CareersAs seen in the November 7-13, 2016 issue of Crain’s Cleveland Business.
Of all the unique assets that may be covered in the estate planning process, firearms perhaps present the most unique set of challenges and considerations. Owners of firearms need to make sure they disclose said ownership upfront in the planning process and seek counsel from an attorney who knows the right questions to ask. Important considerations include the type of firearm involved, its value, background on the beneficiary and location of the beneficiary.
There are multiple types of firearms and firearm accessories–each subject to different rules and regulations on the federal, state and local levels. While many of these issues may not arise until the individual dies and the estate or trust is being administered, they need to be considered when drafting the estate planning documents.
Firearms not subject to the National Firearms Act (NFA) are the most commonly owned and include hunting rifles and pistols, among others. Two primary issues could arise when attempting to transfer ownership of these types of firearms–either the beneficiary is disqualified from owning a firearm because of being a felon or the particular firearm may be illegal in the state where the beneficiary lives. In addition, consideration should be given to whether the firearms should pass through probate or be transferred into a trust upon death because of the laws regarding the transferring of firearms.
Of all firearms, Title II firearms create the most difficult estate planning issues. Title II firearms fall under the authority of NFA and include such firearms as sawed-off shot guns, silencers and machineguns. One strategy for passing on Title II firearms is to have a firearms trust own the firearms. If a firearms trust is not used, a new background check and registration paperwork must be filed for each firearm when it passes to a beneficiary. When an owner of NFA firearms passes away, his or her attorney must inform the trustee or executor as to who can possess the firearms during the administration process and where the firearms can be legally and properly stored. If the firearms are improperly transferred or possessed, an individual can be fined up to $250,000 and receive up to 10 years in prison.
Without a doubt, there are many issues that can arise from passing on firearms. But good communications early in the estate planning process with an attorney knowledgeable about special firearms considerations will help avoid problems later on.
Kevin McKinnis is an attorney in the tax and wealth practice group of Cleveland-based Walter Haverfield LLP.