Gun Trusts

Take-Away: If an individual owns some guns, or a gun collection, the use of a gun trust may make good sense to facilitate the use and transfer of such firearms on the owner’s death.

Background: There is a considerable amount of legal writing these days that promote the use of  a gun trust. Items like pistols, revolvers, rifles and shotguns are primarily governed by state law, but the laws of the various states differ greatly. Other firearms and accessories, like machine guns and suppressors (or silencers) are governed by the National Firearms Act, which require far more sophisticated planning, which can be best carried out through the use of a gun trust.

Bequest of a Gun: The bequest of a firearm is deceptively simple. The following considerations go into such a simple bequest of a gun.

First, the recipient of the bequest must be authorized to own the weapon. Is the recipient old enough under state law to own the weapon, or disqualified from owning a weapon under state law, e.g. the intended recipient is a felon, drug addict, or a non-U.S. citizen?  A background check will reveal an intended recipient’s  disqualification from gun ownership, which means that there should also be an alternate beneficiary, or beneficiaries, named in the gun bequest .

Second, the Personal Representative/Trustee of the decedent’s estate actually needs to have a federal firearms license just to be able to possess the weapon and to transfer it. Once again, state laws differ significantly on the ownership.

Third, the transfer from the estate fiduciary to the beneficiary can become highly complicated if the beneficiary lives in a different state. Crossing state lines with a weapon can become very problematic if the fiduciary does not work with someone who holds a federal firearms license.

National Firearms Act: This federal law governs more dangerous weapons, as noted above. More to the point, the ownerships of these dangerous weapons is allowed only if they are properly registered with the National Firearms Act of 1934 (NFA) and the  revision to that law by Title 11 of the Gun Control Act of 1968. An example of this registration requirement, a machine gun had to be lawfully possessed as of May 19, 1986. Ownership of newer weapons is not allowed. [Firearms Owner Protection Act of 1986.] Some states do not impose any additional restrictions on the ownership of NFA weapons, and they simply rely on the federal rules of registration. Yet other states add additional restrictions, and some states totally ban the ownership of NFA firearms by individuals. The Act also covers what are generally described as any other weapons (AOWs) which include cane guns, knife guns, pen guns, etc.

NFA Weapons: NFA weapons have serial numbers, and the owners must register them with the Bureau of Alcohol, Tobacco, Firearms, and Explosives (AFT.) Only one owner can use and possess NFA weapons, and the owner must pay a $200 tax stamp to transfer a registered firearm. AOWs require only a $5.00 tax stamp.

Beneficiary Registration/Qualification: There are requirements that a beneficiary of a firearm must meet to receive a NFA weapon. The conditions are pretty stringent. For example, the beneficiary of the firearm cannot use marijuana, even if the use of marijuana is legal in the beneficiary’s state. Nor can the beneficiary be convicted of certain crimes, more than just severe felonies, but even for some misdemeanors, like domestic violence may disqualify the beneficiary from NFA weapon ownership.

Fines: If a NFA weapon is not properly registered and the decedent’s estate fiduciary, or the devisee of the NFA weapon, is found holding the weapon, the fine imposed for such possession could be up to

$250,000 dollars, and the individual could be sentenced to up to 10 years in prison.

Registration: If an individual owns an unregistered NFA weapon and dies, the weapon cannot be retroactively registered with ATF. If such a weapon is found, and it is not properly registered, the weapon must be turned over to law enforcement and destroyed.

Gun Trusts: A gun trust is a generic term that is used with a revocable or irrevocable trust that is created to take title to firearms and firearm accessories. In either case, the gun trust should state that the settlor’s specific purpose in establishing the trust is to comply with the NFA and other identified laws that deal with weapons and firearms and their transfer.

Firearms Held in a Gun Trust: As a generalization, a gun trust is used to take title to NFA weapons. Examples of firearms that are frequently held in a gun trust include: short-barreled rifles; machine guns; short-barreled shotguns; silencers; bazookas; mortars; other extremely destructive devices. Other non-NFA firearms can also be held in the same gun trust, but the weapons owner must ensure compliance with all state and federal laws that concern the transfer of such firearms to the trust.

ATF: The ATF does not have to formally approve of a gun trust. However, a gun trust must be sent to the ATF when the gun trust applies for a tax stamp.

Disclosures: Every responsible person in the gun trust, i.e. the settlor and co-trustees, are required to submit photo cards, fingerprint cards and the responsible persons questionnaire for every NFA purchase.

Advantages of a Gun Trust: Some of the perceived advantages to the use of a gun trust include:

Future Transfers: If future laws prohibit or restrict the transfer of certain firearms, a gun trust may help because every trustee of the gun trust can possess or use the firearms. Thus, a gun trust may allow the weapon’s user to sidestep some future restrictions on possession or ownership.

Multiple Owners: More than one person can own and possess a firearm held in a gun trust. If multiple trustees are named for the gun trust, each trustee will possess the right to use or possess the weapons held in the name of the trust.

Distributions on Death: A gun trust can be established to continue beyond a user’s death, which allows the trust’s beneficiaries to use and possess the firearms held in the trust without having to pay the $200 transfer tax to the ATF, file forms, be fingerprinted, and request permission from local law enforcement authorities. Both the trustees and the trust beneficiaries will have whatever rights that are granted to them under the gun trust instrument.

Avoiding Probate: If specific individuals are named as beneficiaries for the firearms held in the gun trust, the firearms do not have to go through probate, a public process, and the firearm can pass directly to the named beneficiaries. As noted above, having the firearms held in the trust can also avoid legal issues for the estate’s Personal Representative, since the trustee manages the trust, who presumably will be well versed in federal and state gun laws to avoid that fiduciary inadvertently passing the weapons to someone who cannot legally possess the weapons.

Avoid Criminal Liability: In the case of individual firearm ownership, mere access to the firearm by a friend or family member may be a felony. Appointing these same friends or family members as trustees of the gun trust avoids this criminal liability trap.

Limited Law Enforcement Involvement: Often there is no signature required by the chief law enforcement officer.

Disadvantages to a Gun Trust: There are some definite disadvantages that a gun owner needs to consider before adopting a gun trust.

Recognition: Gun trusts are not legally recognized in all states.

Complexity: The most common complaint about a gun trust is that it is highly complex and sometimes difficult for individual beneficiaries to fully understand; there is a lot of paperwork and planning involved. It is definitely not a ‘pull a trust from off the shelf, a one form for every situation.

Background Check:  In addition, the trustee of the gun trust will need to be able to pass a background check.

Different Rules Among States: Gun trusts vary from state to state, so it is important to work with an estate planning attorney who is familiar with the state’s laws that pertain to firearms.

Conclusion: A gun trust is not for every firearm owner. If, however, an individual owns a substantial collection of firearms, or NFA firearms, and it is likely that such a collection or firearms  will remain in the family long after the initial owner’s death, then a gun trust could make a lot of sense, especially if multiple family members are expected to periodically use the firearms. There is an expense, and added complexity that must be factored into the decision, but a gun trust is something that a firearm owner needs to strongly consider due to the multiple advantages of such a trust.