Are CLEOs Shirking Their Duty?

So I’ve been reading the ATF Federal Firearms Regulations Reference Guide 2014, the most current version as of March 7, 2015so you don’t have to. It’s actually an interesting read if you’re into statutes, rules, regulations, and such. Try it.  You may have a knack for deciphering dense, jargon-laden language. But if not . . . at least skip to the Questions and Answers section that begins on page 191 for a more accessible rendition of much of the law and in a format that won’t drive you to wherever you go when you don’t drink.

If you’re like me, you’ll find interesting the answers to two questions on page 210, both of which fall under Section N of the Q&A: National Firearms Act (NFA). Now as everybody who’s anybody who’s at all interested in so-called NFA firearms knows, purchasing such arms comes with its own entry among Dante’s circles of hell [insert image of such circles here to catch the already weary reader’s eye]:


This particular circle floats somewhere between Limbo and Anger, though more than one AFA firearms aficionado swears he has seen the circle hovering around Violence.

There’s a reason for this. You see, NFA firearms are a special category of six firearms or weapons that comes with its own extra set of federal rules buyers must abide before they can get their hands on their new NFA firearm–that is, if their states’ law doesn’t ban them altogether. In brief, NFA firearms include 1.) machine guns, 2.) short-barreled shotguns, 3.) short-barreled rifles, 4.) silencers or suppressors, 5.) destructive devices, and 6.) “any other weapon[s],” an odd little category that really doesn’t include just “any other weapon,” but that’s a post for another time (see USC §5845 (a)).

Now, suppose you walk into your local gun shop to buy a short-barrreled rifle as an individual. The National Firearms Act or NFA is pretty explicit. There are taxes to be paid (the seller pays, but your pocketbook takes the actual hit), stamps to be affixed, fingerprints and photos to be taken (guess whose?), firearms to be identified, CLEO signatures to be secured, and finally, approval of the Secretary of the Treasury to be had. Yup, the NFA falls under the authority of the IRS. But that’s not the worst of your problems. No, your problem begins much closer to home.  With the Chief Law Enforcement Officer or CLEO in the jurisdiction where you live.

You see, because you chose to buy as an individual, the local CLEO has to decide whether to sign off on your application, certifying that s/he is

satisfied that the fingerprints and photograph accompanying the application are those of the applicant and that the certifying official has no information indicating that the receipt or possession of the firearm would place the transferee in violation of State or local law or that the transferee will use the firearm for other than lawful purposes. (CFR §479.85)

Read that again. Now, think about what you just read. Would you certify to all that? For someone you didn’t really know, who’s application just showed up in the mail? I probably wouldn’t. And I’m not alone. Apparently, many CLEOs are passing up the opportunity to put their butt on that dotted line as well.

Kind of takes the huff and the puff out of “Who does s/he think s/he is, anyway?” doesn’t it? Yes, I get the frustration of the prospective NFA firearms owner. But having read that little snippet from the Code of Federal Regulations (CFR), I get the reluctance of the CLEOs who don’t want to bet their career on the application of every John Doe and Jane Smith that lands on their desktops. Circle of Hell doesn’t begin to describe the firestorm that would ensue should that brand new certificated NFA firearm owner use that new NFA firearm to commemorate Columbine.

But surely the CLEO must sign eventually, right? You’re a taxpayer, by cracky! And you pay their salary!! There ought to be a law!!!

Check your outrage. There apparently isn’t a law. Let’s go back to those two questions and answers on page 210 of the AFT Federal Firearms Regulations Reference Guide:

(N16) Is the chief law enforcement officer required to sign the law enforcement certification on an ATF Form 1 or ATF Form 4?

No. Federal law does not compel any official to sign the law enforcement certification. However, ATF will not approve an application to make or transfer a firearm on ATF Forms 1 or 4 unless the law enforcement certification is completed by an acceptable law enforcement official who has signed the certification in the space indicated on the form.

(N17) If the chief law enforcement official whose jurisdiction includes the proposed transferee’s residence refuses to sign the law enforcement certification, will the signature of an official in another jurisdiction be acceptable?


