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TEXAS GUN TRUST - $300
Who did the Texas State Rifle Association invite to speak to its members about gun trusts at the upcoming TSRA 2017 Annual Meeting on February 25, 2017?
What is an NFA firearm?
Firearms regulated by the National Firearms Act (“NFA”), such as fully-automatic weapons (also known as “machine guns”), short-barreled rifles (“SBRs”), short-barreled shotguns (“SBSs”), and sound suppressors (also known as “mufflers” and “silencers”) are commonly known as “NFA firearms,” formally known as “Title II weapons,” and oftentimes incorrectly referred to as “Class 3” firearms or weapons. On the other hand, firearms that are not regulated by the NFA, but that are regulated by the Gun Control Act of 1968 (“GCA”) and other federal laws, are formally known as “Title I weapons.” To distinguish them from NFA firearms, Title I firearms are commonly referred to a “non-NFA firearms” or “regular firearms.”
How can I legally acquire NFA firearms?
Basically, there are two ways that an individual or a legal entity, such as a trust, corporation, limited liability company, or partnership, may legally acquire NFA firearms, if the individual or entity is not prohibited by federal, state, or local law from receiving or possessing firearms:
(1) by transfer after approval by the ATF of a registered NFA firearm from its lawful owner residing in the same state as the transferee (ATF Form 4); or
(2) by obtaining prior approval from the ATF to make NFA firearms (ATF Form 1).
What is a trust?
A trust is a fiduciary agreement that allows a party (known as a trustee) to hold assets on behalf of one or more beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries. When a trust is created by a party (known as the settlor), a separate legal entity is created. After the trust is created, the settlor transfers ownership of assets from the settlor’s name to the trust’s name. If the asset is personal property, the settlor signs an assignment of the personal property to the trust. The trustees of the trust may also acquire assets on behalf of the trust. The duty of the trustee, who is named in the trust agreement, is to administer trust assets in accordance with the terms of the trust agreement, for the benefit of the trust beneficiary.
What is a revocable living trust?
A trust is classified as a “living” trust when it is established during the settlor’s lifetime and as a “revocable” trust when the settlor has reserved the right to amend or revoke the trust during the settlor’s lifetime. A revocable living trust can help assets pass outside of probate, yet allows the settlor to retain control of the assets during the settlor’s lifetime. It is flexible and can be dissolved by the settlor at any time, if the settlor’s circumstances or intentions change. A revocable trust typically becomes irrevocable upon the death of the settlor. A settlor can also serve as a trustee (or co-trustee) and retain ownership and control over the trust, its terms, and its assets during the settlor’s lifetime, but make provisions for a successor trustee to manage the assets in the event of the settlor’s incapacity or death.
What is a gun trust?
A gun trust is special type of trust designed to address issues that are unique to firearms, which are one of the most heavily-regulated types of personal property in the United States. Many ordinary law-abiding citizens use gun trusts to acquire and enjoy NFA firearms. Most gun trusts are highly-customized revocable living trusts that address the rights and duties of the parties to the gun trust relating to the use, possession, and transfer of firearms. Most gun trusts determine how a single person or a married couple’s firearms are to be managed during his/her/their lifetime, in the event of his/her/their incapacity, and also upon his/her/their death. Because firearms in the gun trust pass privately to the beneficiaries outside of the probate court process, many people also assign their non-NFA firearms to their gun trusts. A well-written gun trust can serve as a comprehensive estate plan for all of the settlor or settlors’ firearms that are assigned to or acquired by the gun trust.
Do I still need a gun trust after ATF 41F?
The new ATF 41F regulations became effective on July 13, 2016. This rule affects the documentation that needs to be submitted with each new Form 1 (request to make an NFA firearm), Form 4 (request for tax-paid transfer of an NFA firearm), and Form 5 (request for tax-exempt transfer of an NFA firearm) filed on or after July 13, 2016. ATF 41F does not change the advantages of using a gun trust to acquire NFA firearms.
What are the main benefits of a gun trust?
Three of the most important benefits of a gun trust are:
(1) NFA firearms registered to a gun trust can be used and possessed by more than one person. The settlor of the gun trust can add or delete persons (co-trustees) who are allowed to use and possess the NFA firearms throughout his or her lifetime. NFA firearms registered to an individual can only be used and possessed by the registered individual during the individual’s lifetime.
(2) NFA firearms registered to a gun trust pass to the beneficiaries of the gun trust outside of the probate process according to the terms and conditions of the gun trust agreement prepared by the settlor. NFA firearms registered to an individual pass to his or her beneficiaries according to the terms of the individual’s last will and testament, which is probated in a probate court and provided to the ATF during the transfer process so the executor can prove to the ATF that the individual intended to transfer the NFA firearms to the beneficiaries.
