The ABC’s of Gun Trusts

Responsible gun ownership includes: physical security, range security, and transfer security. This blog post focuses on the ABC’s of responsibly possessing and transferring weapons via a Gun Trust. A Gun Trust enables the owner of a firearm to responsibly possess and transfer both regular weapons and NFA Firearms.

Overview

Gun trusts, also known as firearms trusts and NFA trusts, are an excellent way to legally purchase and own both NFA Firearms and regular firearms. NFA Firearms (also called “Title II Firearms”) are guns and other items regulated by the National Firearms Act (the “NFA”). The NFA was enacted on June 26, 1934 and, in general, imposes a statutory excise tax on the manufacture and transfer of certain firearms and mandates the registration of those firearms. Specifically, the NFA regulates the sale, use, possession, and transfer of: machine guns, short-barreled rifles, short-barreled shotguns, silencers, destructive devices and “any other weapons” (“AOWs”).

It is legal to own NFA Firearms in most states. In addition to state regulation, federal law regulates these items under the NFA. Individuals, business entities, and trusts are permitted to purchase NFA Firearms if allowed by state law. To obtain permission to transfer or make these items, the Bureau of Alcohol, Tobacco, Firearms, and Explosives (the “BATFE” or “ATF”) requires completion of either a Form 1 or a Form 4, along with a payment of $200 for a tax stamp.

How does a gun owner benefit from a Gun Trust?

No CLEO signature required. The ATF requires that all individuals obtain approval from their “Chief Law Enforcement (“CLEO”) as part of the application process to obtain a Title II Firearm from another individual or a Class 3 dealer. Many CLEOs across the country are refusing to sign or even acknowledge the ATF forms. At present, there is no real legal remedy to force theses CLEOs to review the ATF forms. In most states a Gun Trust does not require the CLEO’s signature to obtain approval on a Form 4.

No fingerprints or photographs are required. When using a Gun Trust to acquire Title II firearms, no fingerprints or photographs are required. This is a cost savings and can also significantly decrease the time required to take possession of the items. Often fingerprints have to be retaken because they are not acceptable for the FBI’s criminal database.

Privacy. Individuals who submit their ATF forms to their CLEO are often concerned about who will have knowledge of their firearms. They also express concerns that they will come under additional scrutiny because the police will have knowledge that they are in possession of these more restricted firearms. In most states, when using a Gun Trust, neither the CLEO nor local police departments are given notice that you will be in possession of or own NFA firearms. The same holds true for non-NFA firearms.

Incapacity. If you become incapacitated, your family or friends are often the ones to help you. In doing so, they may come in contact with NFA firearms and unknowingly put themselves at risk of violating the NFA. A Gun Trust helps protect these individuals from violating the NFA by providing them with clear instructions on what they are and are not permitted to do with both NFA firearms and regular firearms. Interestingly, many non-Gun Trusts actually instruct people to violate the NFA.

No Probate upon Death. When you die your individually owned firearms will be part of your “probate estate” if they pass under either a will or intestacy. Probate proceedings will be necessary to transfer your weapons to your heirs and/or descendants and are part of the public record. A Gun Trust, in contrast, is not subject to probate proceedings and is therefore not made part of the public record. Your Gun Trust beneficiaries will continue to be protected because the Gun Trust gives guidance as to how and under what circumstances the weapons can be legally transferred. If you have children, a Gun Trust has specific provisions to protect them and make sure that they do not receive the firearms if they live in a location where it is illegal to possess NFA firearms. Most importantly, a properly-drafted Gun Trust can help to ensure that your children reach a sufficient level of maturity and responsibility prior to possessing any of your firearms, both NFA and non-NFA firearms.

Co-Owners and Authorized Users. If an individual NFA firearms then they are the only one permitted to use or have access to them. Many people incorrectly believe that it is okay to let others use their NFA firearms when in their presence. This is incorrect. The ATF considers this to be a “transfer” and is a clear violation of the NFA. The same could be said for giving the combination to your firearms’ safe to a spouse or someone you know. This could be considered as a “constructive possession” of the NFA firearm, and is similarly an improper transfer and therefore violation of the NFA. If you use a Gun Trust, however, you are able to designate additional owners and authorized users as “beneficiaries” of the trust so that they can be in legal possession of the NFA firearms.

Reducing the Risk of Legal Changes. Many groups are attempting to limit the ability to transfer firearms – of any kind – to family members or friends. With a Gun Trust, an adult child, family member, or friend can be made a co-beneficiary of the trust. Put another way, the Gun Trust beneficiaries can be changed without triggering the “transfer” provisions of the NFA.

Conclusion

A properly-drafted Gun Trust is not set up the same way as a standard trust. There are a number of very important differences that substantially affect the rights and duties of both the trustee and beneficiaries; differences that keep these people on the right side of the NFA. Put another way, a Gun Trust is a stand-alone trust that should be used in conjunction with standard estate planning vehicles (wills, revocable living trusts, asset protection trusts, irrevocable life insurance trusts, dynasty trusts, etc.).

As always, if you have an further questions about this post or any other issues relating to estate planning, asset protection, or tax law (domestic and international), please don’t hesitate to contact me. As well, if you would like to learn more about gun trusts online, please feel free to visit our website devoted specifically to this unique area of trust law: www.trilogyguntrust.com.

Marion A. Keyes, J.D., LL.M. (Tax)

mkeyes@trilg.com
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