Gun Trusts in Estate Planning: No Time To Be Quick on the Trigger

When considering an estate plan, clients who own firearms should remember that very often, their firearms require special consideration and planning, particularly given the intricacies of federal, state, and local gun laws and regulations. Gun trusts are a common mechanism for ensuring ease of ownership and inheritance of certain types of firearms and other weapons which are regulated under the National Firearms Act (1934), as amended (“<u>NFA</u>”), and related legislation,<a href=”#_ftn1″ name=”_ftnref1″>[1]</a> such as short-barreled rifles and shotguns; machine guns; suppressors (a.k.a. “silencers”); “destructive devices”, such as explosives; and several other classes of weapons (“<u>NFA Weapons</u>”).<a href=”#_ftn2″ name=”_ftnref2″>[2]</a>

However, these trusts can also be useful for passing on beneficial use of firearms which are not as heavily regulated, doing so outside of probate (and thereby outside of court supervision). Such firearms include pistols and handguns, as well as long guns (i.e. rifles and shotguns) which have more common characteristics, such as a barrel which is not considered to be shortened, and are not automatic (e.g. semi-automatics, breach-loaders, muzzle-loaders, bolt-actions, lever-actions, pump-actions, revolvers, etc.). Given state-level efforts to restrict access to so-called “high capacity” magazines and assault weapons, among other restrictions, ensuring a gun trust is well drafted is critical to its legal viability.
<h2><strong>What to Include in Your Gun Trust Plan</strong></h2>
A well-drafted gun trust instrument will include or provide for, among other provisions, the following:
<ul>
<li>multiple trustees and beneficiaries;</li>
<li>funding of the trust with cash sufficient to pay applicable taxes, fees, and expenses, so as to avoid requiring the trustees to cover such costs with their own money or else force them to sell trust property;</li>
<li>prohibit access to persons as defined under 18 U.S.C. Section 922(g) or similar laws (a “<u>Prohibited Person</u>”), including:
<ul>
<li>providing for trustees to be automatically removed if they become a Prohibited Person, and provide a mechanism for their replacement, and</li>
<li>providing for a beneficiary to be prevented from having any access to or a stake in the trust’s firearms, firearm accessories, and ammunition if the beneficiary is or becomes a Prohibited Person, and provide instead that such beneficiary can only receive distributions of cash from the trust;</li>
</ul>
</li>
<li>if the trust is unable to pay its expenses, or all beneficiaries are Prohibited Persons with little or no chance of such beneficiaries ceasing to be Prohibited Persons, then the weapons and related assets will be allowed to be sold for cash (if possible) and the proceeds to be distributed to the beneficiaries. Otherwise, the trust should provide that weapons, accessories, and ammunition which cannot be legally sold are to be destroyed or surrendered to the relevant authorities in compliance with applicable federal, state, and local law;
<ul>
<li>the trustees should be absolved of the duty to preserve trust assets in this case;<a href=”#_ftn3″ name=”_ftnref3″>[3]</a></li>
</ul>
</li>
<li>direct the trustees to fill out relevant paperwork to ensure that the gun trust remains compliant with federal rules and regulations, as well as applicable state and local law;</li>
<li>waive any requirement under state law that the trustee make the trust’s property productive;<a href=”#_ftn4″ name=”_ftnref4″>[4]</a></li>
<li>provide for a trust protector if permitted under state law, who may then appoint and remove trustees under certain circumstances; and</li>
<li>keep property which is not related to firearms out of the trust, except for the aforementioned cash to cover expenses and taxes.</li>
</ul>
It must be remembered that states and even municipalities often have their own restrictions which are more stringent than the federal baseline, and thus these must be complied with when creating such a trust. For instance, Washington D.C., Rhode Island, and New York ban the ownership of machine guns by civilians;<a href=”#_ftn5″ name=”_ftnref5″>[5]</a> Rhode Island, California, Connecticut and other states have so-called “high capacity” magazine bans;<a href=”#_ftn6″ name=”_ftnref6″>[6]</a> several states have firearms registries, which may require that a natural person (e.g. the trust settlor) be listed as the firearm owner;<a href=”#_ftn7″ name=”_ftnref7″>[7]</a> suppressors are banned in several states,<a href=”#_ftn8″ name=”_ftnref8″>[8]</a> Chicago bans both suppressors and laser sights;<a href=”#_ftn9″ name=”_ftnref9″>[9]</a> and numerous cities have significant ordinances regulating what types of firearms and firearm-related equipment may be owned (including New York City’s restrictions against “deceptively colored firearms” such as pink-colored guns).<a href=”#_ftn10″ name=”_ftnref10″>[10]</a> Thus, a gun trust instrument must be carefully drafted in order to comply with federal, state, and local restrictions even if the trust settlor does not intend to contribute any NFA Weapons to such a trust.
<h2><strong>Conclusion</strong></h2>
A competent gun trust attorney will be able to help their client navigate the maze of laws related to firearms ownership and the applicability of the gun trust option to a given client’s needs. At a time in our country’s history when the Second Amendment is under increasing scrutiny, proper planning around such trusts is extremely important to ensure a client’s wishes are carried out.
<p style=”text-align: center;”>——————————————————————–</p>
<em>This DarrowEverett Insight should not be construed as legal advice or a legal opinion on any specific facts or circumstances. This Insight is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. The contents are intended for general informational purposes only, and you are urged to consult your attorney concerning any particular situation and any specific legal question you may have. We are working diligently to remain well informed and up to date on information and advisements as they become available. As such, please reach out to us if you need help addressing any of the issues discussed in this Insight, or any other issues or concerns you may have relating to your business. We are ready to help guide you through these challenging times.</em>

