would happen in this case if the wife appointed the brother-in-law as trustee, and then resigned her trusteeship), then the doctrine of "merger of interests" kicks in, and (depending on state law) the trust is automatically terminated.

Complications like this are why I'm not a fan of gun trusts (or any trusts, really). The problem specifically with gun trusts is that they're often set up by laymen, without the benefit of legal advice. You need the advice of a lawyer before setting up any kind of trust. Those boilerplate trusts are full of traps for the unwary.

 

[Elkins45]

Whoa. Trust assets are not part of the probate estate and don't pass under the terms of a will. Therefore the executor is an irrelevant party here. In fact one of the reasons for setting up a trust is to avoid probate.

The referenced thread did not address a situation where the guns were held in trust.

Depending on the provisions of the trust, the surviving trustee (presumably the wife, in this case) could appoint an additional trustee. The trustees (again, pursuant to the provisions of the trust) could opt to terminate the trust, or to continue the trust. If the trust is terminated, then a Form 5 would be filed for a tax-free transfer to the beneficiary.

Note that if the trustees and beneficiaries are exactly the same (which would happen in this case if the wife appointed the brother-in-law as trustee, and then resigned her trusteeship), then the doctrine of "merger of interests" kicks in, and (depending on state law) the trust is automatically terminated.

Complications like this are why I'm not a fan of gun trusts (or any trusts, really). The problem specifically with gun trusts is that they're often set up by laymen, without the benefit of legal advice. You need the advice of a lawyer before setting up any kind of trust. Those boilerplate trusts are full of traps for the unwary.

My trust was written by a lawyer, but I’m not sure if I still have access to his services. Regardless, as long as a permanent change of location can be filed that’s all I will need. Thanks.

 

[12Bravo20]

Whoa. Trust assets are not part of the probate estate and don't pass under the terms of a will. Therefore the executor is an irrelevant party here. In fact one of the reasons for setting up a trust is to avoid probate.

The referenced thread did not address a situation where the guns were held in trust.

Depending on the provisions of the trust, the surviving trustee (presumably the wife, in this case) could appoint an additional trustee. The trustees (again, pursuant to the provisions of the trust) could opt to terminate the trust, or to continue the trust. If the trust is terminated, then a Form 5 would be filed for a tax-free transfer to the beneficiary.

Note that if the trustees and beneficiaries are exactly the same (which would happen in this case if the wife appointed the brother-in-law as trustee, and then resigned her trusteeship), then the doctrine of "merger of interests" kicks in, and (depending on state law) the trust is automatically terminated.

Complications like this are why I'm not a fan of gun trusts (or any trusts, really). The problem specifically with gun trusts is that they're often set up by laymen, without the benefit of legal advice. You need the advice of a lawyer before setting up any kind of trust. Those boilerplate trusts are full of traps for the unwary.

WHOOAAAAA

I was just stating how things would be handled if there is NO trust involved.

But in the OP's case, yes adding his brother in law to the trust as a trustee is the best solution. Then the only paperwork needed will be a Form(s) 5320.20

 

[AlexanderA]

My trust was written by a lawyer, but I’m not sure if I still have access to his services.

What happens after the trust is initially set up could have consequences. For example, as I pointed out, if your brother-in-law ends up being the only trustee, and the only beneficiary, the trust automatically terminates and the guns are deemed to have been distributed to him (necessitating Forms 5).

Some states have abolished the merger doctrine by statute. New York did this in 1997. But from a cursory look, it appears that the merger doctrine is still good law in Florida.