“No.” Can’t get much more blunt than that. Though I guess it depends on what the meaning of “no” is. (As an aside, if I were doing Q&As for the federal government, I would have written, “Sorry Charlie, better luck next time. May the Force be with you. Or some such.)

For the “individual,” there’s no joy if Mudville’s CLEO decides s/he doesn’t want to sign the certification. Unless . . . Unless the “individual” takes advantage of another provision in the CFR, a provision that has implications for who can be a transferee under the NFA, a provision that defines “person” as:

A partnership, company, association, trust, estate, or corporation, as well as a natural person. (CFR §479.11)

Thus, when the NFA says that the transferee must be identified in the application for an NFA firearm, it is only where

. . . such person [i.e., transferee] is an individual, [that] the identification must include his fingerprints and his photograph . . . . (USC §5812) (emphasis supplied)

and therefore, only in such circumstances that the local CLEO must sign off before the application can proceed.

However, if the transferee is a partnership or a corporation or a trust? (Is that too obvious a hint that a trust might be the solution to the problems of both the prospective NFA firearm buyer and the reluctant CLEO?)

Rather than going the individual route, maybe a a trust is the better option. No muss, no fuss. No fingerprints, no photos. No CLEO, no certification. All legal, all by the book. Annie gets her gun. All right. [Readers may be nodding off. Another image to get them to the end.]:


And thus was born the gun trust and your local CLEO relieved of a responsibility s/he didn’t want in the first place. The end.

Interested, But Not Twitterpated–Yet

So when I began this blog post about this guy, I had to look up the spelling of the word “twitterpated” for the title to the post, which led to this:

And now that I’m done with that, let me return to writing about the guy I began with, Don Willett. He’s apparently on the short lists of some who are looking forward to the next Supreme Court nominee.

I don’t know much about this Justice of the Texas Supreme Court–yet–but he appears to have a sense of humor, so he’s got my attention.

A Gun Trust in Your Future?

A recent study by the University of Chicago Crime Lab published in the Journal of Preventive Medicine, coupled with a move by Senator Tim Kaine (D-Va.) to amend Section 922(d) of the Gun Control Act of 1963 (18 U.S.C. 44), provide yet another reason for gun owners to set up a gun trust.

The Chicago study involves a survey of 99 inmates of Cook County Jail. Number one among its five principal findings:

Our respondents (adult offenders living in Chicago or nearby) obtain most of their guns from their social network of personal connections. Rarely is the proximate source either direct purchase froma gun store, or theft.

In fact, purchases at gun stores and shows accounted for just 1.5% of the guns these individuals “accessed . . . during the 6 months before the current arrest.” Or, put another way,

a majority of the primary guns (40 of the 48 for which we have detailed information on the source) were obtained from family, fellow gang members, or other social connections; the fraction is still higher for secondary guns. (emphasis supplied)

According to the study, the chain of transactions typically looks something like this:

2015-09-09_1629_Chicago Study

So now comes Kaine and his amendment to Section 922(d), an amendment which effectively puts the same burden on private persons–often family members and friends–that already rests on the shoulders of Federal Firearms Licensees or FFLs. That is,

Unless the transferor has taken reasonable steps to determine that the recipient is not legally barred from possessing firearms or ammunition under paragraphs (1) through (9), it shall be unlawful for any person to sell or otherwise dispose of any firearm or ammunition to a person who
(1) is under indictment for, or has been convicted in any court of, a crime punishable by imprisonment for a term exceeding one year;
(2) is a fugitive from justice;
(3) is an unlawful user of or addicted to a controlled substance . . .;
(4) has been adjudicated as a mental defective . . .;
(5) [is an illegal alien];
(6) has been discharged from the Armed Forces under dishonorable conditions;
(7) [has renounced his citizenship];
(8) [is subject to a restraining order because of harassment, stalking, threatening, and the like]; or
(9) has been convicted in any court of a misdemeanor crime of domestic violence. (emphasis supplied; underlined language is Kaine’s proposed amendment; aspects of items (1)-(9) have been paraphrased for length)

Among many of the knocks against this proposal is that it imposes a burden–the same potential penalty gun dealers face–without offering relief–the ability to do background checks using the FBI’s NICS database. If Kaine’s bill (or any bill like it) passes, a well-drafted gun trust could be the shelter from the ensuing storm, from the increased potential of the unintentional or accidental felony that could result from being unable to perform an adequate background check. Why? Because that trust will contain provisions that spell out, for the trustees and beneficiaries, who can and who cannot qualify as a potential transferee of any of the guns that make up the corpus of the trust. In short, they will know–without having to Google the answer–that persons who fit in categories (1) through (9) do not qualify.

