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Here is the full original submission for an article of mine published several months ago by Recoil Magazine. As I posted previously, the editors significantly changed my message. I knew they would have to cut the length down, but they cut out my main point so here is the full version.
Do I Need a Gun Trust?
This article aims to help you decide whether or not you need a gun trust.
Short answer: YES! But not for the reasons many assume.
What is a gun trust? Let’s start with the most basic definition: a trust designed to hold guns. While any trust can hold guns, it may be dangerous to hold guns in a trust not designed for that purpose.
Trusts vary widely in purpose and complexity. With just a few basic required elements, a valid trust can easily be created within the four corners of a napkin; so can a gun trust. You could even engrave it on a gun stock. Of course, planning is the important thing and that is why we like to use paper, lots of paper.
There is no shortage of internet-based, high-volume trust mills offering low-priced piles of paper they call gun trusts: online document preparers, paralegals, even some attorneys who should know better. These vendors are selling a pro forma solution for a complicated problem—gun transfer at death or incapacity—to a clientele in need of advice the vendors are not capable of giving. Avoid these “mill-spec” gun trusts; canned estate plans do not work.
NFA GUN TRUSTS
Gun trusts rose in popularity as a way to obtain items regulated under the National Firearms Act (NFA) such as machine guns, short-barreled shotguns, short-barreled rifles (SBR), suppressors (silencers) and a special class of weapons called Any Other Weapon (AOW). (Californians are generally limited to AOW’s, which often resemble a short-barreled shotgun without a stock.) Unlike other federal law and the law of most states, the NFA treats trusts as entities capable of registering to own NFA items. Until 2016, individuals who applied with ATF to register NFA items were required to obtain Chief Law Enforcement Officer (CLEO) approval first, and this was an impediment in most locales. However, CLEO sign-off was not required for trust applications, so having an NFA gun trust was a practical necessity in most areas.
Then in 2016, ATF ditched the CLEO sign-off requirement for all NFA applicants, including individuals, thereby removing the main benefit driving demand for NFA gun trusts. Unfortunately, the same rule change added a new requirement for all “responsible persons” under the trust to complete forms and supply ATF with identifying photos and fingerprints for background check. Thus it was no longer possible for one to apply and add buddies as co-trustees so they could legally handle the NFA items, without identifying those buddies to the ATF. ATF never really made a convincing case as to why they needed to identify responsible parties; they even admitted criminal activity using NFA items was so rare as to be almost non-existent. And why would criminals report truthfully? For anyone not already leery of giving an entire copy of their trust to the ATF, the new requirement to identify “responsible persons” should be a wake-up call. Note that overseas, in some countries recognizing trusts, a disturbing trend has developed requiring the same sort of disclosure of trust instrument and responsible persons. Such invasive regulation, normally limited to statutory business entities (corporations, LLC’s), erodes the privacy critical to families in free societies.
Despite the rollback in benefits, NFA gun trusts may remain beneficial for some, e.g., depending on state law, appointing family members as co-trustees may insulate them from possible criminal liability under NFA for constructive possession. This is definitely not something to chance with an online trust mill; you have to comply with all applicable law—state as well as federal—so check around for an attorney in your state who can answer these questions.
I practice law mainly in California; occasionally I will draft an NFA gun trust with multi-state administrative provisions for a client with bona fide dual residency in another state, but generally avoid recommending NFA gun trusts for California clients. As is the case in the vast majority of states, trusts in California are clearly not entities, though we often speak of them as if they were. Trusts are merely fiduciary arrangements between individuals or entities, for the benefit of some individual or entity. Usually when we say we transfer something into our own trust (where we serve in all three capacities: grantor, trustee, and beneficiary), that something does not go anywhere; we simply declare that we now hold it under terms of the trust instrument. Later, when a successor trustee takes over, an actual transfer does occur but this “transfer to trust” is really just a transfer to another individual, holding under terms of trust. Moreover, transfers (even loans) between individuals are highly regulated in California and generally there is no allowance for joint title to firearms in California. Trusteeship includes the right to possession and any attempt to jointly exercise or even furcate or otherwise allocate powers among co-trustees or special trustees, even if it helps with NFA, may be problematic under California transfer laws. So when fellow Californians want an NFA item, I recommend applying individually with ATF rather than creating an NFA gun trust.
Again, find the expert in your state to see if an NFA gun trust makes sense for you. But whatever you do, avoid listing your non-NFA guns in an NFA gun trust! Use a general assignment instead, or better yet, have a separate trust for non-NFA guns.
NON-NFA GUN TRUSTS
How about non-NFA firearms—everyday rifles, pistols and shotguns?
