Gun Trust Misfires and Myths

The History and the Problem of Gun Trusts.

Just after the end of Prohibition, in 1934 Congress passed the National Firearms Act (“NFA”)  The NFA has been amended from time to time.  There was the Gun Control Act of 1968, the Firearm Owners Protection Act of 1986, the Brady Hand Gun Violence Protection Act of 1993, and the NICS Improvement Act of 2008.  In a nutshell, the NFA uses a transfer tax and registration requirements to limit or prohibit the use, manufacture and/or sale of “NFA Firearms” which include suppressors (silencers), short barrel shot guns and rifles, fully automatic guns, and certain explosive devices.

The prohibition against transfer of NFA Firearms is a problem for estate planners because such a transfer is unavoidable at the death of an NFA Firearm owner.  Gun Trusts have been used as an attempt to reduce the paperwork required in complying with the law.  The Department of Treasury has previously issued guidelines to point estates in making such transfers within the limits of the law.   More recently,  the Department of Justice ATF issued Final regulations which clarify a number of issues including some pertaining to Gun Trusts

One indicator that the laws of a nation are “corrupt” is when an ordinary person cannot tell what they mean or how they work.  This may provide at least temporary job security for lawyers, but it can also be frustrating.  The purpose of this article is to dispel some of the myths and confusion about the need and use of Gun Trusts in light of recent changes in the law.

Myth # 1: Leaving Firearms to Heirs Requires a Gun Trust.

You do NOT need a Gun Trust to transfer most firearms to your heirs.  A Gun Trust is only used for  “NFA Firearms” which include suppressor (silencers), short barrel shot guns and rifles, fully automatic guns, and certain explosive devices.  If you are leaving a weapon that is not an NFA Firearm, there is no need for a Gun Trust.  WARNING:  The definition of an NFA Firearm is political, and therefore subject to change by the politicians.  Because it could change, this is something to watch.

Myth #2: A Gun Trust reduces the paperwork required to transfer an NFA Firearm.

Reducing paperwork was one of the original purposes of a Gun Trust.  They were invented by estate planners.  Trusts are the engine that drive estate planning.  Typically, if a person owns property at death, the property is subject to probate.  If a Trust owns the property instead of a person, there is no probate.  Using the same logic, if a person transfers an NFA Firearm because they died, the laws and regulations restricting (or taxing) the transfer apply.  But if a Trust owns the NFA Firearm rather than a person, theoretically there is no transfer at death and the restrictions can be avoided.  Supposedly any well crafted estate planning Trust could operate in this manner.  In particular, the hope has been that if a Trust owns the NFA Firearm, there is no need for fingerprints, photo ID’s, back ground checks, and the signature of the Chief Law Enforcement Officer in the area where the NFA Firearm owner lives.

That was the theory.  Final regulations from the Department of Justice ATF result in the Gun Trust Misfiring and failing to hit its target of simplification.

Under the final regs, everyone who is a “responsible party” under the terms of the Trust must submit (1) fingerprints, (2) all relevant personal information, and (3) photographs, and pass a back ground check by the ATF and FBI.  Fortunately, “responsible parties” includes (1) parties that may direct the management and policies of the Trust (typically any then-serving trustee) and (2) persons who may possess an NFA Firearms under the terms of the Trust.  Merely being a beneficiary or a beneficiary’s use of an NFA Firearm under the supervision of a “responsible party” does not make a beneficiary a “responsible party”.  However, the scope of “responsible party” under a Trust may have the result of expanding the number of people who must do paperwork and a background check in connection the the NFA Firearm transfer.

This means a Gun Trust may increase the amount of paperwork required rather than reducing it.  Gun Trust Misfire!

Myth #3:  A Gun Trust enables the owner of an NFA Firearm to remain anonymous.

Even with a Gun Trust, the “responsible party” must make all the required disclosures and pass the background check to transfer an NFA Firearm.  Gun Trusts have never been a way to avoid the applicable law and regulations.  They were an attempt to comply with the law and regulations in a manner that required less paperwork.  The politicians, in their wisdom, have determined that more paperwork will protect us better.

Myth #4:  A Gun Trust prevents the local Chief Law Enforcement Officer from withholding consent.