Look, the NRA and other gun advocates may beat back Kaine’s attempt to impose liability on private persons who unknowingly transfer guns to legally barred dudes and dudettes. But given the Chicago study which points the finger directly at family members and social connections as the source of most illegal guns on the streets of Chicago, don’t be surprised if Kaine’s bill has legs. And if it does, it seems at least arguable that a well-drafted gun trust would be one large reasonable step towards satisfying the legal standard established in Kaine’s proposed legislation.

That’s the beauty of gun trusts. Rather than a way to circumvent the law, they’re actually a method of safely and legally transferring the guns you treasure to the people you care about–so long as those people haven’t been walking on the wrong side of the law. Should you have one?

The Best Way to Take the Stress out of Estate Planning

Slide1Brian Vnak, over at MarketWatch, just penned a piece titled “How to Take the Stress Out of Estate Planning.” He gives four ideas to support his title, among them, number 3: “Gift assets while you’re still living — addition by subtraction.” That’s a good idea, by the way, if only to take the monkey off your back, put there by Andrew Carnegie, who famously said:

The man who dies rich, dies disgraced.

Yankee’s short piece could have been even shorter, had he talked to me first. The best way to take the stress out of estate planning is to get it done. To do it now. To be done with it.

Six Things to Ask Yourself as a Business Owner

Another helpful link, this one from Northern Trust: 6 Things to Ask Yourself as a Business Owner. Sorry for the quick spate of links to videos and webinars. I happen to be on the look for something else, and found these instead. I thought they may be of interest to my readers. This one is short–about 2 minutes–but the six questions may prompt you to think more deeply about what you want to do with your business. Enjoy.

Estate Planning: How to Get Going and Why You Shouldn’t to Do It Yourself

Slide1Courtesy of the ABA, here’s a link to an on-demand webinar that should answer a lot of your questions about estate planning. As the brief description of the webinar says, “The program is intended for the general public and does not require a background in the law of wills or trusts or tax.” Click on the link near the bottom of the page, enter your e-mail address and a few other details, and you’re set.

The webinar is 1 hour long and covers a lot of issues. If you have any questions, feel free to contact me.

By the way, access to the webinar ends in October 2015, so take advantage of access now.


5 Reasons You Might Need a Trust

Virtually everyone should have a will. To see why, go here. But most people would do well to have a trust. Get that? You don’t have to be Bill Gates to need a trust. Here are five reasons why:

1. Avoid probate. Probate is the word we use to describe the legal process, the court proceedings, that virtually all wills must go through, so that your property goes where you want it to go, so that the court can decide whether the guardian you chose for your children is the best person for the job, so that . . . the list goes on and on. A revocable trust saves you from all that. Rather than passing your property via your will, set up a revocable trust, then title your bank accounts, your home, and your other property in the name of the trustee–you–and you can avoid probate, at least for all the property in the trust. A by product of that process is that you can . . .

2. Preserve your privacy. Hand in hand with probate is the loss of your privacy. What do you think “the public record” means if it doesn’t mean the record of what goes on inside a court room? Go down to your local clerk of court’s office and ask for the court file for a recent probate, and you’ll see what I mean. Revocable trusts? They don’t go through probate; hence, your maintain your privacy.

3. Keep control. If you’ve ever seen Brewster’s Millions or Easy Money, you know all about control. In Brewster, Richard Pryor must spend $30 million in 30 days in order to inherit a larger estate. In Easy Money, Rodger Dangerfield has to turn his vices into virtues before he can inherit. Control. In some cases, it might come in handy. A trust can give it to you–even when you’re long gone.

4. Protect your property. Protect it, that is, until your intended beneficiaries are old enough or mature enough to take care of it on their own. Trusts can do that. Wills can’t.