(3) If your NFA firearms are owned by you individually and you are later deemed to be incompetent, your NFA firearms are subject to confiscation immediately since it is illegal for any other individual to take possession of your NFA firearms. On the other hand, if your gun trust owns your NFA firearms, any co-trustee can take possession of your NFA firearms to hold them on your behalf. In other words, you will not lose ownership of your firearms. As as result, you will retain the ability to either direct that the NFA firearms be sold and the cash returned to you, or that the NFA firearms continue to be held in trust for the beneficiaries to inherit when you die.
For a more detailed discussion of the benefits of gun trusts, see http://www.myguntrust.com/do-i-still-need-a-gun-trust-after-atf-41f.html.
Do I need to visit your office in Austin to get a gun trust?
No. I prepare gun trusts for clients who live all over Texas. In most cases, I can answer all of my clients’ questions about gun trusts and get all of the information that I need to prepare their gun trusts over the telephone and by email. In the vast majority of cases, all of the gun trust documents are emailed to my clients, who then execute the documents using a notary public where they live.
If I want you to prepare a gun trust for me, how do I get started?
During normal working hours, the best way to get started is to call me. My office number is (512) 288-3200. If not, send me an email message using my Contact page. Please make sure to leave a telephone number, so I can call you. Before I prepare your gun trust, I want to make sure that I have answered any questions you may have, and that we have discussed the best gun trust structure for you.
Can NFA firearms be registered to other types of entities, such as corporations, LLCs, and partnerships, instead of a gun trust?
Yes, but there are several disadvantages to doing so. These types of entities are required to file federal income tax returns to the IRS and state tax returns and public information reports. Overall, a gun trust is the most flexible, most private, least expensive, and least maintenance-intensive method of registering NFA firearms.
Is a gun trust required to file any annual reports or pay any state franchise taxes?
No, gun trusts are not required to file any annual reports or to pay any franchise taxes in Texas.
Do I need to register or record a gun trust with the State of Texas?
No. Since the gun trust is a revocable trust, it does not need to be registered or recorded with the State of Texas or any county or local government entity. An NFA gun trust is not a public document, rather it is private, much like a will. However, when the trust files an application with the ATF to transfer or make an NFA firearm, a complete copy of the gun trust, any amendments, and any current appointment of additional co-trustee documents are filed with the application.
Does the gun trust include an inventory of the firearms assigned to the trust?
No. Our gun trust does not require an inventory of firearms that have been assigned or acquired by the gun trust to be listed in or as an exhibit to the gun trust. The only property disclosed in our gun trust is $1.00. All documents that disclose firearms that are assigned or acquired by the gun trust are not part of our gun trust document itself. As a result, your inventory of firearms is not disclosed to anyone whom you do not want to see it, including gun shop employees and the ATF, when you buy NFA firearms. This is probably the most important difference between our gun trust and just about any other gun trust sold by other “gun trust attorneys” or at gun stores. Most of these gun trusts include “schedules” (an old-fashioned word for exhibits or attachments), which need to be amended each time another firearm is assigned or acquired by their gun trust. Because of our criticisms of “schedules,” many of these “gun trust attorneys” and gun stores have simply removed the term “schedule” from their gun trust document, but they still have the same inventory list incorporated into their gun trust document—so that they could advertise that their gun trusts did not include “schedules.” Since gun shop employees will request a complete copy of your gun trust when you buy another NFA firearm, you are therefore being forced into the position of being required to disclose a detailed list of your firearms to every person (including gun shop employees and ATF agents) who happen to handle the gun trust.
Do I need a separate taxpayer identification number for the gun trust?
No, as long as a settlor is a trustee of the gun trust, no taxpayer identification number is required. Instead, a settlor’s social security number is used.
Can more than one person legally possess NFA firearms?
NFA firearms must be titled in the name of an individual or an entity, much like other real property (land) and some types of personal property, such as cars, trucks, boats, and airplanes. However, unlike almost any other kind of titled property, the ATF has never allowed more than one person’s name to appear on the ATF tax stamp, which is effectively a title certificate. As a result, if an NFA firearm is titled in the name of an individual, only that specific individual may possess it. One of the chief advantages of registering NFA firearms in the name of a gun trust, rather than in the name of an individual, is that more than one person may legally possess and use the NFA firearms. In Texas, any person at least 18 years of age who can legally possess firearms may agree to be included as a trustee of the gun trust and, thereby, legally possess the NFA firearms assigned to the gun trust.