Things got so bad in California (remember “Gunpocalypse”?) that for a three-year period I mostly recommended against holding guns in trust. Given persistent uncertainty about trust transfers, I came up with an alternate approach using powers of attorney and specific bequests by will and by written memoranda authorized by will, to get guns into trust after death.
Then in July of 2019, shockingly, Sacramento did something good for gun owners in passing AB 1292; it cleared up a lot of confusion that dogged us in planning for gun transfers, in particular regarding trusts but also in other areas such as use of powers of attorney during incapacity and small estate affidavits after death.
Back to the main question: Do you need a gun trust for your non-NFA firearms? What exactly can a gun trust do for you? I can tell you what it can do for California gun owners. States vary, check with your attorney, but most of these benefits will apply generally.
Unlike the NFA gun trust which until a few years ago provided a tangible, clear and present benefit by allowing just about everyone, even in states like California, to obtain an NFA firearm, the non-NFA gun trust is simply estate planning—all about protecting your family, and the peace of mind you get from that.
Does that mean you need a gun trust? Certainly it does, if you are serious about family protection. Not everyone is. I’ve had clients that literally hated their kids, wanted to give everything to charity instead. Many are indifferent, going through the motions simply because their neighbor or coworker has a trust, or their spouse is nagging to get it done. But their hearts are not in it. They lack legacy mindset.
Black families in particular have suffered in this country, post-slavery, largely due to a lack of estate planning. The same is true of other minorities, sometimes for cultural reasons but mainly it has to do with economic position and a false perception that estate planning is something only rich people do. Actually in many ways, estate planning is more important, the less wealth you have, because you need to protect it from loss and help the next generation grow it. Gun owners are an extremely diverse lot, including some high net worth (HNW) families and some not-so HNW. Gun-owning families, especially those in lower economic strata, need to plan at a higher level if gun culture is to survive.
So here are a dozen ways a non-NFA gun trust can protect your family:
- Transmit Legacy of Firearm Training
This is listed first as it is by far the most important. It is not enough to merely be a gun owner. For example, you have to train seriously with your guns and carry them for defense in order to understand the lunacy of magazine capacity limits and other restrictions on carry. True legacy is only 10% stuff you give away. Ninety percent is training others, and then training them to train others. A legacy of family protection involves transmission of values necessary to preserve family power, namely, Life, Fortune, and Honor, first to your kids and then to their kids and on down the line through generations of descendants.
Will your children remember what you taught them, even ten years from now? One way to help them remember is to tie their inheritance (or at least a significant chunk of it) to their regular participation in defensive gun training. Reward them monetarily for training, competing, reloading, gunsmithing, teaching, and carrying for defense of themselves and others. Make it big enough to maintain interest despite cultural headwinds.
The trust is the only effective means for firearm legacy to be transmitted over multiple generations without dilution. Just look at our Founders who obviously had an excellent militia ethic yet, if the War of 1812 is any indication, failed to transmit that ethic to their children. If word-of-mouth training proved inadequate back when just about everyone hunted, how can we rely on it when so much of modern society is dedicated to canceling gun culture? What if each of us included, in our written family constitutions, provision for regular firearm training and testing under time pressure according to objective, immutable performance criteria? Much as a forward-looking business plan can have immediate benefit, this type of dynastic family planning can have a positive impact on our families even while we are alive.
Incentive language in a gun trust is similar to incentive language you might use in your main trust to transmit additional values important to your family, for example through religious, charitable, or financial mentorship. There is a lot of crossover potential and ideally all of your core estate planning documents should be drafted with an eye toward transmitting essential values you deem important for family protection.
America forgets its Founders valued widespread gun use not merely for balance of power against a standing army, but also as a sort of sacrament (effecting sanctity and justice, if you will), constantly developing and improving the moral character of citizens so they might continue to enjoy republican government. You probably have seen the John Adams quote: “Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other[…]” And you may have seen this quote from Thomas Jefferson: “A strong body makes the mind strong. As to the species of exercises, I advise the gun. While this gives moderate exercise to the body, it gives boldness, enterprise and independence to the mind. Games played with the ball and others of that nature, are too violent for the body and stamp no character on the mind. Let your gun therefore be the constant companion of your walk.” Washington’s Secretary of War Henry Knox nailed it further in 1790, advocating the entire population be educated and disciplined in the military arts, “by means of rotation”: “A glorious national spirit will be introduced, with its extensive train of political consequences. The youth will imbibe a love of their country; reverence and obedience to its laws; courage and elevation of mind; openness and liberality of character; accompanied by a just spirit of honor; in addition to which their bodies will acquire a robustness, greatly conducive to their personal happiness, as well as the defence of their country[…]An energetic national militia is to be regarded as the capital security of a free republic, and not a standing army, forming a distinct class in the community. It is the introduction and diffusion of vice, and corruption of manners, into the mass of the people, that renders a standing army necessary. It is when public spirit is despised, and avarice, indolence, and effeminacy of manners predominate, and prevent the establishment of institutions which would elevate the minds of the youth in the paths of virtue and honor, that a standing army is formed and riveted forever[…]”
So it appears gun training incentives would also encourage transmission of other beneficial values, and vice versa, each strengthening the others, furthering the ultimate goal of family protection.