Prior to the Final Regs, the consent of the local Chief Law Enforcement Officer (“CLEO”) was required to transfer an NFA Firearm.  The effect of this was that the local CLEO could arbitrarily withhold consent.  The result was different application of the federal rules in different locations.  That was the case with or without a Gun Trust.  With the Final Regs, the rules just changed.  Now, with or without a Gun Trust, consent of the CLEO is not mandatory.  All the other disclosures and back ground checks are still required.

Myth #5:  A Gun Trust makes it legal to own/transfer NFA Firearms anywhere in the U.S.

In addition to federal restrictions on the ownership or transfer of NFA Firearms, it is also necessary to comply with local laws.  While some states permit the ownership or transfer of NFA Firearms, others do not.  The laws vary from place to place.  A breakdown on which states permit silencers can be found here.

Myth #6:  Gun Trusts are used by criminals to hide from law enforcement.

Gun Trusts have all the same disclosure and background check requirements that apply to individual ownership and transfer of NFA Firearms.  If anything, under the new Final Regs. Gun Trusts have expanded disclosure requirements, and leave no room to conceal unlawful activities from law enforcement.  While there have been a limited number of instances in which individuals who own NFA Firearms have committed crimes, according to the ATF’s comments in the Final Regs, there is no evidence that crimes have been committed with NFA Firearms.  The existing restrictions on NFA Firearms have been 100% effective at eliminating criminal acts.  When the politicians unilaterally expand such restrictions with no result other than making it more burdensome for law abiding persons to own firearms, it logically follows that the restriction must have some purpose other than reducing crime.

So What Does it Mean?

Lawyers and politicians have forever been engaged in a strange dance where each tries to get around what the other wants to do.  Politicians impose taxes.  The people engage Lawyers to find loop holes.  Politicians exercise power, which translates to controlling the use of private property.  Lawyers (and their clients, the people) believe they should decide for themselves how to use their private property.  Lawyers are skilled at playing both sides of this game, and move back and forth between political office and private practice.  When the disagreement between politicians and the people escalates out of control, one side or the other pulls out their weapons and uses force.  The Second Amendment is all about who gets to hold the weapons in order to keep the peace in this delicate balance of power.

Disarming the populace is not a new idea.  It has been employed a great many times through out history.  Typically, greater safety and peace is the promised reward for disarming.  ‘Trust us, this is for your own good.”  We would be hard pressed to find any historical instance in which the actual result matched the promise.  There is a tremendous difference between a personal moral choice not to use a weapon and forcible disarmament by someone with a bigger gun (i.e., the government).  The personal moral choice is a right worth fighting to defend.  The forcible confiscation of weapons is an evil worth fighting to resist.

The personal moral choice not to use a weapon depends on preventing any party from having a monopoly on the use of weapons.  A government that can forcibly take a gun can force the use of a gun.  When the government has all the guns, pacifists have no power to resist conscription.  Strangely, some who make the personal moral choice to not use a weapon, also wish to employ the government to use its weapons to compel others to do the same.  We invite destruction when we fail to remember that we owe our freedom of choice to good people willing to use weapons in defense of such personal liberty.  The irony of pacifism is that it is entirely dependent upon a balance in the distribution and use of weapons.  When good people have no weapons to resist the coercion of evil, there are no non-combatants.  There are only evil shooters and good targets.  Targets do as they are told, or they get shot.  This nuance gets lost in the rhetorical dance macabre surrounding guns.

Do I Need A Gun Trust?

It is important to note, that just because you have a gun and want to transfer it to your heirs does not mean you need a Gun Trust.  A Gun Trust has historically only been needed for NFA Firearms.  If you own a silencer, a sawed off shot gun, a fully automatic gun or certain explosive devices, a Gun Trust is one of the options to consider.  It may not save you paperwork, but may instead do just the opposite.  The devil is in the details of how the Gun Trust is put together.  Whether you use an online Gun Trust factory or engage an attorney is not just a pricing issue.  Integrating a Gun Trust with all the other parts of your estate plan is critical to avoid unintended consequences.

The ATF Final Regulations were conveniently coordinated with certain executive orders from the White House expanding how the regulations apply.  The net effect is that Gun Trusts may now be less useful or effective than they once were.  If nothing else, the politicians have made it clear they regard the use of a Trust to transfer a weapon as a loop hole that must be closed or regulated.  Don’t worry.  If you like your firearm you can keep your firearm, just like you could keep your Doctor under the new federal health care laws.

Absent a significant change in the political winds and the balance of power between the government and the people, the Gun Trust is at risk of becoming as much of an antique as the flintlock.