For a married couple, it almost always makes sense for an NFA firearm to be registered in the name of a gun trust. For example, suppose the husband owns a suppressor, which is legally registered with the ATF in his own name. The husband goes to work and leaves his suppressor at home. If the wife stays at home that day and could have access to the suppressor, she is committing a federal felony offense that carries a prison sentence of up to 10 years and/or a fine of up to $250,000. 26 U.S.C. §§ 5861, 5871; 18 U.S.C. § 3571(b). Further, the suppressor is subject to seizure and forfeiture. 26 U.S.C. § 5872. If convicted, the wife loses her right to own or possess any kind of firearms in the future. In addition, if the husband instead left the suppressor in the wife’s vehicle, the vehicle is subject to seizure and forfeiture. If the husband had simply registered the suppressor in the name of a gun trust and appointed his wife as a co-trustee of the trust, this situation would have been prevented. Additionally, the husband could appoint other individuals, such as friends and family who may legally possess firearms as co-trustees of the trust, as long as the other individuals agree in writing to be co-trustees.
Do I need a gun trust if I am single?
Even if a person is single, it still makes sense to register NFA firearms in the name of a gun trust because of the built-in flexibility of being able to amend the trust throughout the person’s lifetime to add or remove additional trustees and beneficiaries as the person’s life and roles evolve (i.e., husband, father, grandfather, etc.). If the person registers NFA firearms in his own name and then decides later to title the NFA firearms in the name of a trust, the person will end up paying the $200 transfer tax (or whatever the transfer tax amount is at that time) for each NFA firearm to be transferred to the trust. This short-term thinking (registering NFA firearms in the name of an individual) could end up costing the person a large sum of money down the road. I know, because I made this mistake myself when I first began acquiring NFA firearms. Moreover, I frequently assist my gun trust clients with their ATF Form 4 applications required to transfer any NFA firearms that they previously registered in their own names to their gun trusts. Creating a gun trust while you are single also provides an avenue for assigning your non-NFA firearms to the trust, thereby officially documenting the separate property nature of those firearms before you get married.
When does a gun trust become irrevocable?
Upon the death of the last of the Settlors to die.
What happens to the NFA firearms assigned to the gun trust when the settlors die?
The trust property assigned to the trust passes to the beneficiaries of the trust without being subjected to the probate process. Until the trust property is distributed to the beneficiaries, the trustees of the gun trust continue to hold and possess the trust property in trust for the beneficiaries.
How does the buying process for a silencer from a Class 3 Dealer work using a gun trust?
If you already have your gun trust prepared, the process of buying a silencer from a dealer is as follows:
First, you visit your Class 3 dealer and pick out the silencer that you want to buy.
Next, you pay the dealer for the cost of the silencer plus sales tax.
After that, the Class 3 dealer will partially prepare an ATF Form 4 application requesting permission to be allowed to transfer the silencer from the dealer to your gun trust. The Class 3 dealer will provide the partially completed ATF Form 4 to you.
Next, you will complete the rest of the ATF Form 4 application. On page 2 of the ATF Form 4 application, you will identify the Chief Law Enforcement Officer (“CLEO”) where you live. The CLEO is usually your sheriff or police chief. Every time an NFA firearm is transferred from one party to the other (such as from the dealer to the gun trust), the ATF charges a $200 tax. On page 3 of the ATF Form 4 application, you will indicate whether you are paying the transfer tax by check, cashier’s check, money order, or debit or credit card. Also, on page 3 of the ATF Form 4, you will need to identify all “Responsible Persons” in your gun trust. The Settlor (you) and the Initial Trustee (you) are considered a “Responsible Person” under the ATF’s definition of the term. In addition, any person whom you appointed as an Additional Co-Trustee using the Appointment form (and who is still serving as an Additional Co-Trustee) is considered a “Responsible Person.” Beneficiaries and Successor Trustees identified in the gun trust are not considered to be “Responsible Persons,” unless you have later appointed them as Additional Co-Trustees using the Appointment of Additional Co-Trustee document. In other words, if an individual, other than you, has not signed an Appointment of Additional Co-Trustee document, he or she is not a “Responsible Person.”
In addition, each “Responsible Person” will be required to complete a Responsible Person Questionnaire. Each “Responsible Person” will need to provide two (2) fingerprint cards and one (1) passport photo. Each “Responsible Person” mails a copy of his or her complete Responsible Person Questionnaire to the CLEO where he or she lives. The CLEO does not need a copy of the photograph or fingerprint cards.
You mail a copy of the ATF Form 4 application, each Responsible Person Questionnaire (including the photographs and the fingerprint cards), and a complete copy of the gun trust to the ATF at the address indicated near the top of page 1 of the ATF Form 4. If you are paying the $200 transfer tax by check, then the check is included in the package that you mail to the ATF.
After the ATF receives the ATF Form 4 transfer application, it takes the ATF several months before the application is processed and approved.
