Laura Wilson recently joined our firm as a partner, specializing in real estate, elder law and estate planning. A very specific area of estate planning is the creation of a gun trust.
1. What is a gun trust?
Gun trusts are effective estate planning tool to ensure the proper possession, ownership and transfer of NFA weapons. The trust allows multiple trustees to legally possess and own Title II weapons. They also allow the to establish beneficiaries of the trust in order for the NFA weapons to eventually be passed onto heirs. A proper trust can also ensure that NFA weapons are appropriately transferred or maintained upon death of the settlor by the trustees.
2. Who needs a gun trust?
Gun trusts are advisable if you want to own a Title II weapon. Title I weapons are generally those you can buy at a sporting goods store. Title II weapons are regulated by the NFA and require a specific tax be paid to and background check from the Bureau of Alcohol Tobacco and Firearms (BATF) before you can own the weapon. Title II weapons include: Silencers/Suppressors, Machine Guns, Short barrel rifles, Short barrel shotguns, any destruction device and AOW (All Other Weapons).
3. Why, in general, do you need a gun trust?
a. In order to possess or own any weapon, a person must comply with all state and federal laws. However, to possess or own a Title II weapon, there are additional requirements imposed upon a person. Namely, only the person who applies for the Title II weapon may own or even possess that weapon. For instance, if a husband buys a Title II weapon and his wife possesses that weapon, she could be in violation of federal law and state laws. This is why it is critical to have a properly drafted and valid NFA gun trust.
b. A proper NFA gun trust can have multiple settlors of the trust, establish multiple trustees of the trust who are legally able to possess Title II weapons and can lay the proper groundwork to establish beneficiaries of the trust. Multiple people can be put into a gun trust, and so long as they are trustees, they are entitled to possess a Title II weapon that is contained in the trust. However, to become a Trustee, the person must qualify to own a weapon under state and federal laws. A gun trust does not circumvent state and federal requirements to legally own or possess a weapon. Trustees of a gun trust need to be careful as the assets in the trust cannot pass to beneficiaries upon the death or incapacity of the settlor as they do under a normal trust. There are special obligations the trustees have to ensure that the beneficiaries are legally able to possess or own the weapons under state and federal laws.
4. When do you need to set it up? Why is it better to do it now rather than later?
In order to place a NFA weapon into a trust, the trust must be established before you try to make the purchase through your authorized firearms dealer. In a recent ATF final rule 41f that is set to take effect around July 13, 2016, all trustees of a valid NFA gun trust will be required to submit fingerprints and photographs to the ATF. The NFA gun trusts are not being abolished, as is rumor, but the requirements and the expense to trustees of an NFA trust are being expanded. Before, the ATF required proof of a valid NFA gun trust existed as part of an application process for a Title II weapon. However, the new final rule not only requires there be a valid NFA gun trust, but also that each “responsible member” of the NFA gun trust be photographed, fingerprinted. It is beneficial to set up a trust before 41f goes into effect so as to not have to have each responsible member fingerprinted and photographed. 41f is not retroactive, so if your application is in before July 13, 2016, your application will be assessed under the current rules, not the new rule change.
5. Why set up a gun trust?
Gun trusts ensure the proper possession, ownership and transfer of Title II weapons. A proper trust can also ensure that Title II weapons are appropriately transferred or maintained upon death of the settlor by the trustees. Using forms from the internet or fill-in-the-blank forms can leave you with an invalid trust, that is why it is important to make sure that someone skilled in trusts and estates law help set up a proper trust.