Gun Trusts: The Complete Guide - LawPracticeCLE · Gun Control Act, but also the National Firearms Act. •It is also important to note in the trusts statement of intent that the

2019 Edition

Gun Trusts: The Complete Guide

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© 2019 Porter Wright Morris & Arthur LLP

GUN TRUSTS

Michael A. Sneeringer

239.593.2967

[email protected]


• Section I.

• Background information on firearms and trusts containing firearms

a) Uniform Trust Codeb) Federal law considerationsc) State law considerations

Section II. Creation of gun trusta) Basic contentsb) Identity of beneficiariesc) Trusteesd) Trustee powerse) Additional considerationsf) Drafting checklist

Section III. Ancillary gun ownership issues

Section IV. Cases on gun trusts

ITINERARY

2


Section I. Background

information on firearms and

trusts containing firearms

3


• The Uniform Trust Code does not

specifically address assets such as

firearms.

• State’s trust laws are silent on the

ownership of firearms.

• However, State’s laws are not silent on

the overall position and ownership of

firearms.

UNIFORM TRUST CODE

4


• National Firearms Act

o While the tax imposed by the National

Firearms Act of $200 on the making

and transfer of firearms has not

changed since its inception, the

substance of it is virtually

unenforceable.

• Gun Control Act of 1968

FEDERAL LAW

5


• Congress sought to impose a tax on the

making and transfer of specifically

enumerated firearms, as well as those

engaged in the sale, manufacturing and

importing of such firearms.

• Defines the terms “firearm,” “rifle,”

“machinegun,” “antique firearm,”

“unserviceable firearm,” and “destructive

device.”

NATIONAL FIREARMS ACT

6


• Regulates the interstate transportation of

firearms.

• Firearm:(A) any weapon (including a

starter gun) which will or is designed to or

may readily be converted to expel a

projectile by the action of an explosive;

(B) the frame or receiver of any such

weapon; (C) any firearm muffler or

firearm silencer; or (D) any destructive

device.

GUN CONTROL ACT OF 1968

7


• A destructive device includes an

exhaustive list of things including: bombs,

grenades, rockets, missiles, mines, and

other types of weapons either designed

or intended for use in converting such

device into a destructive device.

• Additional terms, such as “shotgun,”

“rifle,” “short-barreled rifle,” and “antique

firearm” are also defined with specificity.

GUN CONTROL ACT OF 1968

8


• Effective July 13, 2016, the Department

of Justice published revisions, a “final

rule,” under 27 CFR part 479 applicable

to machine guns, destructive devices and

certain other firearms.

• Referred to as Rule 41F.

• Rule 41F discusses background checks

for “Responsible Persons.”

FEDERAL LAW

9


• Rule 41F is important because it closed

what effectively amounted to a “loophole”

that allowed individuals, under the

disguise of a trust, to purchase a firearm

without the identification and background

check requirements.

FEDERAL LAW

10


• Rule 41F requires responsible persons, of

trusts or legal entities, to: (A) complete

ATF form 5320.23 (the National Firearms

Act Responsible Person Questionnaire);

and (B) submit photographs and

fingerprints when the trust or legal entity:

(1) files an application to make an NFA

firearm; or (2) is listed as the transferee

on an application to transfer an NFA

firearm.

FEDERAL LAW

11


• Firearm Owners Identification Cards.

• All applications to make or transfer a firearm are required to be copied and forwarded to the chief law enforcement officer (CLEO) of the locality in which the applicant/transferee or responsible person resides.

• Compare certain cities’ laws to certain states’ laws (Chicago to Illinois; New York City to New York State)

STATE LAW

12


SECTION II. CREATION OF

GUN TRUST

13


• The contents of a typical gun trust are no

different than any other revocable trust,

except for references and terms related

to firearms and the Act.

• Can also be created as an irrevocable

trust.

• The grantor or gun owner creates a trust

during his lifetime for his benefit, naming

himself as a trustee.

BASIC CONTENTS

14


• The trust should make specific references

to an intent of complying with not only the

Gun Control Act, but also the National

Firearms Act.

• It is also important to note in the trust’s

statement of intent that the trust is

created specifically to comply with local,

state and federal law on firearms in its

administration and interpretation.

BASIC CONTENTS

15


• The grantor or gun owner creates a trust during his lifetime for his benefit.

• If the grantor is going to name specific beneficiaries during his lifetime, he should ascertain that such beneficiary(ies) is able to own a firearm.