After approval, the ATF sends a copy of the approved application (commonly referred to as the “ATF tax stamp” or the “tax stamp”) back to the dealer. The ATF tax stamp serves as proof that the $200 transfer tax has been paid and that the dealer has the ATF’s permission to transfer/sell the silencer to the gun trust. What you thought was a sale when you paid the dealer many months ago was really just a deposit.
After the dealer receives the ATF tax stamp, the dealer contacts the customer to come pick up the silencer. Any trustee of the gun trust who is at least 21 years old may pick up the silencer. When the trustee picks up the firearm from the dealer, the trustee provides the dealer with his or her driver’s license, and optionally, his or her concealed handgun license (CHL), and completes an ATF Form 4473, which is the same ATF form a person would fill out if he or she were buying any a non-NFA firearm from a dealer.
After that, the dealer hands the ATF tax stamp and the silencer to the trustee, and the trustee walks out the door.
Does a gun trust eliminate the need for a background check?
No. As part of the ATF application process, the ATF conducts a background check on each “Responsible Persons” to ensure that each “Responsible Person” in not prohibited from receiving and possessing firearms and ammunition. In addition, when the trustee visits the dealer, the trustee provides the dealer with his or her driver’s license, and optionally, his or her concealed handgun license (CHL), and completes an ATF Form 4473, which is the same ATF form a person would fill out if he or she were buying any a non-NFA firearm from a dealer.
Can convicted felons use and possess NFA firearms registered to a gun trust?
Not just no, but HELL NO! Our gun trusts explicitly provide that no person who is ineligible to possess trust property, which may include NFA firearms and non-NFA firearms, regulated by federal firearms laws or applicable state firearms laws may serve as a trustee or receive firearms as a beneficiary. Moreover, if any trustee becomes ineligible to possess such trust property, the trustee is disqualified to serve as a trustee and is deemed to have resigned immediately upon ineligibility.
Under current Federal law, who is prohibited from receiving, possessing, shipping, or transporting firearms or ammunition, and therefore, cannot serve as a trustee of a gun trust?
(1) Any person who has been convicted in any court of a crime punishable by imprisonment for a term exceeding one year;
(2) Any fugitive from justice;
(3) Any unlawful user of or any person who is addicted to a controlled substance;
(4) Any person who has been adjudicated as a mental defective or who has been committed to a mental institution;
(5) Any alien who is illegally or unlawfully in the United States or, except as provided in 18 U.S.C. 922(y)(2), has been admitted to the United States under a non-immigrant visa (as that term is defined in 8 U.S.C. 1101(a)(26));
(6) Any person who has been discharged from the Armed Forces under dishonorable conditions;
(7) Any person who, having been a U.S. citizen, has renounced his or her citizenship;
(8) Any person who is subject to a court order that:
(a) was issued after a hearing of which such person received actual notice and at which such person had an opportunity to participate;
(b) restrains such person from harassing, stalking, or threatening an intimate partner of such person or child of such intimate partner or person, or engaging in other conduct that would place an intimate partner in reasonable fear of bodily injury to the partner or child; and
(c) (i) includes a finding that such person represents a credible threat to the physical safety of such intimate partner or child; or (ii) by its terms explicitly prohibits the use, attempted use, or threatened use of physical force against such intimate partner or child that would reasonably be expected to cause bodily injury; and
(9) Any person who has been convicted in any court of a crime of domestic violence.
See 18 U.S.C. 922(g). Moreover, under current Federal law, it is unlawful for the trustee to sell or otherwise dispose of any firearm or ammunition to any of the persons listed above. See 18 U.S.C. 922(d).
Does a gun trust provide the ability to manufacture machine guns?
No. Under Federal law, only machine guns (fully automatic firearms) made before May 1986 are allowed to be owned by individuals and gun trusts.
Does a gun trust eliminate the ATF’s $200 tax?
No. Each time a gun trust applies to transfer or to make an NFA firearm, it must pay the $200 tax for each NFA firearm to be transferred or manufactured.
Do I need a separate gun trust for each NFA firearm?
No. In most cases, all of your NFA firearms would be assigned to the same gun trust. Note: Some dishonest Class 3 dealers who sell gun trust forms tell their customers that they need a new gun trust for each new NFA firearm.
How many NFA firearms can be held in the gun trust?
There is no limit to the number of NFA firearms that may be held by your gun trust.
Do I need to make any changes to the gun trust to add another NFA firearm to my gun trust?
To add another NFA firearm to the gun trust, you simply use the gun trust to complete another purchase. You do not need to change the gun trust. The ATF tax stamp itself is the official U.S. government document that is indisputable evidence that the NFA firearm is owned by the gun trust. There is no other additional document that you need to create prove that the NFA firearm is trust property. Note: Other gun trust providers charge their customer a fee every time an NFA firearm is added to the gun trust.