<em>Unless expressly provided, this Insight does not constitute written tax advice as described in 31 C.F.R. §10, et seq. and is not intended or written by us to be used and/or relied on as written tax advice for any purpose including, without limitation, the marketing of any transaction addressed herein. Any U.S. federal tax advice rendered by DarrowEverett LLP shall be conspicuously labeled as such, shall include a discussion of all relevant facts and circumstances, as well as of any representations, statements, findings, or agreements (including projections, financial forecasts, or appraisals) upon which we rely, applicable to transactions discussed therein in compliance with 31 C.F.R. §10.37, shall relate the applicable law and authorities to the facts, and shall set forth any applicable limits on the use of such advice.</em>

<a href=”#_ftnref1″ name=”_ftn1″>[1]</a> <em>See e.g.</em>, Gun Control Act of 1968; Firearm Owners’ Protection Act of 1986.

<a href=”#_ftnref2″ name=”_ftn2″>[2]</a> 26 U.S. Code § 5845.

<a href=”#_ftnref3″ name=”_ftn3″>[3]</a> <em>See, e.g.</em>, N.C. Gen. Stat. § 36C-8-809.

<a href=”#_ftnref4″ name=”_ftn4″>[4]</a> <em>See, e.g.</em>, C.A. Prob. Code § 16007.

<a href=”#_ftnref5″ name=”_ftn5″>[5]</a> <em>See </em>R.I. Gen. Laws § 11-47-8(a) (banning possession of machine guns, except for manufacturers as provided for in § 11-47-19); Code of the District of Columbia c. 45 § 22–4514(a); N.Y. Penal Code § 265.02(2).

<a href=”#_ftnref6″ name=”_ftn6″>[6]</a> <em>See </em>R.I. Gen. Laws §§ 11-47.1-1, -2, -3; C.A. Penal Code § 32310; Conn. Gen. Stat. § 53-202w.

<a href=”#_ftnref7″ name=”_ftn7″>[7]</a> <em>See, e.g.</em>, Conn. Gen. Stat. §§ 53-202-202x; C.A. Penal Code § 30900.

<a href=”#_ftnref8″ name=”_ftn8″>[8]</a> <em>See, e.g.</em>, R.I. Gen. Laws § 11-47-20; M.A. Gen. Laws c. 269 § 10A; C.A. Penal Code § 33410; N.Y. Penal Code § 265.02(2).

<a href=”#_ftnref9″ name=”_ftn9″>[9]</a> <em>See </em>Municipal Code of Chicago § 8-20-060.

<a href=”#_ftnref10″ name=”_ftn10″>[10]</a> N.Y.C. Administrative Code § 10-131(j)(1), (3), (5), (6) (defining and banning possession of “deceptively colored firearms”, with exceptions); Municipal Code of Chicago § 8-20-060 (banning laser sights and silencers); Municipal Code of Chicago § 8-20-075 (banning “assault weapons” in the City of Chicago). Not to discriminate, New York City also expressly bans guns which are colored “white, bright red, bright orange, bright yellow, bright green, bright blue, bright pink or bright purple.” N.Y.C. Administrative Code § 10-131(j)(1)(ii), (3).