Last year I wrote this scathing review of Michel & Cubeiro’s 2022 edition of their popular book “California Gun Laws”. Actually, my harsh criticism was limited to the portions touching on estate planning. As far as I knew, the rest of the book was great, and my recommendation was to BUY IT (but rip out the pages on estate planning). I use the book often, personally and professionally, and have for a long time.
This year my criticism is softer and with the 2023 edition there is no need to rip out ALL the pages on estate planning (just the pages disparaging gun trusts). Again, BUY IT (it’s even thicker this year). However, there are still several errors and omissions relevant to estate planning and I do suggest making corrective annotations in your new book reflecting the points I raise in this article, and yeah you might want to rip out the last several pages disparaging gun trusts. Or print this article and stick it in the book.
The authors are obviously busy doing what they do best, dealing with the onslaught of anti-2A tyranny and pro-2A litigation after NYSRPA v Bruen, and have not had the time to address all of the points I raised in last year’s review. For example, they did not fix the inaccuracy I noted regarding the FSC exemption under PC 31700(b)(7)-(13), which was on page 141 of the 2022 edition, and is on page 151 of the 2023 edition — make that the first page 151 of the 2023 edition as there are two of those. (In the copy I received recently via Amazon, there is a pagination problem such that page numbers 143-152 are repeated but the pages are not duplicated so a given page number in that range refers to two different pages with different content.) Anyway, aside from the production problems, the substantive error (“trustee of a trust”) is serious and should be fixed for next year. The trustee of a living trust (revocable or not) is NOT exempt from having an FSC, at least not by virtue of that section (other exemptions may apply to the individual, for example having a CCW). I repeatedly encounter professional fiduciaries who receive firearms as trustee and are unaware of the FSC requirement. I mention the above error first, as I did last year, because it is in a separate section dealing with FSC exemptions.
There is a similar error on another chart at page 171 describing exemption from using a dealer under PC 27920(b) for bringing a gun into California due to bequest or intestate succession. The federal and state statutes (and regs) providing exemption from the dealer requirement for bequest and intestate succession seem to use the traditional sense of bequest as a gift made through a will, rather than the broader sense often seen including intervivos trust gifts, so to be safe I would recommend using a dealer for interstate transfers. Also, I would recommend for California living trusts that the initial successor trustee be an individual residing in California. Otherwise, the “slow PPT” issue may pop up, which was the main problem frustrating use of living trusts for guns prior to enactment of PC 16990(q). If that particular Californian initial successor trustee predeceases or is otherwise not available, not to worry. In a well-drafted trust, there are a number of alternate methods of removing trustees and filling vacancies, or of appointing a special trustee to handle the firearms. Once death is conquered and title to the firearm successfully passes to a California trustee, it is then a simple matter to make additional legally compliant transfers under terms of trust, either within California or without.
I now turn to the main sections on estate planning [two sections, Section 3 (“Operation of Law” Transfers Other Than Transfers Between Spouses Involving Transmutation of Property) and Section 4 (Gun Trusts), together spanning pages 187 through 194, all within Chapter 5 (Obtaining Firearms and Ammunition), Part VII (Exceptions to Transferring Firearms Through a Federal Firearms Licensee in California), Subpart B (California Law)].
The big improvement this year (why you don’t have to rip out ALL the pages on estate planning) is that they mostly cleared up their apparent confusion regarding the operation of PC 16960 and PC 16990, and this year they did not misquote the sections as they did last year. (I am guessing this error probably persisted for several years since enactment of AB 1292 in 2019, but I had not bought the book for several years so I did not learn of the error until last year.) The manner in which they explain these sections this year is a bit confusing, though for the most part technically correct. I do very much appreciate their pointing out that only PC 16960 technically defines the term “operation of law”, and that PC 16990 defines a larger phrase containing that term of art within it. That is a very important distinction because, for example, including living trusts within that term upends a lot of case law (e.g., title insurance cases) that holds otherwise as trust arrangements are more akin to contract. But conceptually, especially in a handbook like this, I think it is more helpful and simpler to describe these two sections (as I have in previous articles including last year) as practically and functionally two separate definitions of “operation of law”, PC 16960 being the exemption from the requirement of getting a firearm dealer license, and PC 16990 being the exemption from the requirement of going through a firearm dealer for a valid transfer in a private party transaction (PPT) within California. This year’s edition almost completely ignores the important issue of the licensing requirement, additional likely exemptions from which I discussed back in my July 2019 article on the new AB 1292. If you are worried about PC 16960 you can always just run it through a gun dealer, which is generally good advice anyway to avoid prohibited person issues, but other exemptions will probably apply. The important thing is having a valid transfer to successor trustee so that probate can be avoided, and we can have that now under PC 16990.