• The trust will give the trustee authority to ascertain whether such beneficiary can receive the firearm upon the grantor’s death.

IDENTITY OF BENEFICIARIES

16


• The trust should make an alternate

disposition of the firearm(s) in case a

certain beneficiary is unable to own a

firearm.

• If the trust has only one beneficiary, a

charitable remainder beneficiary should

be utilized (such as the National Rifle

Association).

IDENTITY OF BENEFICIARIES

17


• Because this is usually created as a

revocable trust, the grantor is typically the

initial trustee.

• In order to properly accomplish its

purposes, the gun trust should have

successor trustees listed whom are

eligible to own firearms themselves, in

accordance with the Gun Control Act of

1968.

TRUSTEES

18


• Since the grantor cannot predict the

future, the trust should contain automatic

removal language that indicates if a

successor trustee, who, at the time he is

to become trustee, is an ineligible trustee

in accordance with the provisions of the

Gun Control Act of 1968, he is deemed to

have predeceased the grantor.

• It is recommended that at least 2

qualifying successor trustees be named.

TRUSTEES

19


• Instead of naming successor trustees, a

trust protector or trustee selector could be

named in the trust instrument to select

successor trustees who are eligible to

serve in accordance with the Gun Control

Act of 1968.

• Typically, corporate fiduciaries are

unwilling to serve as trustee of a gun

trust.

TRUSTEES

20


• Use broad language in order to deal with

the grantor’s firearms.

• Allow the Trustee to fill out the requisite

transfer forms to transfer the firearms.

• Reimburse the Trustee for shipping costs

and/or travel costs to transport such

firearms.

TRUSTEE POWERS

21


• Discretion to transfer firearms to

beneficiaries, in accordance with local,

state and federal law.

• Authority to ascertain whether such

beneficiary can receive the firearm upon

the grantor’s death (allow background

checks and reimbursement for such check).

TRUSTEE POWERS

22


• Do not forget the obvious Trustee powers

included in most trusts:

o Power to sell;

o Power to terminate an uneconomic

trust; and, among others,

o Power to transfer the Trust’s situs.

TRUSTEE POWERS

23


• Although a dynastic trust may be

preferred, trust must comply with the

applicable state’s Rule Against

Perpetuities.

• During his lifetime, the grantor may leave

himself the power to amend the trust and

add and/or remove additional property

from the trust.

ADDITIONAL CONSIDERATIONS

24


• The grantor may prepare a list of his

firearms to accompany the creation of the

gun trust.

• This is analogous to completing a

Schedule “A” upon creation of a

revocable trust or simultaneously

executing a statement of tangible

personal property when creating a will.


25


• If the grantor is considering expatriation,

transfers of firearms to a gun trust should

be made before the grantor becomes a

“prohibited person,” i.e., an expatriate.

• The gun trust would be drafted to ensure

that if the grantor became a prohibited

person under 18 U.S.C. § 922(g), the

grantor would immediately cease to be a

trustee and/or a beneficiary of the trust.


26


• Grantor

• Initial Beneficiary

• Successor Beneficiaries

• Charitable Taker-of-Last-Resort

• Initial Trustee

• Successor Trustees

• Providing for Incapacity of Beneficiary

• Providing for Incapacity of Trustee

DRAFTING CHECKLIST

27


• Flexibility to Change with State and/or

Federal Laws

• Trustee Addition and Removal

• Trust Protector with Ability to Add or

Remove Beneficiaries

• Signatures of Grantor and Trustee with

Appropriate Notary/Witness

Requirements in Accordance with State

Law

DRAFTING CHECKLIST

28


SECTION III. ANCILLARY GUN

OWNERSHIP ISSUES

29


• For example, how would a bump stock

ban effect its ownership by a gun trust?

o With a revocable trust, the bump stock

can be removed.

o Does giving the Trustee the power to

substitute assets cure this problem

with regards to bump stock ownership

by an irrevocable trust?

WHAT IF TRUST ASSET

BANNED?

30


• If a biometric or combination gun safe is

owned by the gun trust, the

trustee/successor trustee and grantor

must communicate so that the successor

trustee has the ability to open such safe.

• If there are online documents related to

the gun, the trustee must be given access

to the documentation (or know how to

access such information).

DIGITAL ASSETS

31


SECTION IV. CASES ON GUN

TRUSTS

32


• Judge required Henderson, a U.S. Border

Patrol agent, to surrender all of his guns

as a condition of his release on bail.

