Gun Trusts: Valuable Estate Planning Tool or Doomed Loophole?
After wills, trusts might be one of the most commonly used estate planning tools. You can set up a trust for your children, for charity -- and for your gun? Gun trusts are growing and increasingly common way to pass firearms between generations. (Of course, gun trusts aren't for the gun in the way charitable trusts are for charity -- the firearms, or money meant to purchase firearms, make up the trust res or corpus.)
Like with many things gun-related, gun trusts can be polarizing topics for practitioners. Some criticize them as loopholes, allowing people to skirt around gun laws. To others, they're valuable planning tools, allowing firearms, sometimes valuable heirlooms, to be passed from generation to generation.
Gun Trusts Basics
If you're familiar with a typical trust, a gun trust won't be unfamiliar. In a gun trust, the grantor places property with the designated trustee to be used for or distributed to the beneficiary. The guns themselves don't have to be the corpus of the trust -- money in the trust can be used to purchase firearms.
Most lawyers in this practice area charge anything from $200 to several thousand dollars to set up a gun trust, and the business is booming. The amount of trusts has more than doubled in recent years, according to The New York Times.
The trust may be able to pass along firearms without the same bureaucratic hurdles that apply to transfers between individuals. Since the trust is a legal entity, it's not subject to the same legal restrictions an individual person would be -- and that's where the controversy comes in.
Your Trust Can Buy a Machine Gun When You Can't
Plenty of people use gun trusts to purchase guns, not to pass them along. Having a trust acquire guns can result in a much less stringent process review process. When an individual purchases a gun controlled under the National Firearms Act, such as shotguns, rifles and machine guns, they must submit fingerprints and a photo to the ATF along with an assertion from local law enforcement that the purchase is probably not illegal.
These restrictions don't apply when a gun is purchased in the name of a trust. Trusts can even be used to get around restrictions imposed on purchasing new machine guns, which are off-limits to civilians.
That might not last for too much longer, however. The Department of Justice has proposed federal rules which would impose many of the requirements applicable to individuals who purchase or transfer controlled firearms to trusts. Those regulations are expected to be adopted in May of this year.
Related Resources:
- Gun Collections Pose Special Estate Problems (Forbes)
- Estate Planning: The Next 'Growth' Practice Area for Small Firms? (FindLaw's Strategist)
- Law Firm Branding: Know Your Target Audience and Adjust (FindLaw's Strategist)
- Highland Park's Assault Weapon Ban Does Not Violate 2nd Amend (FindLaw's U.S. Seventh Circuit Blog)