While I am very happy that the 2023 edition is now technically correct on this “operation of law” discussion, there is a bit of sloppiness that could be clarified in the next edition. The book on pp.187-188 lays out the sixteen situations exempt under PC 16960 (though it confusingly only mentions the statute once in a footnote to a paragraph preceding that with the list), and then it follows with another list of four additional exemptions and cites in footnotes PC 16990 for those exemptions. There is a problem with each of these four, as follows:
- “A firearm passing to a surviving spouse” would be clearer if it referred to it passing by spousal property petition under Prob C 13500 et seq, so as to distinguish it from the transmutation exemption contained in both sections PC 16960 and PC 16990.
- The reference to delivery by law enforcement to “finder of a firearm” appears to be erroneous as it appears in both PC 16960 and PC 16990 and therefore is not an additional exemption.
- “A firearm passed to a decedent’s successor” would be clearer if it referred to the small estate affidavit procedure for wills or intestacy under ProbC 13000 et seq.
- “The trustee of a trust” is a loaded little phrase appearing nowhere in these code provisions, but appearing often with differing and conflicting meanings in the various editions of this book. Apparently here it is used to refer to PC 16990(q): “The trustee of a trust that is not referenced in subdivisions (k) or (p)” [(k) being a testamentary trust and (p) being a court-supervised trust]. This is our crucial clause that allows living trusts to work so much better. Aside from the false implication this broad wording about PC 16990 gives that PC 16960 did not exempt any trusts when in fact testamentary and court-supervised trusts were already included in PC 16960, there is also the conflicting reference I note above where the book (both this year and last) uses the exact same phrase in a very different, not so broad sense to describe the FSC exemption which is limited instead by PC 16960 and does NOT exempt living trusts. It is best here to describe PC 16990(q) accurately instead of trying to simplify it too much.
Next I turn to the book’s Section 4 discussing “Gun Trusts” as another exception to the requirement of going through a gun dealer. I don’t even know why they still include this section, because I agree with them that NFA trusts are now rare in California, for multiple reasons including less availability of NFA, less demand for NFA (think bullpups vs AOW), and less need for an NFA trust due to ATF getting rid of the requirement for CLEO signoff, and even where you have one it must comply with both state and federal law. But I guess they include this section because a lot of gun owners are misled into thinking that a “gun trust” can be used to somehow evade California transfer laws. And this is a valid concern. There are a lot of shoddy pro forma “gun trusts” being sold on the internet by non-attorneys, even given away for free by some gun shops. And a lot of people get their legal advice from the internet and non-lawyers, or lawyers that should not be giving advice on estate planning.
A lot of the confusion regarding gun trusts is because estate planning attorneys often speak and write about trusts as if they are entities, when the vast majority of them are clearly not. Even some irrevocable trusts which are treated as entities for tax purposes by the IRS, are NOT actually legal entities. It’s usually just easier to refer to them that way, to describe their function. But actually, in the vast majority of states, including California, trusts are NOT entities. They are simply a legal arrangement for a relationship, akin to contract, between trustor, trustee and beneficiary. And California generally bans entities from owning guns. The authors (like many attorneys, including even some estate planning attorneys) seem confused by this; while they describe a gun trust as “basically just a legal relationship” at the top of p. 190, they state on p.191 that a trust is a legal entity. A trust is clearly NOT an entity in California. There are exceptions for certain statutory trusts, like REITs and business trusts under the codes of some states. (Trusts have a longer history as business entities than corporations, which have been popular only for the last century or so.) Obviously, NFA trusts are an important example of a statutory trust that is defined as an entity under federal law. (But note that transfers must comply with Title I as well as Title II, and also with state law.) But the vast majority of trusts in California (whether revocable or irrevocable) are NOT entities, and they are completely disregarded for purposes of California firearm transfer laws. Any transfer between trustees is simply a transfer between individuals.
So I totally agree with the authors when they say that a firearm can only be transferred to a single trustee, and that subsequent transfer to a beneficiary (other than the trustee) would require an additional transfer. But the last sentence of the second paragraph of p.191, stating that firearms (generally) cannot be transferred to a trust, should be taken out and shot with a very large, illegal caliber of artillery round. Again, TRUSTS ARE NOT ENTITIES (generally). Even in the rare case you have a trust that is an entity, you still comply federally with Title I (as well as II), and also with California transfer laws. (California generally prohibits entities from owning guns, but there have been a few exceptions over the years.)