• Henderson complied, and the FBI took

custody of the guns.

• Henderson was convicted of the felony

offense of distributing marijuana.

Henderson v. U.S., 575 U.S.

___, 135 S. CT. 1780; 191 L.

ED. 2D 874 (2015)

33


• 18 U.S. Code § 922 - Unlawful acts

• (g)It shall be unlawful for any person

• (1)who has been convicted in any court

of, a crime punishable by imprisonment

for a term exceeding one year;

• (2)who is a fugitive from justice;

• (3)who is an unlawful user of or addicted

to any controlled substance;

Henderson v. U.S.

34




• (4)who has been adjudicated as a mental

defective or who has been committed to a

mental institution;

• (5)who, being an alien—(A)is illegally or

unlawfully in the U.S.; or (B) is admitted

to the U.S. under a nonimmigrant visa;

Henderson v. U.S.

35




• (6)who has been discharged from the Armed Forces under dishonorable conditions;

• (7)who renounced U.S. citizenship;

• (8)who is subject to a court order (related to harassment, stalking, or threatening violence); or

Henderson v. U.S.

36



• (g)It shall be unlawful for any person:

• (9)who has been convicted in any court of

a misdemeanor crime of domestic

violence

Henderson v. U.S.

37



• (g)It shall be unlawful for any person:

• Any of (1) through (9) . . .

• to ship or transport in interstate or foreign commerce, or possess in or affecting commerce, any firearm or ammunition; or to receive any firearm or ammunition which has been shipped or transported in interstate or foreign commerce

Henderson v. U.S.

38


• As a result of his conviction, §922(g)

prevents Henderson from legally

repossessing his firearms.

• Henderson asked the FBI to transfer the

guns to a friend who had agreed to

purchase them for an unspecified price.

Henderson v. U.S.

39


• The FBI denied the request.

• In a letter to Henderson, it explained that

the release of the firearms to Buyer would

place Henderson in violation of §922(g),

as it would amount to “constructive

possession” of the guns.

Henderson v. U.S.

40


• Henderson goes to court to seek release

of his firearms.

• District Court concludes (as the FBI had)

that Henderson could not transfer the

firearms or receive money from their sale”

without “constructively possessing” them

in violation of §922(g).

Henderson v. U.S.

41


• The Court of Appeals for the 11th Circuit affirmed, reasoning that granting Henderson’s motion would amount to giving a felon “constructive possession” of his firearms.

• Issue: whether §922(g) categorically prohibits a court from approving a convicted felon’s request to transfer his firearms to another person.

Henderson v. U.S.

42


• §922(g) makes it unlawful for any person convicted of a felony to possess in or affecting commerce any firearm or ammunition.

• It prevents a court from instructing an agency to return guns in its custody to a felon-owner like Henderson, because that would place him in violation of the law.

Henderson v. U.S.

43


• By its terms, §922(g) does not prohibit a felon from owning firearms.

• It interferes with a single incident of ownership—one of the proverbial sticks in the bundle of property rights—by preventing the felon from knowingly possessing his (or another person’s) guns.

Henderson v. U.S.

44


• All parties agree, that §922(g) prevents a

court from ordering the sale or other

transfer of a felon’s guns to someone

willing to give the felon access to them or

to accede to the felon’s instructions about

their future use.

Henderson v. U.S.

45


• Government argues §922(g) prohibits a

felon from transferring his firearms to

another person, no matter how independent

of the felon’s influence.

• A felon “exercises his right to control” his

firearms, merely by selection the recipient

because that choice determines who will/will

not next have access to the firearms.

Henderson v. U.S.

46


• “But the Government’s theory wrongly conflates the right to possess a gun with another incident of ownership, which §922(g) does not affect: the right merely to sell or otherwise dispose of that item.”

• “The Government’s view of what counts as ‘possession’ would also extend §922(g)’s scope far beyond its purpose.”

Henderson v. U.S.

47


• Congress enacted that ban to keep firearms away from felons like Henderson, for fear that they would use those guns irresponsibly.

• Government’s construction would prevent Henderson from disposing of firearms even in ways that guarantee he never uses them again, solely since he played a part in selecting their transferee.

Henderson v. U.S.

48


• He could not place those guns in a

secure trust for distribution to his children

after his death.

• He could not sell them to someone

halfway around the world.

• He could not even donate them to a law

enforcement agency.

Henderson v. U.S.