Can non-NFA Firearms (Title I Firearms) be assigned to the gun trust?
How do I assign non-NFA firearms to the gun trust?
We provide our clients with a simple form that they use to assign non-NFA firearms to the gun trust.
Can I add someone as a trustee on an NFA gun trust who lives in a state where NFA firearms, such as silencers, short barreled rifles (SBRs), short barreled shotguns (SBSs), and machine guns, are illegal?
Yes. However, the trustee will not be able to use and possess the NFA firearms in a state that does not allow possession of NFA firearms. The trustee will only be able to use and possess the NFA firearms in a state where possession of NFA firearms is legal. Some states only allow possession of specific types of NFA firearms.
Who are the parties to a gun trust?
There are three parties to a trust — settlors, trustees, and beneficiaries.
Who is a settlor in a gun trust?
A settlor is the person who creates the trust, and is usually the person who provides the funding for the trust and assigns personal property, such as firearms and cash, to the trust.
Should both the husband and wife be the settlors in a gun trust?
This depends upon several factors and should be determined after discussion with one of our lawyers. For example, if the wife is the person who will be handling the paperwork for the couple, or if she is just as involved in using the firearms as her husband, then it might make sense for her to be on the trust as a settlor and initial trustee. There can be more than one settlor in a Gun Trust, such as when a married couple creates a single estate plan for their firearms. Texas is a community property state. For an unmarried person, all property acquired before marriage is owned by that person as “separate property.” However, for a married person, almost all property acquired during marriage is jointly owned by both the husband and the wife as “community property.” Since firearms purchased during marriage are community property, the husband and the wife can be the settlors of a gun trust.
The disadvantage to listing the wife as a settlor and co-trustee on the main trust document is that she will be considered a “responsible person” under the new ATF Rule 41-F. As a “responsible person” on the main document she would have to provide fingerprints and a photograph for every new Form 1 or Form 4 filing after July 12, 2016. For many trusts recently, I have recommended that the wife be listed as the primary beneficiary instead of being listed on the trust as a settlor or initial trustee. As a primary beneficiary, the wife can be appointed as a trustee later, if she needs to be in legal possession of the NFA firearms, the same way that a brother or a friend can be appointed as a trustee. The trust is designed to be very practical for NFA firearm ownership. The settlor is in full control over who is or is not a trustee at any particular time using the Appointment form and Removal form provided with our trust documents.
Should two brothers, a father and son, or two friends share the same gun trust as settlors?
A gun trust is designed to take the place of a person’s will for these firearms. For example, while a husband and wife might have a will together or mirror-image wills, a father and son or two brothers would not have wills together. The father’s beneficiaries are different from his son’s beneficiaries. Two friends would certainly have different people claiming an interest in the property if either of them die or get divorced. Having different heads of family sharing ownership of firearms in a gun trust raises a multitude of future litigation concerns. It also raises tax issues for the settlors which may require litigation to resolve. It is simply a bad idea. A son, brother, or friend can be appointed as a trustee so that they can borrow the settlor’s NFA firearms. But if the son, brother, or friend want to purchase their own NFA firearms, they should have their own gun trust.
Who is a trustee in a gun trust?
In a gun trust, a trustee is a person who is allowed to use and possess the firearms assigned and acquired by the gun trust. The settlor of the gun trust is almost always, at a minimum, the trustee of the gun trust, so that he or she can continue to use and possess his or her firearms assigned to and acquired by the gun trust. However, if the settlor wants to be able to lend his or her NFA firearms to another responsible adult, such as a spouse, son, or daughter, so that the adult can take the NFA firearms to the range or the ranch (without the settlor), then that adult also needs to be a trustee.
However, being a trustee isn’t all fun and games. The trust agreement between the settlor and the trustees is a contract. In addition to the right to use and possess the trust property in accordance with the terms of the trust agreement, a trustee also owes fiduciary duties to the settlors and to the beneficiaries of the trust. If a trustee breaches his or her fiduciary duty, the trustee can be sued for damages. Since the trust agreement is a contract, all trustees must agree in writing to serve as a co-trustee. In addition, a trustee must have the legal capacity to enter into a contract. By law, minors do not have the capacity to enter into a contract. Further, parents cannot impose the duties of a fiduciary on a minor. In other words, parents cannot make their children trustees of a trust by signing on their behalf. For these reasons, children under the age of 18 cannot be trustees of a trust.
