13th Apr 2016
In a recent study by Bindu Kaledan, an assistant professor of Epidemiology at Columbia, one-third of Americans reported owning a gun. Gun ownership and gun control are popular topics in the United States. Most of the time, the conversations are focused on restricting the use of guns or supporting the right to bear arms. Regardless of which side of the debate you’re on, gun ownership is an important consideration when it comes to estate planning.
Most individuals think of an estate plan and think of tax saving strategies, how to avoid probate and assigning beneficiaries for asset allocation. However, if you own a firearm for any variety of reasons including self-defense, target shooting or hunting, or if have a gun collection or family heirloom, it needs to be included within your estate plan. You not only want to be certain your firearm is passed on to a responsible person who will appreciate it, you want make sure you it is done so legally. While some estate planners view firearms as tangible household assets, there is a distinct difference and firearms need to be addressed specifically within your estate plan.
Depending on the type of firearm you own, it may be subject to state and federal laws. Certain firearms are restricted federally and others are restricted at the state level. In some circumstances, it is a requirement for your firearms to be registered with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). If your gun must be registered with the ATF, you will need to establish a gun trust. It is also important to note that some firearms are banned by the ATF all together; therefore, even if you attempted to put them in your estate plan, it would be illegal.
Under Title II of the National Firearms Act (NFA), the transfer of short-barreled shotguns and rifles, silencers, automatic weapons and certain other “destructive devices” require approval of your local Chief Law Enforcement Officer (CLEO) and a federal tax stamp. This makes the transfer of firearms to your beneficiaries much more complicated than transferring funds, property or vehicles. In order to ensure your firearms are legally transferred to your beneficiaries, you must comply with the National Firearms Act, as well as the state laws of where both you and your beneficiary live. To complete this process legally, you must establish a gun trust.
When you establish a gun trust, it allows you to retain ownership and control of your firearms and firearm collection throughout your life while securing the future of your collection to your beneficiaries. While you are living, you remain the trustee and beneficiary of your firearms. You assign a trustee to manage your gun trust after you pass away as well as a beneficiary or beneficiaries to receive the firearms. Gun trust are revocable allowing changes to be made at any time.
Similar to other living trusts, gun trusts allow you to provide detailed instructions on what you would like to happen to your assets upon your death. It important to note than when you establish a beneficiary, they must be able to properly own a gun or firearm. When you establish your gun trust, you must consider the age, background and mental state of the beneficiary. You can not leave your guns to an individual who is incompetent or mentally unstable, someone convicted of certain drug and criminal offenses or someone under the age of 18. Some exceptions apply based on the type of firearm.
Transportation of Firearms
One of the biggest reasons you want to establish a gun trust is because of the specific challenges with transferring firearms. If your beneficiary lives in a different state, the other states firearms regulations will need to be taken into consideration prior to transferring the firearm. Your gun trust will help speed up this process, which is set forth by the National Firearms Association.
Without a gun trust, you are required to work with local law enforcement to approve the transfer of the firearm. However, when you establish a gun trust, you are able to avoid approval from your local Chief Law Enforcement Officer and the application for transfer can be sent directly to the Bureau of Alcohol, Tobacco and Firearms, saving a great deal of time.
If you have not established a gun trust or your firearms are restricted by the NFA, they are not legally allowed to be transported or handled by any other individual unless the owner is present. This can cause an issue if you as the owner are deceased. Registering a firearm can take one to three months and if the trustee or beneficiary is in possession of the firearm without the proper registration, it can lead to serious legal issues. However, when a proper gun trust is in place, the firearms are allowed to be legally transferred to and possessed by the trustee and the beneficiary.
By establishing a gun trust, you save your trustee and beneficiaries a significant amount of time and money. In addition, by legally conducting the transfer of your firearms, you avoid unintended violations of the National Firearms Act, which could lead to fines, prison and forfeiture of all rights to possess or own firearms in the future.
If you’re in need of establishing a gun trust, I strongly recommend working with an estate planning attorney. Often times gun dealers have the trust forms available, but the documents typically fail to address the ownership of the firearms. An estate planning attorney will provide the guidance necessary to draft a gun trust that avoids any legal complications for the successor trustee and beneficiary.
To learn more about estate planning for your firearms, call me directly at 1-714-385-0044 to schedule a consultation.