“Taxes are a heavy component of estate planning, but it is important to be alert for other issues.”
Proper estate planning for your assets depends, in large part, on what those assets are. Common assets in an estate include the obvious, such as real estate, collections, cash, brokerage accounts, retirement funds and stock portfolios. However, there can be less obvious assets requiring special attention. A recent article through Forbes points this out with a fairly common example that is all too easily forgotten: the special estate planning problem of guns.
Guns are as natural to own for some as any other asset is. Indeed, to some, their firearms collection is really more akin to an art collection. That noted, under the law, passing down your firearms to your heirs may trigger a different set of laws than passing down your tools set or the painting in your hearth room.
Firearms are highly regulated at both the federal and state levels. Consequently, the laws and regulations need to be followed, particularly if the firearms will be crossing state lines. Passing down firearms to heirs can take time and require the approval of several parties, such as the chief law enforcement officer for the respective jurisdictions.
Enter the “gun trust.” This can be a simple and powerful tool to pass down your firearms. Practically speaking, it is a special purpose revocable living trust. At its formation, the owner of the trust is both trustee and beneficiary. At the owner’s death, the trust property (i.e., firearms) is passed down to the lifetime and remainder beneficiaries by the successor trustees. Of course, trust or not, there are some hard and fast rules imposed by the National Firearms Act and all parties have to comply with them (or risk incurring serious fines and possibly even forfeiture of the right to bear arms).
Your firearms (and other atypical estate assets), may hold a unique status under federal and state laws. Make sure you comply with any law governing their transfer, as part of your estate planning.
Reference: Forbes (September 22, 2011) “Gun Collections Pose Special Estate Problems”