49


• 9-0 opinion in favor of Henderson.

• Court vacates the judgment of the Court

of Appeals and remands the case for

further proceedings.

• How could the issues of this case be

avoided? (Hint, gun trust . . .)

Henderson v. U.S.

50


• Decedent passed away in June 2016.

• In January of 2015, Decedent established trust with himself as the trustee and Yarteras the beneficiary.

• Prior to his death, according to Yarter, Decedent informed a mutual friend, that a blue folder at his home contained his will, but no will was ultimately found.

• Instead, the trust documents were found.

Estate of Keener, No. 13-18-

00007-CV, 2019 Tex. App. LEXIS

1222 (Tex. App. Feb. 21, 2019).

51


• Trust was a “gun trust” advertised as a vehicle used to “easily” transfer federally regulated firearms upon death and also as a way to legally share the use of a federally regulated category III asset, such as a silencer or suppressor, among multiple individuals.

• Terms of this trust, however, did not limit the trust property to only firearms.

• Trust was “funded” with a one-dollar bill.

• Attorney assisted Decedent in adding a suppressor to the trust.

Estate of Keener

52


• Under the terms of the trust, Decedent could add any real and personal property to it, and the trust did not specify how property was to be added.

• Decedent’s next of kin, appellees, lived in Illinois and, during the last year of his life, interacted with Decedent mostly via email, as Decedent’s ALS prevented him from communicating verbally.

• After Decedent passed away, he was buried without notice to his family, and Yarter disposed of the majority of Decedent's personal property.

Estate of Keener

53


• Yarter alleged that Decedent told him and other friends that he did not want his family to be present at his funeral or for them to have a share of his estate.

• After learning of Decedent’s passing through Facebook, appellees immediately traveled to Texas, where they met with Yarter and were informed of these facts and that no will had been found.

• Appellees were surprised to hear what Yarter alleged, and they consulted with an attorney.

Estate of Keener

54


• Yarter attempted to probate the trust documents as a will, but he eventually non-suited that claim.

• As part of those proceedings, the parties deposed Trust Attorney regarding the trusts he promoted and his interactions with Decedent.

• Appellees filed an application for a proceeding to declare heirship.

• Yarter filed a plea in intervention and alleged he had a justiciable interest in the proceeding.

Estate of Keener

55


• Yarter produced the trust documents, including a copy of a "Schedule A" titled "Trust Assets & Acknowledgment of Funding," which was the document underlying appellate case.

• Appellees objected to Yarter's intervention and argued that: the trust was only a "gun trust" meant to allow Yarter to receive a suppressor; the identity of the witnesses who signed the trust were unknown; the trust lacked the legal formalities and testamentary intent to add any property to the trust apart from a suppressor; and Decedent's residence was not properly and legally added to the trust because the attempt to add the real property failed to comply with the statute of frauds.

Estate of Keener

56


• On appeal, court holds that Yarter had a justiciable interest in the proceeding:– As an inter vivos trust, no testamentary intent was

required for its establishment and, because the trust documents did not provide otherwise, Keener was free to add any property in any way he wished.

– The trust documents also did not limit the purpose of the trust or state that it was intended to hold only firearm related property.

– Thus, appellees' arguments that Yarter lacked a justiciable interest because there was no testamentary intent, no witnesses, and because the trust was not intended to transfer anything more than the suppressor failed.

Estate of Keener

57


• On appeal, court holds that Yarter had a justiciable interest in the proceeding (continued):– Testamentary intent on Decedent’s part was not

required for the disputed property to have been added to the trust.

– Thus, because no testamentary intent was required, and because property may be added to an existing trust in any manner and at any time under Texas law, the trial court's decision was made without reference to guiding rules and principles.

– Therefore, Yarter had established he had a justiciable interest in the proceeding and that the trial court abused its discretion when it denied his plea in intervention.

Estate of Keener

58


• Takeaways:

– The “gun show” gun trust; use of proper legal

counsel.

– Attorneys and trust funding.

– Explaining to clients that without funding, a

trust may not serve its intended purpose.

Estate of Keener

59


Thank you!Michael A. Sneeringer

Porter Wright Morris & Arthur LLP9132 Strada Place, 3rd Floor

Naples, FL 34108 Direct: 239-593-2967

Fax: [email protected]

Documents

Gun Trusts: The Complete Guide - LawPracticeCLE · Gun Control Act, but also the National Firearms Act. •It is also important to note in the trusts statement of intent that the