Estate Planning Archives - Page 12 of 14

It’s (Almost) All About That Basis

February 19, 2016 by Gregory Leave a Comment

Because of the applicable exclusion amount, a married couple must have an estate of almost $11,000,000 dollars (2016) before the estate taxman comes and actually takes his share. As a consequence, the emphasis in estate planning–at least for smaller estates–is all about saving income taxes–capital gains, to be precise–on appreciated property.

I don’t have the time right now to go into this in detail, but I do have time to link to an extended paper on the subject by Edwin P. Morrow and to a shorter article in the Wall Street Journal. If you’re interested, both are worth a read. Enjoy.

And have a great weekend.

Oh, and here’s that song. Well, at least my favorite version.

Filed Under: Estate Planning, Trusts Tagged With: basis planning, optimal basis trust

Why Do You Want a Gun Trust?

February 18, 2016 by Gregory Leave a Comment

If your sole purpose in purchasing a gun or NFA trust is so you can buy that silencer and avoid the need for your local Chief Law Enforcement Officer’s (CLEO) signature*, then I’m not your guy. As I explain elsewhere on this site, I see gun trusts as accomplishing that purpose and much more, including encouraging safe and careful ownership of firearms for both you and those who inherit your firearms when you die, as well as helping you make sure that when you die, your guns go to whom you want, how you want, and when you want.

Gun law generally and the law governing NFA firearms more particularly are complex subjects. Persons who ask me to draft their gun trust will get more than a trust, they’ll also receive advice from me and substantial documentation on how to use that trust.

* This changes on Wednesday, July 13, 2016. After that, individuals no longer need a CLEO’s sign off on their NFA purchase, though they still need to notify the CLEO.

Filed Under: 41F, Estate Planning, Firearms, Gun Trusts, NFA Trusts, Trusts Tagged With: guns, NFA firearms

Water Rights and Water Wrongs

February 17, 2016 by Gregory 1 Comment

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A very interesting article about water at ProPublica.org. Essentially, the pieces asks whether Wall Street–the good guys on Wall Street, of course–will help us achieve this:

[Hedge Fund manager] Disque Deane . . . supports the idea of setting aside what policy makers call “lifeline supplies” to guarantee households some minimal amount of water. But he says if markets jack up prices on higher levels of consumption, that may not be a bad thing. Anyone who wants to fill a swimming pool, water a golf course, or use billions of gallons of Colorado River water to grow cotton in the Sonoran Desert, he says, should have to pay for that privilege.

without our farmers and ranchers and small town America ending up like this:

Eventually, though, Crowley County passed a point of no return. With so much water gone [because farmers had sold their rights for the high prices offered], the empty irrigation ditches didn’t work; one lonely farmer at the end of the run would see all his water soaked up by the soil long before it ever reached his farm. And with fewer and fewer farmers around to share the expense of maintaining the ditch systems, the cost kept rising. Farmers had little choice but to sell, and all but 11 in the county did. The place literally dried up.

Kneeling in his driveway changing a truck tire last summer, Tomky’s son-in-law Matt Heimerich recalled what the town had lost. Though tens of millions of dollars in water rights were sold, few of the proceeds were reinvested in the community, he said. One by one, families moved away. The tomato and sugar factories shut down, and without goods to ship, the railroad stopped sending trains through town. Ordway’s car dealerships closed, and the tractor store went bankrupt. As though someone had pulled a bottom block out from a Jenga tower, Crowley County fell into an inexorable collapse.

“I couldn’t have eaten enough Prozac,” Heimerich said.

We don’t take water as seriously as we should. I think that’s self-evident. And pricing water differently and more sanely is, in theory, a good idea, so that we begin allocating it better than we do. But. There is always a but. And right now, I don’t know what comes after the but.

SAMSUNG

I know I don’t want farmers, ranchers, and small town America to disappear. Oh, and water rights are assets, assets that, as this story makes clear, are becoming more and more valuable as I write this. Assets that warrant good estate planning to preserve them for future generations. So there’s that.

On a related note, if you’re interested in water and water issues, may I recommend the always interesting podcast, Water Values hosted by attorney Dave McGimpsey? I discovered about a year and a half ago and listened to it regularly as I ran. As I ramped up my estate and business planning practice, I stopped listening, intending to return after I had things moving along in estate planning. I’m thinking it’s time to begin listening again, especially since farmers and ranchers make up such an important part of the two, dry, Western states that I serve.