A trustee MUST be at least 18 years old, and a trustee MUST agree in writing to serve as a co-trustee. Unfortunately, many gun trusts claim to allow the settlor to name as many co-trustees as he or she wants within the trust document, but only provide a space for the settlor to sign the trust document. In other words, the settlor has been led to believe that simply naming a trustee makes it so. In one particularly egregious example we have seen, a married settlor of the gun trust merely listed his wife, a couple of friends, and his minor children (a 4-year old toddler and an 18-month old infant) as co-trustee. No one, other the settlor, signed the trust document. Quite possibly, the settlor was the only person who even knew about the existence of the trust agreement. That trust had two major flaws: (1) it did not require the trustees to sign to accept the duties and responsibilities of a trustee; and (2) it allowed the settlor to list very young children as persons allowed to use and possess NFA firearms independently of an adult trustee.
Additionally, many gun trusts instruct the settlor how to amend the trust to add additional co-trustees, but the example illustrated in the instructions teaches that the additional trustee need not sign the document. Arguably, a trustee who does not sign the trust document (that supposedly makes him or her as a trustee) is not really a trustee. These “fake” trustees are arguably violating the National Firearms Act when they are in possession of NFA firearms outside the presence of the settlor (the only real trustee). This could ultimately result in the arrest of the “trustee” and confiscation the NFA firearms that were illegally in the “fake” trustee’s possession.
What if the settlor is not also included as a trustee in a gun trust?
A few gun trusts do not name the settlor as a trustee in their own gun trust. We are aware of few gun trust providers who sell such gun trusts to their customers. This is the most egregious example of a bad gun trust that we have ever seen. This means that it is illegal for the settlor to use and possess the NFA firearms acquired by his or her own gun trust. If you have one of these gun trusts, you need to amend and restate your gun trust immediately!
How can I add co-trustees to my gun trust?
Our gun trust is designed so that the settlor or settlors are the only initial trustee or trustees of the gun trust. This means that our gun trust clients are the only persons who need to sign the gun trust in front of a notary.
After the gun trust is created, you can appoint additional co-trustees to your gun trust (so that they can use and possess your NFA firearms) at any time without amending the gun trust. This is a significant difference between our gun trust and almost every other gun trust out there. Moreover, unlike almost every other gun trust, you can appoint additional co-trustees to serve either long-term or short-term (such as while you and a friend are on a hunting trip). In addition to several other documents, my gun trust clients receive a document entitled “Appointment of Additional Co-Trustee and Acceptance of Additional Co-Trustee.” With this document, my clients are able to appoint additional co-trustees to their gun trust at any time without calling me (or any other lawyer). The Appointment of Additional Co-Trustee document and Acceptance of Additional Co-Trustee is signed by the settlor(s) and the additional co-trustee in front of a notary public. Now, that person is an additional co-trustee of my client’s gun trust. It’s that easy! We are not aware of any other gun trusts that have anything like this.
In stark contrast, almost every other gun trust out there requires you to anticipate every person who will want to borrow your NFA firearms in advance, so that you can list them as co-trustees of the gun trust. Before their gun trust is created, their client will need to coordinate with each of the other co-trustees so that they can all sign the gun trust in front of a notary. Depending on the number of additional co-trustees listed, this can cause a significant delay between the time that their clients pay for their gun trust and time that they are able to actually use the gun trust to buy NFA firearms. Additionally, if the client wants to add another additional co-trustee after the trust is created, their clients need to amend their trust, which means more legal fees to prepare an amendment.
Our clients love having the ability to add additional long-term or short-term co-trustees to their gun trusts at any time using our Appointment of Additional Co-Trustee document. None of their friends have this capability, unless, of course, we prepared their gun trust. You will love it, too!
Who is a beneficiary in a gun trust?
The settlor is usually the beneficiary of a revocable living trust during his or her lifetime. After the settlor die, the settlor’s wife is usually the primary beneficiary (also known as the “remainder beneficiary”) and the settlor’s children are usually the secondary beneficiaries (also known as “contingent remainder beneficiaries”). However, the settlor is free to name any persons or organizations (such as a charity) as the trust beneficiaries. While the settlor is alive, he or she can direct the co-trustees to buy more firearms for the gun trust or to sell any of the firearms in the gun trust and distribute the cash to the settlor. After the settlor dies, the primary beneficiary (usually the spouse) is entitled to inherit whatever property (usually the settlor’s firearms collection) remains in the gun trust. If the primary beneficiary dies before or at the same time as the Settlor the secondary beneficiaries (usually the settlor’s children) are entitled to inherit whatever property remains in the gun trust. If the beneficiaries are too young to inherit the firearms in the gun trust when the settlor dies, the gun trust makes provisions for the trustees to use and possess the trust property until the beneficiaries are old enough and (in the trustees’ opinion) mature enough to inherit the trust property.
