Federal and state law can create significant criminal liability exposure to clients, fiduciaries and planners when firearms are involved. There are three principal areas of law involved:
1. The Gun Control Act (18 USC Chapter 44). This federal law prohibits interstate transfers of firearms, except among licensed manufacturers, dealers and importers.
2. The National Firearms Act of 1934 (26 USC 53). This federal law requires registration of owners of, and payments of excise taxes on transfers of, certain weapons alternatively referred to as ‘Type II weapons,’ ‘Class 3 weapons,’ and/or ‘NFA weapons.’ These include machine guns, short-barreled rifles, short-barreled shotguns, silencers/suppressors, destructive devises and "any other weapons."
3. Applicable state laws.
Particular problems that attorneys and fiduciaries should be on the lookout for include:
1. Being aware that directions in testamentary documents for the disposition of firearms can run afoul of the above restrictions on transfer, possession, and use of firearms.
2. Trustees, executors and personal representatives will need to determine registration status as to firearms coming within their ownership or control. Unregistered firearms may have to be turned over to law enforcement, since retroactive registration may not be available.
3. The fiduciary may need to register itself. This process includes filing forms with the Bureau of Alcohol, Tobacco and Firearms, paying required taxes, and obtaining certifications from a local law enforcement officer. Note that obtaining such certifications may not be possible in many jurisdictions – gun trusts are often touted as a method of avoiding such certification requirements.
4. There are prohibitions on transfers to certain types of persons who may not lawfully possess firearms, including felons, aliens, and persons with capacity issues.
Some prohibitions on interstate transfer and on excise taxes may not apply to transfers occurring via inheritance.
Clients facing issues with firearms may want to consider the availability of gift annuities from the National Rifle Association in exchange for contribution of firearms (go here for more information).