5. Take care of you should you become incapacitated. Coupled with what is called a durable power of attorney, the trustee of your living trust can step in an manage your estate should you become incapacitated. With the power of attorney and the trust powers, he or she will essentially walk in your shoes and speak in your voice–be you . . . essentially.

Bonus: Reduce or eliminate your estate tax. Of course, if you have a lot of money, that is, if you have $5,430,000 or you and your spouse together have twice that amount–$10,860,000–you can use a trust to avoid or delay the estate tax on amounts over those sums. It gets complicated, so we’ll stop here.

Trusts 101

Slide1A trust is a fiduciary relationship between a trustee and beneficiaries of the trust. Trusts can be implied and express. Implied trusts are court created in order to prevent unjust enrichment (a constructive trust) or to carry out what the parties intended, but failed to do properly.

In estate planning, we concerned almost entirely with express trusts, trusts set up intentionally to achieve some goal or purpose, to avoid taxes or direct money to a charity, for example. To set up such a trust, a person–the settlor–must have the intent to do so and then must comply with three formalities:

1. There must be a res or property, a bank account, a piece of real estate, a life insurance policy, or some such.

2. The trust must have ascertainable beneficiaries. Why have a trust if there are no beneficiaries, right?

3. Finally, the trusts must have a trustee, though a court can appoint the trustee if the trust document doesn’t name one.

Express trusts are almost always laid out in a trust document that names the res, the beneficiaries, and the trust. Those documents also explain the trust’s purpose, list the trustee’s powers, and the like.

Express trusts can be testamentary, that is they come into existence upon death. Such trusts are generally established in a will and must always comply with the formal requirements of a will, In Wyoming that means the testator or maker of the will must sign the written/typewritten document and that at least two disinterested people must witness the testator’s signature. Though testamentary trusts are irrevocable upon death, the testator can change the terms of the trust while he is still alive.

Express trusts can also be established during the settlor’s lifetime. They are called inter-vivo trusts. People often set up revocable inter-vivos trusts, so they can test drive them before they die. Revocable trusts are not separate taxable entities. Thus, if you have a revocable trust with an investment account as part of the trust property, you will have to report the trust’s taxable income on your 1040 form. Upon the settlor’s death, that revocable trust become irrevocable.

Intervivos trusts can also be irrevocable from the beginning, but by doing so, you may also create a taxable event because, remember, the trust has to have a res, and if that res is large enough, you will have to transfer that property from your pocket to the trust’s pocket, if you will. We call that a gift, and a large enough gift will be subject to the federal gift tax system. Why? Because a revocable trust is a separate taxable entity, a separate person. But that’s enough on that subject for now.

Though the wealthy often use trusts to save estate taxes, they can also be a valuable estate planning tool for the middle class. But more on that later, in another place on this site.

Guardians 101

Slide1A guardian is a person appointed by another person or a court to care for another person or their property. That other person will be either a minor or a legally incompetent adult and is referred to as the “ward.” Guardians of the ward’s person are always called guardians. Sometimes guardians of the estate or property are referred to as conservators. In either case, they are fiduciaries; that is, they must act with special care towards the ward or their property.

If you have minor children or have responsibility for an incapacitated adult, you should consider making provision in your will for a guardian. But take care to choose someone with the ability and wherewithal to do the job. Fail to do that, and you may find the court re-doing what you didn’t do properly.

Elective Share

As we discussed in 5 Reasons You Need a Will, a valid will controls where your money goes when you die–except when it doesn’t. In some states for instance, the maker of a will–the testator–can’t disinherit a spouse.  In Wyoming for example, a disinherited spouse can “elect” to take 1/4 to 1/2 of the property disposed of by the will (reduced by certain items), depending on whether there are children and whether the disinherited spouse is a “parent of any surviving issue of the decedent.” In other words, the will won’t control where all the money goes in this circumstance.

Once again, whether the disinherited spouse has an elective share and how much that share is, depends on where the decedent is domiciled. If the decedent is domiciled in Utah, the surviving spouse’s elective share is 1/3 of the augmented estate–essentially the property disposed of by the will, reduced by funeral and administrative expenses, certain exemptions, and the like.


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