In a revocable living trust, the settlor reserves the right to amend or revoke the trust during the settlor’s lifetime. A settlor can add or delete beneficiaries whenever he or she wishes. Because the listed beneficiaries have, at best, an expectation that they may inherit the trust property after the settlor dies, beneficiaries normally do not have any rights or duties during the settlor’s lifetime. Additionally, the trustees do not owe fiduciary duties to the beneficiaries of the trust during the settlor’s lifetime. As a practical matter, beneficiaries may not even know of the existence of the gun trust or that they are listed as beneficiaries of the trust. Because beneficiaries have no rights or duties relating to the trust while the settlor is alive, beneficiaries do not sign the trust agreement. More importantly, beneficiaries cannot use or possess NFA firearms owned by the gun trust outside the presence of at least one trustee of the gun trust. However, an adult child of the settlor can be a beneficiary and a trustee. Then, only because he or she is a trustee, the adult child would be able to use and possess the NFA firearms owned by the gun trust.
Only a settlor can revoke a revocable living trust. During the settlor’s lifetime, the settlor considers the trust property to be his or her property. If the trust is revoked, the trust property is returned to the settlor and the trust is terminated. In contrast, during the settlor’s lifetime, beneficiaries of a revocable living trust cannot terminate a trust. However, the gun trust sold by many Class 3 dealers includes a provision that allows the beneficiaries of the trust to do just that:
TERMINATION OF TRUST: In addition to the Grantor’s right to revoke and terminate this Trust, if at any time all beneficiaries so consent in writing, the trust shall be terminated and the corpus of the trust sold or transferred, in accordance with the law, and any and all income and corpus shall be divided and distributed to the beneficiaries.
This provision turns the whole idea of a revocable living trust on its head. In practical terms, this means that the beneficiaries of the trust (usually the settlor’s children) can unanimously agree to terminate the trust “at any time” and force all of the trust property (usually the husband’s gun collection) to be sold or transferred to the beneficiaries, even while the settlor (usually the husband) is very much alive and well, and regardless of whether the beneficiaries (usually the settlor’s children) are, in either the settlor’s or the trustees’ opinion, mature enough or responsible enough to lawfully use and possess the trust property (usually the parents’ gun collection). Unfortunately, these gun dealers’ “great example of a do-it yourself option” marketed to gullible customers are clearly more like a “help yourself whenever you feel like it” option for the customers’ beneficiaries.
Who needs to sign the gun trust?
Since a gun trust is a fiduciary agreement, all of the settlors and trustees must sign the gun trust agreement in the presence of a notary public. Beneficiaries and successor trustees do not sign the gun trust agreement, nor do they even need to know of the existence of the gun trust while the settlors and trustees are alive.
Do all of the settlors and trustees need to sign the gun trust documents at the same time?
No. It can be a logistical problem to get all of the settlors and trustees into the same room, especially if one or more of the settlors or trustees are active duty military personnel who are deployed overseas. However, the gun trust is not created until the date the last of the trustees executes the documents.
When my application is sent to the ATF, does the ATF need a complete copy of the gun trust?
Yes, to register a Title II weapon, or NFA firearm, in the name of a gun trust, the ATF needs a complete copy of the gun trust and all amendments to the gun trust to be included as part of the ATF application.
When my application is sent to the ATF, does the ATF need a “Schedule A?”
It depends. If an NFA gun trust does not specifically state that it includes schedules (which is just another word for attachments, or exhibits, to the trust), such as a “Schedule A” to identify all of the trust property or a Schedule B to identify the beneficiaries, then the NFA gun trust is complete without a “Schedule A.” On the other hand, if the NFA gun trust specifically states that it includes schedules, then the schedules necessarily form a part of the NFA gun trust. In other words, without the schedules specifically identified in the trust document, it is not a complete copy of the NFA gun trust. If you understand this distinction, then you should understand why this is a misleading question. The correct question is whether you need to send a complete copy of the NFA gun trust to the ATF, and the answer to the question is always “yes.” See also http://www.myguntrust.com/schedule-a-question.html.
Does your NFA gun trust include a Schedule A?