- Prevent Accidental Felony
The worst legacy you can leave is for a family member or friend to become an accidental felon as a result of a poor estate plan that does not guard against unlawful transfer or possession of firearms. This can happen to those who handle your affairs when you are incapacitated, or who settle and distribute your estate once you pass on. It can also happen to beneficiaries (like that nephew on medical marijuana). Violations may occur because of jurisdictional issues (for example, a firearm is transported to a state that considers it a banned “assault weapon”), or because of issues with the firearm itself (perhaps a modification turning it into an NFA item, unregistered and therefore contraband), or even because of issues with the trustee (besides marijuana, there are many other categories under federal and state law under which someone may be deemed a “prohibited person” unable to possess firearms).
How does a properly drafted gun trust reduce the likelihood of accidental felony? For one thing, you can select a trustee, possibly one different than the trustee under your main trust, who knows guns well enough to at least spot issues and get help where needed. Also, in a properly drafted gun trust the language will educate the trustee by highlighting potential issues and will limit the trustee’s authority in certain ways to reduce the likelihood of accidental felony. And in California, having a separate gun trust avoids a technical violation that may occur if married gun owners have only the common joint living trust.
- Maintain Privacy
Do you want your guns to be a matter of public record? That could happen if you don’t have a trust and probate or conservatorship is necessary. A popular benefit of trusts in general is that they avoid unscrupulous solicitation of heirs by predators pouring through public probate records on a regular basis. The concern is far greater with guns. Instead of a harassing call, your heirs may receive a visit at 3am involving broken glass! With a gun trust, there is total privacy. You do not need to list your guns in the trust instrument. As trustee, you will simply maintain an inventory spreadsheet in your gun trust binder.
- Allow Temporary Use by Multiple Beneficiaries
Even in California, a gun trust may provide for use by multiple beneficiaries. However, this must be done with careful attention to state law as severe restrictions on such loans in California and other states may turn a seemingly innocent loan into an unlawful transfer. Adding users as co-trustees (as is commonly done with NFA gun trusts) may be a possibility in some states, but may be problematic in California.
- Family Maintenance / Bonding Through Recreation
Beginning immediately, the gun trust can provide generations of recreational activity (training, competition, etc.) organized to maintain family ties, with incentives to attend.
- Avoid Forced Liquidation of Firearms While Prohibited from Possessing
An established gun trust may be useful in some cases where the grantor is suddenly prohibited from possessing firearms due to one of several types of protective order. In California and with court permission, grantor’s agent under power of attorney may transfer the firearms to himself or another as successor trustee of the gun trust; however, the court must be assured grantor lacks control over the trust and this may require amending the trust instrument to something resembling what I occasionally use for clients expecting restoration of gun rights within a few years, for example after a psychiatric hold or plea of guilty to a “felony/misdemeanor wobbler”. Again, state law varies.
- Avoid Conservatorship During Incapacity
It is important to control what happens to your firearms while you are incapacitated due to illness or injury. You might recover, then wonder what happened to your favorite carry gun! A shoddy “mill-spec” gun trust rarely integrates with the estate plan, if such a plan even exists. A specially drafted gun trust will allow a successor trustee to take over in the event of incapacity, will allow the grantor to “come back in” if capacity is regained, and the estate plan should also include powers of attorney drafted with guns in mind.
Again, state law varies. In California, transfers by “operation of law” are exempt from having to go through a licensed gun dealer. (Keep in mind that where the recipient resides in another state, federal law requires that the transfer be handled through an FFL in the recipient’s state.) In addition, one who transfers by “operation of law” is exempt from having to obtain a gun dealer license. The code sections defining “operation of law” for these two exemptions are similar, but differ slightly. Recent passage of AB 1292 simplified planning in California, chiefly by broadening the scope of these definitions.
The exemption obviating the need to go through a gun dealer now expressly covers conservators, agents under powers of attorney, and trustees of living trusts. Normally we try to avoid conservatorship (sometimes called “living probate” and the downsides—cost, publicity, etc.—are similar to probate at death), but the clarification helps if a conservator is necessary. The new law expressly excludes agents under powers of attorney from the requirement of having a Firearm Safety Certificate; however getting a safety certificate is easy and inexpensive, and there are several substitutes such as having a concealed carry license. Power of attorney can be helpful as a backup, but the living trust (whether gun trust or main trust) is a better planning tool. What is really new here is that the law was broadened to deem a trust transfer as occurring by operation of law, eliminating the need for the dead or incapacitated trustee to show up at the dealer’s table. This was a surprising statutory change, as trust transfers are not generally considered to happen by operation of law; remember, trusts are private arrangements among fiduciaries, akin to contract. Theory aside, we can now plan reliably with trusts.
