Every Gun Owner Should Consider a Gun Trust
By now, I’m sure most of you are familiar with the term “gun trust.” People often assume the process of establishing a gun trust, like many legal processes, is costly and time-consuming, and maybe even unnecessary. Plus, if you don’t own a museum-quality collection of rare and expensive weaponry, why would you need a gun trust, right? The truth is that most gun trusts are relatively inexpensive, fairly simple to set up, and serve a variety of useful purposes, regardless of the value and extent of your collection.
The majority of gun trusts are drafted for one reason: to avoid many of the requirements imposed by the ATF on an individual seeking to obtain or manufacture a Title II firearm. Of course, Title II firearms, such as silencers (aka, suppressors) and short-barreled rifles and shotguns, are perfectly legal to own as an individual, a business entity, or a trust. However, the ATF requires an individual-applicant to submit fingerprints, a photograph and the certification of the chief law enforcement officer (“CLEO” ) in the applicant’s home area. Few CLEOs will agree to this, usually out of reluctance to subject themselves to any possible liability in the event the firearm is ever misused, or due to a lack of time or resources to properly review applications. However, those same requirements are currently not imposed on similar applications submitted by a Trust or other legal entity, such as a corporation or LLC.
A gun trust is typically drafted with a schedule of assets attached, but it does not have to be filed of public record, and can and should be kept completely confidential. Unlike a gun trust, corporations and LLCs are typically required to maintain detailed annual records and file documents with the Secretary of State for public record. Understandably, most gun owners are reluctant to provide the government with a list of their firearms, not to mention file such a list of record for the world to see. The creator of a gun trust, called the “Settlor,” is thus able to keep this information private.
Other than simplifying the ATF application process and enabling the Settlor to maintain privacy regarding his assets, one of the greatest benefits of the gun trust is that it can authorize persons other than the Settlor to possess the firearms held in trust. An individual to whom a Title II firearm is registered is the only person that may legally possess that particular firearm. But any properly appointed trustee of a gun trust, whether a spouse, sibling or adult child, has the authority to use and possess the firearm. The appointment and removal of trustees is simple and can be done whenever necessary at the Settlor’s discretion.
There are plenty of recent examples of our government’s desire to limit or ban the transfer of certain types of firearms and ammunition. A gun trust may offer continued protection of your assets in the event that transferring Title I or Title II firearms is ever prohibited. Upon the death of an individual, all assets of his or her estate will necessarily be transferred to another, whether by devise or inheritance. However, when a gun trust is established, assets held in trust are not immediately transferred upon the death of the Settlor, but continue to be held in trust for the beneficiaries according to the terms of the trust. Believing the government may one day ban the transfer of certain types of firearms, many people value the gun trust as a means of protecting those firearms by avoiding an immediate transfer upon the Settlor’s death.
There are also some misconceptions about what a gun trust can accomplish. Transferring certain firearms to a gun trust will not enable the Settlor or trustee to possess those items in a state or jurisdiction where such possession is illegal. For instance, a Settlor of a Texas trust who has an “assault weapon” or a machine gun in Texas, cannot appoint a New York trustee and thereby enable him or her to possess the assault weapon or machine gun in New York. Possession of such firearms is largely prohibited in New York and the existence of the gun trust will not enable the side-stepping of state law in that regard. Violation of federal firearms laws is a serious matter. Care should be taken to understand ATF regulations and what a gun trust can and cannot accomplish. For example, even the transportation of a Title II firearm into a state where it can be possessed legally still requires prior approval from the ATF.
Most of my clients are pleased to hear that the cost of drafting a gun trust is reasonably low considering the benefits. Generally, I have found that the average gun owner can hire a knowledgeable attorney to answer questions, consider all relevant circumstances and draft an effective, personalized gun trust for somewhere between $250 and $350. Of course, there are websites where a person can answer a handful of questions and have a computer fill in a blank trust in seconds for less than $75. Unfortunately, the phrase “you get what you pay for” is often applicable to these online legal document sites. A well-drafted gun trust should contain provisions which educate and instruct Trustees on how to properly administer the trust in compliance with the NFA and other applicable state and federal laws. Too many of these “budget trusts” contain few educational provisions and offer little or no guidance as to the duties and obligations of the Trustees. At the other extreme, a person can pay upwards of a $1000 for a highly sophisticated trust with every bell and whistle. Very few people seeking to set up a gun trust come to me with cookie-cutter circumstances and zero questions about the process. Most clients have questions or special circumstances that are best answered or addressed by an attorney who can prevent the Settlor from establishing a trust that violates federal or state law, or was never valid to start with.
It’s easy to see why the use of gun trusts has become so prevalent over the last several years. ATF statistics reveal that roughly half of all recent applications to make or transfer a Title II weapon were filed by legal entities, many of which were gun trusts. Whether you are looking for a simpler way to deal with the ATF in applying for the transfer of Title II weapons or simply want to protect your firearms and ensure they are available for your family after you are gone, a gun trust is a practical and convenient tool for any gun owner to consider.