The Bureau of Alcohol, Tobacco, Firearms and Explosives (BATFE) estimates that there are more than 234 million firearms in the United States. Others have estimated the number to be closer to 300 million. Whatever the actual number, it is undisputed that many Americans own guns and feel very strongly about their gun-owning rights. But what happens to these guns when those who own them die? More importantly, what could happen to these guns if the owner does not properly plan?
State and federal laws restrict who may own guns. Therefore, not just anyone can legally inherit or receive a gun. For these and other reasons, several gun owners are creating gun trusts to purchase, hold, and designate beneficiaries to receive the guns upon their death.
While a well-drafted gun trust can be an excellent tool for a gun owner, a poorly drafted trust could be nothing short of disastrous. ALL gun trusts – without exception – should be drafted by a licensed attorney who is knowledgeable about the various laws affecting such trusts.
The following are five things you should know about gun trusts:
1. Not all guns are created equal. The National Firearms Act (NFA) restricts the ownership and transfer of certain firearms such as short barrel shotguns and rifles, machine-guns, silencers, destructive devices (like hand grenades and explosives), and other weapons (like umbrella guns and pen guns). Additionally, the State of Michigan requires the registration of certain handguns. These restricted firearms cannot be freely transferred to just anyone. A carefully drafted gun trust can provide for the purchase, control and disposition of these restricted firearms.
2. All guns can be held in trust. Just because a firearm isn’t restricted under the NFA or state law does not mean that it should not be held in trust. Gun trusts are appealing to gun owners for some of the same reasons that all trusts are appealing – privacy. Unlike a will that becomes a matter of public record, trusts are a way of distributing assets outside the reach of the probate court. Gun trusts can be an excellent means to pass a special hunting rifle or a family heirloom from one generation to the next. Trusts can be drafted to hold exclusively NFA firearms, exclusively non-NFA firearms, or both. The type of firearms held in trust will dictate the compliance standards with state and federal laws.
3. Not everyone can legally own a gun. The Gun Control Act (GCA) provides that it is unlawful for “prohibited persons” to possess firearms (other than those excluded as antiques). Prohibited persons include convicted felons, certain domestic violence offenders, and controlled substance abusers, just to name a few. Of particular note to Michigan residents: the BATFE takes the position that medical marijuana users under state-approved laws are “unlawful users” of controlled substances. Furthermore, “possession” – either actual or constructive – is very broadly defined under the GCA. If a prohibited person is named the trustee or beneficiary of a gun under any trust instrument (including a revocable living trust), the trust may be invalid.
4. NFA gun trusts are subject to BATFE regulation. Just as the BATFE is responsible for the review and approval of NFA firearm applications, it is also responsible for the review and approval of NFA gun trusts. This includes approving the termination of the trust and the ultimate distribution of guns. Currently, an approved NFA gun trust does not require the signature of the Chief Law Enforcement Officer (CLEO) (which is often difficult to obtain) to purchase certain firearms restricted under the NFA. This current status, however, is subject to change.
5. Going cheap could be very costly. Some gun owners who wish to save the expense of having a gun trust drafted by an attorney may be tempted to fill in the various forms available online. Unfortunately, this could prove to be a very costly mistake. A poorly drafted trust could inadvertently put a prohibited person in possession of a firearm – an offense that carries a penalty of $250,000, 10 years in prison, or both. Only an attorney who is familiar with the federal and state laws regulating gun possession and ownership should draft gun trusts.
To download a copy of Michigan gun laws visit http://www.legislature.mi.gov/Publications/Firearms.pdf
For more information about the BATFE visit http://www.atf.gov
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