The most shocking and offensive part to me, as an attorney who strongly advocates gun trust planning, are the perfunctory conclusions drawn on pp. 192-194 that gun trusts have little or no benefit. While I addressed similar conclusions last year (also check my recent article on the benefits on gun trust planning, published in a gun mag), I will add a few comments here.
First, regarding the point made on p.192 that, while PC 16990 allows transfer of a firearm to a trustee without going through a firearm dealer, there is supposedly no real benefit of having a gun trust because a subsequent transfer to a beneficiary (other than the trustee) would have to go through a firearm dealer, I am again surprised at the authors lack of understanding and appreciation for estate planning. They seem to think that all gun owners care about is avoiding the use of gun dealers to process firearm transfers. While it is sometimes nice to do that, to save money and perhaps for some other constitutionally legitimate reasons, it is not commonly an important objective in estate planning. (While I am happy to plan to minimize use of gun dealers, I am not going to sell that as a benefit as I plan for the long term and it is too easy for Sacramento to change the law on this point.) It is far more common for estate planning attorneys to recommend having a firearm dealer process these transactions so that prohibited person status can be checked, or to access needed expertise regarding other factors such as firearm features and applicable law in other jurisdictions. The objective of estate planning is to protect family in various ways, including avoiding conservatorship and probate, and planning for asset protection and family protection, possibly including incentives for training through multiple generations. The main sea change with AB 1292 that we should be happy about was the change in PC 16990 that allowed revocable trusts to conquer death; in other words, allow a transfer to a successor trustee. Before AB 1292, I designed elaborate plans to get guns into a trust via the will and/or a memo used in conjunction with a will, but this often required probate, avoidance of which is a major objective of estate planning. Avoiding dealer fees is way down on the list of objectives. Even so, I can think of a lot of ways to potentially exempt beneficiaries from having to go through a dealer. For example: given the wording of PC 27875, an appropriate beneficiary (parent/child, grandparent/grandchild) could arguably be exempt for receiving the firearm “by gift” or “other means” “to” the beneficiary even though not direct because the trustee is also exempt (not that I would rely on this argument); easier still (and very routine in estate planning), the beneficiary, even if not named initially as a successor trustee, can later be named as a successor trustee or co-trustee by the then-serving trustee, or by a trust protector, or by a court; or the beneficiary can be simply named by one of these as a “special trustee” for that particular firearm. You can bifurcate trust duties and have multiple special trustees for multiple firearms, while limiting it to no more than one trustee per firearm. So it is actually very easy, even many years after death of decedent, to qualify a beneficiary as an exempt trustee, if you want to avoid the dealer. In fact, the specific concern expressed by the book in footnote 42 on page 79 (“…it is uncertain how all of this would work”, in relation to minors inheriting ownership when California restricts them from possessing), is easily handled as any decent trust will provide for successor trustee to retain assets at least until beneficiary reaches age 18.
The discussion on p.193 regarding “assault weapons” (and .50 BMG) appears unchanged from last year, to which I responded that estate planning is not simply about giving stuff away, but also training, potentially for generations, and it is commonplace for active shooters to seek high-end gun training outside of California. Gun trust planning can preserve these special weapons (which in America are simply called “rifles”) for training in that free country, where your kids may actually live one day, or at least visit for training as often as the trustee can coax them to do so.
The paragraph on p.194 regarding “large cap” mags appears inaccurate, at least for those with “Freedom Week” mags. If you have them already, a “transfer” into a trust, even though we use that terminology, is not really a transfer. It’s nothing. So it doesn’t change any status except of course any successor trustee should be wary of accepting, depending on how the litigation turns out.
Speaking of litigation, given the authors’ firm history of arguing in federal courts that there is NO fundamental Second Amendment right to open carry, and given the extremely strong dicta in NYSRPA v Bruen that there is indeed such a right to open carry, and that it appears, based on historical tradition, to have an even stronger constitutional footing than concealed carry (which is also protected), I think the authors should have more respect for the necessity of gun trusts in maintaining these traditions. Word of mouth only goes so far, especially with all the elites opposed to our values. NRA is reeling from its problems. Front Sight is out of business. The only institution we can rely on for training is YOUR family, and the only way to carry on postmortem training with objective, immutable performance criteria is with a properly drafted (and flexible) gun trust.