NFA Firearms Trusts: A Guide to Rules, Laws, and Common Mistakes and Pitfalls.
DISCLAIMER: This blog is for informational purposes only and does not constitute legal advice. Always consult with a licensed Texas attorney before taking ANY action related to firearms ownership. This post is not intended to promote the use of firearms for unlawful purposes. This post does not create an attorney-client relationship.
In Texas, where the right to bear arms is both a constitutional right and a cultural cornerstone, many individuals seek to legally possess firearms regulated under the National Firearms Act (NFA) of 1934. These regulated items include suppressors, short-barreled rifles (SBRs), short-barreled shotguns (SBSs), machine guns, and "any other weapon" (AOW) as defined by the statute. While the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) allows for the transfer of such firearms through a trust structure known as a National Firearms Act (NFA) Firearms Trust, the process is riddled with legal nuances and potential landmines, especially when executed without proper legal guidance.
This blog aims to help individuals understand the mechanics of NFA Firearms Trusts and avoid common pitfalls that could lead to legal complications, including criminal liability or the loss of firearm rights. This is not a comprehensive list of every item and common mistake that may arise when putting together an NFA trust.
What Is an NFA Firearms Trust?
An NFA Firearms Trust is a specialized trust created under state law (in this case, Texas) to legally own and manage NFA-regulated firearms. Unlike a standard living trust, an NFA Trust must comply with both federal law and Texas state law (Texas Trust Code [specifically Tex. Prop. Code Title 9, Chapters 111-117, and 121-124]). The trust is established by a Settlor (the individual creating the trust), who appoints Trustees (typically two or more, who can possess firearms registered to the trust) and Beneficiaries (who do NOT have the right to possess the NFA items registered to the trust).
Why Should I Use an NFA Trust?
Multiple Individuals Can Use the NFA Item
An NFA Trust allows multiple trustees to possess and use the NFA item as long as they are not prohibited from possession of firearms under state or federal law. If there are multiple trustees listed when a Form 4 application is filed on behalf of the trust, the settlor and each trustee will have to file responsible person paperwork for the transfer.
Increased Control Over Inheritance of NFA Items
Upon the Settlor’s death, the trust can then distribute the regulated items to beneficiaries. However, a Form 5 transfer must be completed by the surviving trustees or successor trustee and approved by the ATF before the trust can distribute any NFA item to a beneficiary. Non-compliance with ATF Form 5 transfer requirements upon the death of a Settlor is a major pitfall that trustees can fall into if they are not careful.
ATF Final Rule 41F allows for Ease of Multiple Transfer into a Trust
Under ATF Final Rule 41F, if a successful transfer into the trust has occurred within the past 24 months, a subsequent Form 4 application of an NFA item into the trust is not required to include responsible person questionnaires, fingerprints, or photographs of the responsible person or persons (as long as nothing has changed regarding those responsible individuals). If someone is planning to obtain several NFA items and put those items into an NFA trust, this can be a significant benefit. However, an individual must notify the NFA as part of the Form 4 application transferring an NFA item to the trust that they are exercising the ATF Final Rule 41F exemption. NOTE: This exemption does not apply to individuals, only trusts.
Common Pitfalls to Avoid When Drafting an NFA Trust in Texas
Here are common pitfalls, many of which stem from confusion surrounding federal and state law, which can lead to criminal charges and/or loss of firearm rights:
1. Drafting Without the Involvement of Legal Counsel
Many individuals attempt to use online templates or rely on third-party services to create their NFA Trusts. This creates significant risk. While the ATF does not require an attorney to draft the trust, the legal complexity of firearm trusts necessitates professional oversight, especially when state and federal laws intersect.
Inadequate drafting of the trust may lead to:
● Invalid trust documents
● Non-compliance with ATF regulations
● Potential criminal liability under 18 U.S.C. § 922(g) (possession by a felon)
2. Including Non-Compliant Trustee or Beneficiary Designations
● Trustees must be U.S. citizens or legal residents. Non-citizens cannot serve as a Trustee.
● Beneficiaries must not be prohibited persons under 18 U.S.C. § 922(g). This includes but is not limited to: individuals convicted of a felony, domestic abuse, or those adjudicated mentally ill.
● Beneficiaries must be at least 18 years old for suppressors and 21 for machine guns.
Failure to verify these qualifications may result in criminal prosecution or firearm forfeiture.
3. Improper Trust Structure
Some drafters create trusts that are not recognized by the ATF. The trust must:
● Name the Settlor, Trustees, and beneficiaries clearly.
● Signed by Settlor, Trustees, and the trust must be notarized.
The Trust must not allow "any person" to possess the firearm. Broad language that does not specifically designate trustees and/or beneficiaries is problematic. Attorneys must ensure that trust documents do not enable unlawful conduct.
Additionally, poorly drafted gun trusts may have “merger doctrine” issues, where the same individual is named as the sole settlor, sole trustee, and sole beneficiary of a trust. Under the merger doctrine, such designations can make the trust invalid, thereby creating an immediate possession issue. With the trust invalid, the individual now unlawfully possesses the NFA item, creating a significant legal headache.
4. Failure to File the Correct Forms
ATF Form 4 is the most common form used to transfer an NFA item and to register it with the trust. ATF Form 5 must be used to transfer NFA items from a trust to beneficiaries upon the death of the Settlor.
The Trust document, and any amendments or schedules, must be submitted to the ATF along with the Form 4. There are also other required documents, including: 5320.23 Responsible Person Questionnaire, Form FD-258 fingerprint cards, and identification photographs.
5. Not Notarizing the Trust
The trust document must be notarized. In Texas, notarization must comply with state law. Failure to properly notarize the trust renders it invalid.
6. Ignoring State-Specific Considerations
Texas law recognizes the validity of trusts created under Texas law. However, Texas does not recognize "firearms trust" as a distinct legal entity—it must be structured as a valid revocable or irrevocable trust under the Texas Trust Code in the Texas Property Code.
Final Thoughts
The use of an NFA Firearms Trust can be a powerful tool for lawful firearm ownership in Texas. However, it is not a “get-out-of-jail-free” card. Missteps in drafting or compliance can lead to federal criminal charges, firearm forfeiture, and loss of Second Amendment rights.
Key Takeaways:
● Do not rely solely on online templates.
● Ensure the trust is drafted by a Texas-licensed attorney familiar with both federal and state laws.
● Verify that all Trustees and Beneficiaries are legally eligible.
● File all required forms with the ATF.
● Keep trust documents notarized and properly maintained.
If you are considering an NFA Firearms Trust in Texas, consult with a qualified attorney. Compliance with the NFA and ATF rules, as well as all state and federal regulations, is mandatory.