Our gun trust does not include a Schedule A, and for very good reasons. Some gun trusts include schedules as part of their NFA gun trust, such as a Schedule A to identify all of the trust property. Such a practice has two primary disadvantages for their unfortunate clients. First, each time the client transfers property in or out of the NFA gun trust, the schedule must be amended. The better practice is transfer property in or out of the NFA gun trust using a separate assignment form, which is not part of the NFA gun trust. Second, the ATF needs a complete copy of the NFA gun trust each time you mail in a new application. Besides NFA firearms, non-NFA firearms (Title I weapons) may be assigned to the NFA gun trust. If the NFA gun trust includes a schedule that identifies all trust property, the customer unnecessarily provides an organized, detailed inventory of each and every firearm assigned to the NFA gun trust to the ATF. Why would this be a good idea? Finally, more and more frequently, Class 3 dealers mail the package of documents that form a complete application to the ATF on behalf of their customers. To do so, each time the customer buys a new NFA firearm, the Class 3 dealer needs a complete copy of the customer’s NFA gun trust. If the NFA gun trust includes a schedule that identifies firearms assigned to the gun trust, the customer turns over, or broadcasts, a detailed inventory of each and every firearm assigned to the gun trust to the Class 3 dealer, which, frankly, the Class 3 dealer has no reason to know about. Also, once you turn over your NFA gun trust to the Class 3 dealer, you do not know whether additional copies will be made or stored online, who among the Class 3 dealers present or future employees have or will have access to the information, or to whom this information is or will be disclosed. Don’t get me wrong, I trust my recommended Class 3 dealers, but this is still a major security breach. On the other hand, if an NFA gun trust does not include a schedule that identifies all trust property, the only trust property that the Class 3 dealer, the dealer’s employees, and any third parties to whom this information might be disclosed will know is owned by the customer is the specific NFA firearm(s) bought from the Class 3 dealer. It is a simple matter of privacy and security.
Can I prepare my own NFA gun trust?
Who knows? Ms. Vazquez, of Floresville, Texas, certainly thought she could prepare her own revocable trust. However, in a recent order, dated March 28, 2013, in the U.S. District Court for the Western District of Texas, San Antonio Division, U.S. District Judge David Ezra ruled that her revocable trust, which is similar to an NFA gun trust, was invalid and, thus, her attempted transfer of property into the revocable trust was also invalid. In a footnote, the judge stated:
This case is a poster child for the proposition that one should not rely on prepaid legal forms with boilerplate language for important legal matters. … It is also clear that a properly drafted trust prepared by a competent lawyer would have accomplished the goal she sought in the first instance.
Do you really want to take the chance of being the next “poster child,” especially where NFA firearms are concerned?
Can I use Quicken WillMaker to create a gun trust?
No, and even Nolo (the distributors of the Quicken WillMaker Living Trust) expressly say so. If response to the question “Can I use a Nolo living trust to create a gun trust?” Nolo states on their website:
No. If you want to create a gun trust, get personalized legal advice from an expert on gun laws. Nolo living trusts are designed for the people who simply want to pass on their assets while avoiding probate. Gun trusts are complicated because they:
— may need to last for more than one generation
— may have multiple trustees, and
— must address both state and federal weapons laws.
Nolo’s living trusts do not address these issues, and so you should not use Nolo living trusts to transfer weapons. If you want to make a gun trust, get help from a lawyer who has plenty of experience with these trusts and state and federal weapons laws.
If the ATF ever challenges the validity of an NFA gun trust prepared for me by you, will you provide me legal representation at no charge?
Yes, if the ATF ever challenges the validity of the gun trust that Willi Law Firm P.C. has prepared for you, Willi Law Firm, P.C. will provide legal assistance, advice, counsel, and representation to you at no charge in any ATF proceeding seeking to challenge the validity of the gun trust prepared by Willi Law Firm, P.C. Any actions by the ATF, other than challenging the validity of the gun trust prepared by Willi Law Firm, P.C., are not covered.
Has the ATF Ever Challenged the Validity of a Gun Trust Prepared by You?
Will you review and/or redraft a gun trust prepared by someone else?
Yes. I frequently receive inquiries from individuals who are very uneasy about the quality, or lack thereof, of Texas gun trusts prepared by others after reviewing the information on my website. I have redrafted “gun trusts” prepared by so-called “gun trust” attorneys in Houston, Dallas, and San Antonio. Frequently, I also redraft “gun trusts” sold as forms by non-attorneys, such as Class III dealers. These clients regularly express to me that they wish they had contacted me on the front end, as it would have saved them time, money, and aggravation.
Do I need to carry proof of registration for my NFA firearm?
It is a good idea to always have a copy of the ATF tax stamp for each NFA firearm in a trustee’s possession, a copy of the gun trust, including all amendments, if any, a copy of the trustee’s appointment document, and a driver’s license.
Why do you charge so little for such a comprehensive and thorough Texas NFA gun trust?
I am a long-time firearms owner, competitive shooter, collector, instructor, and licensed Texas attorney. I thoroughly enjoy meeting like-minded firearms owners, shooters, and collectors and having the opportunity to provide them and their families with a high-quality Texas NFA gun trust at reasonable price so that they may continue to exercise and enjoy their Second Amendment rights and pass this unique American heritage to future generations.
Would you like to have the peace of mind that comes with knowing that you received a high-quality Texas NFA gun trust prepared by a Texas attorney who is recommended by several Class 3 dealers? Let’s get started!
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