Elder, Estate Planning & Probate Law: Demand for Gun Trusts Surges Amid Record Firearm Sales
By: William J. Smyth
Firearms ownership in the United States is at an all-time high and is trending higher due to increased participation in shooting sports and collecting, and firearms purchases for use in hunting and self-defense.
Recent high-profile shooting incidents have led to calls for increased regulation of firearms, which has driven record firearms purchases nationwide. An estimated 50 million U.S. households have at least one firearm. The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) estimates that there are currently about 234 million firearms in the United States.
Gun trusts are an important tool that attorneys can use to protect clients who own and use firearms. Historically, gun trusts were primarily used to facilitate the purchase of firearms regulated by the National Firearms Act (NFA). Increasingly, gun trusts are being used for other purposes, such as to ensure compliance with state and federal laws regarding the possession, use and transfer of firearms. Gun trusts can also be used to avoid probate for firearms.
Most clients seeking to create gun trusts will not own or wish to purchase a machine gun, but many of them will own rifles, shotguns and handguns. Firearms are valuable and collections can make up a significant part of a clientís net worth. For this reason, attorneys need to be aware that the ownership and use of firearms creates exposure to legal risks and that there are additional risks when guns are passed on to family or friends through wills or trusts. Without educating ourselves, we as attorneys could be unknowingly creating problems for our clients and their beneficiaries, who innocently transfer or possess firearms in violation of the law.
Attorneys must also consider their own liability. If, for example, an attorney drafts a will that calls for the distribution of a prohibited weapon to a beneficiary living in Boston, and the executor follows the instructions in the will, both the executor and beneficiary could be arrested, convicted of felonies, fined and imprisoned.
Gun trusts are helpful in facilitating the purchase of NFA weapons, accomplishing estate planning goals and helping to ensure compliance with state and federal firearms laws. Although New Hampshire firearms regulations are not onerous, our neighbor to the south has severe firearms laws, violations of which are considered felonies and lead to jail time. If a New Hampshire client owns firearms and has family living in Massachusetts or owns property in Massachusetts, a gun trust can be very useful in preventing his executor/trustee or beneficiaries from becoming accidental felons.
Under NFA, before applying to ATF, an individual seeking to purchase an NFA weapon must get a sign-off from the chief law enforcement officer (CLEO) in his jurisdiction, which can be difficult to obtain. An entity-purchaser can apply directly to ATF. Gun trusts eliminate the need to obtain CLEO sign-off.
Each time an NFA weapon is transferred, a transfer tax is imposed. ATF often takes several months to approve transfers. During this period, possession and use can lead to legal risk. Gun trusts can be used to hold NFA weapons for the use of multiple beneficiaries or a class of beneficiaries, which reduces the number of times transfer tax will need to be paid for the same NFA weapon and provides guidelines for possession, use and storage of NFA weapons, thereby reducing legal risk. In addition, gun trusts can facilitate the transfer of NFA weapons to beneficiaries without probate.
Gun trusts are easy to create and fund. They can be used to provide family members with instructions for the safe possession, use and storage of firearms and to ensure compliance with state and federal laws. Additionally, these trusts can alert family members to the risks associated with transporting firearms out of state, which helps prevent the accidental felony. Gun trusts can be used to transfer firearms to the next generation without probate and, like other revocable living trusts, can easily be amended to address changes in circumstances.
In addition, gun trusts can be used to address estate planning issues related to the ownership of firearms. Care must be taken to ensure that successor trustees are not prohibited persons and will faithfully carry out their responsibilities.
Gun trusts can be drafted to provide for the distribution of firearms upon the death of the grantor, or they can hold firearms for beneficiaries. Gun trusts can also be drafted as dynasty trusts. The grantor can set the parameters for the use of the firearms after they become disabled and after the grantorís death. For example, firearms can be held by the trustee until a beneficiary reaches a certain age or can be held for a class of beneficiaries with rules for usage.
Instructions for the maintenance of a gun collection can be laid out in a gun trust, as can instructions regarding the sale of individual firearms or the collection, to provide estate liquidity. A properly drafted gun trust helps manage legal risks such as negligent entrustment, negligent maintenance, transfers to prohibited persons, criminal possession, and transportation of firearms to jurisdictions where they are illegal.
When properly drafted, a gun trust serves to educate successor trustees regarding firearms law and provides guidance for trust administration. It also provides guidelines to ensure compliance with state and federal laws and ensures that only qualified beneficiaries have access to firearms.
In summary, gun trusts are valuable tools that attorneys can use to protect their clients who own and use firearms. Attorneys who offer gun trusts are able to attract new clients, which often leads to other legal work. Attorneys who arenít interested in offering gun trusts still need to be aware of the legal risks of firearms ownership and make referrals for gun trust planning when appropriate.
William J. Smyth is the owner of Smyth & Associates, P.A. and the New England Gun Law Group, with offices in Hampton, NH, and Kennebunk, Maine. Bill is one of the founding members of GunDocx Lawyers, a national organization of lawyers who study, teach, and practice in the area of firearms law and estate planning for firearms owners. He can be reached at 603-758-1617, firstname.lastname@example.org, or through www.smythlaw.net.