As for the exemption from having to get licensed as a dealer, conservators and agents under powers of attorney were both added to that exemption’s “operation of law” definition; but trustees of living trusts were not added. Don’t worry about the dead or incapacitated trustee losing sleep over compliance with the licensing requirement—the other exemption allowing the transfer to successor trustee is enough for the old guy to rest comfortably. This is really more of an issue for transfers made by successor trustee and there are several additional exemptions available to excuse the licensing requirement. One exemption applies if the trustee handles only up to a maximum of 50 firearms per year, which should be sufficient in most cases. Another exemption from the licensing requirement applies if a licensed dealer is actually used to make the transfer. Usually it is prudent to run transfers through a dealer even if not required, unless you are 100% sure the recipient is not a prohibited person. This is a choice for your family to make. A lot of folks who go through a dealer actually perjure themselves on the forms, yet the government rarely prosecutes these criminals.
So bottom line, with proper estate planning under current law in California, you should be able to avoid conservatorship by using either an agent under a power of attorney or an incapacity trustee (of gun trust, or main trust).
- Avoid Probate at Death
Like conservatorship, probate after death is generally to be avoided if possible due to cost, delay, public nature, potential for fostering disputes, etc. Refer to the preceding section for discussion of recently enacted AB 1292’s clarification on the use of trusts to transfer property after death. Trusts avoid probate! This newly legitimized ability to use trusts in gun transfer planning is a major, positive development in California, but the good news in AB 1292 doesn’t stop there. The law also clarified use of the small estate affidavit procedure and that can help in situations where there is no estate planning, or where the guns were not properly held in the trust. Note however that to use the affidavit procedure, the entire probate estate must be no more than $166,250. The expense of using the affidavit is far less than that of a full probate petition.
- Avoid Court Where Beneficiary is Minor
Court involvement may be necessary where a distribution is made to a minor. A properly drafted gun trust will avoid this outcome by retaining the firearms in trust until the beneficiary reaches the required age.
- Train and Evaluate Beneficiaries Prior to Use or Distribution
For those firearms to be distributed rather than held for generations, a gun trust can allow evaluation of beneficiaries over time prior to distribution of firearms. This is important not only with regard to minors, but also adult firearm novices.
- Avoid or Delay Confiscation
A gun trust may possibly avoid or delay confiscation under a future state or federal gun ban. We can only speculate, informed by previous attempts to regulate guns. For example, a federal ban may be accomplished with an expansion of NFA to cover more firearms and we can speculate that retention may be easier for items held in a dynasty trust. With a state ban, typically there is a grace period during which the firearms may still be purchased, and then another grace period during which owners may register the affected firearms. Under such a law, a gun trust might be used to keep the guns in the state longer. This would involve transferring the firearm to an adult child (or other young family member) who will be the registrant and serve as trustee. At the end of the child’s long life, if the ban remains in place, the child’s successor will need to remove the “assault weapon” from the state but will do so under trust terms providing for continued use of the firearms to train the family on vacations using trustees located out of state.
- Manage Risk
By segregating firearms from the main trust, a gun trust may insulate the rest of the estate from possible tort liability arising from firearm injuries.
Gun trust planning works best when integrated with contemporaneously-drafted main revocable trust, wills, powers of attorney, and other estate planning documents, all containing gun provisions of their own. Benefits vary a bit depending on the state, but no matter where you live, leaving a legacy of firearm training is by far the most important, for family protection and for survival of the republic. In the last year, we have seen local, state and federal governments infringe on our rights as never before. To give people an idea of what I mean by firearm training, so they can plan for it, I give away free training at a large, famous school. That school, because of its size and influence, only shut down for a few months but has since remained open, resisting unlawful decrees. Eventually the government may succeed in shutting it down, along with other gun schools. When that happens, your family will be the only firearm training institution available to you. Your trust will be its charter. And while some leftist-packed court of the future may rule that gun training provisions in a trust are void as against public policy, the great power of a private trust is that your family, the family you brought up right, is in charge of implementing your trust. They know what is in your trust instrument, even if the government rips that instrument right out of their hands, because given enough time it will be written in their hearts. As an attorney I can only recommend compliance, but there is a long tradition in this country of disobeying unjust and unconstitutional laws. I assure you that tradition is alive and well, and will grow as the times demand. Your family will not be alone.