Filed Under: Business Planning, Estate Planning, Farms and Ranches, Water and Water Rights, Wealth Transfer

Trust Protectors: They Can Come In Handy When Your (Trust) Intentions are in a Pinch

February 15, 2016 by Gregory Leave a Comment

What do I mean by “pinch”? Well, let’s say that you’ve created a trust, with yourself as the initial trustee. You know what you want to do with your trust, who you want to benefit, what you what to happen and what you don’t want to happen–that drug addled nephew, for example doesn’t get anything until he shapes up.

You’ve got big plans, and you think you’ve made your intentions clear, both in the trust and to the person or persons who will succeed you as trustee should you die or become incapacitated.

And then you die. And your successor trustee takes over. And as time moves on and one, your trustee begins to deviate from the path you clearly explained to him years ago. And he does this some more and some more, until he’s way off the path that leads to the fulfillment of your dreams for your beneficiaries. What do do?

Well, you could come back as a ghost and scare him straight, but that’s a long shot, right? Or your beneficiaries could all get together and petition the court to remove the trustee, but that can be a long, drawn-out, expensive, and often futile process. Though more receptive to the idea of modifying a trust or removing a trustee, courts have been and still can be reluctant to do so.

Enter the trust protector–that is, if you named a trust protector in your trust document. What’s trust protector, you ask? According to Lawrence A. Frolick, a law professor at the University of Pittsburgh School of Law, trust protectors

are best conceived as a means for a settlor [or grantor or trust maker] to attempt to ensure that the intent behind the establishment of the trust remains fulfilled in the future. Settlors [grantors, trust makers] appoint a protector to create and alter-ego who can supervise the trust and act to ensure that the purpose of the trust, as envisioned by the settlor [grantor, trust maker] is carried out even if the trustee must be replaced or the terms of the trust must be modified. The settlor [grantor, trust maker] by appointing a protector, overcomes the judicial reluctance to modify trusts . . . (Trust Protectors: Why They Have Become “The Next Bit Thing,” Real Property, Trust and Estate Law Journal, pg. 268-269, 50:2, Fall 2015; see here for an abstract of the article)

Now, trust protectors aren’t necessary for every trust, especially those that will close their doors once the grantor’s children reach an age appropriate to receive their final distributions free of trust–if that’s the grantor’s plan. However, for those of you who want their trust and their trustee to carry out their intentions for years and years into the future, a trust protector makes all kinds of sense. Think of it: A trustee, even the best trustee, will probably do a better job if she knows someone with the power to remove her will continue to be looking over her shoulder for years to come.

Not a bad idea.

Filed Under: Decanting, Estate Planning, Trust Protectors, Trusts

A Note on Why I Draft Gun Trusts for My Clients

February 14, 2016 by Gregory 2 Comments

I thought long and hard about whether I should do my gun trust business on a different website and under a different trade name than the ones I use for my estate and business planning practice. I’ve noticed that many attorneys separate their gun trust work from their other practice areas for fear, I suppose, that they might scare off potential clients who are not interested in or even loathe firearms.

I decided to do all my business using the same website and trade name. Here’s why.

I draft gun trusts for two basic reasons:

1. Gun laws are complicated. Guns are assets, property that must be handled properly and carefully when the owner dies or becomes incapacitated. This is so because guns are regulated property and are therefore unlike virtually any other property people own. Violate one of the laws or regulations governing the transfer or possession of firearms–even unintentionally–and you or your executor or trustee could be in a fix. As an attorney who holds himself out as an estate planner, I feel an obligation to be knowledgable about and able to help my clients manage their firearms in their estate plans so my clients don’t find themselves in that fix. Moreover, since I represent clients in both Wyoming and Utah, this approach seems like a sensible plan to me.

2. Gun trusts promote safety. I believe gun trusts provide an extra layer of safety to gun owners and those who succeed them in ownership and therefore to the public. A trustee of a gun trust assumes a special or fiduciary obligation under the law when they manage firearms in a trust. The trusts that good attorneys draft make the parameters of that obligation crystal clear. The result, I believe, is better informed gun owners and improved public safety. If that’s actually the case, it only makes sense to draft gun trusts.

Of course, I could do all this without promoting my gun trust business on my estate and business planning website. I chose not to do that for two reasons: 1. Two websites are two times the work. Two trade names are twice as much to keep track of. 2. I want people who come to this website to know who they are dealing with. No surprises. I ask potential clients to disclose a lot when they work with me–that’s essential to good planning. It seems fair for me to be completely open with them as well.

Filed Under: Estate Planning, Firearms, Gun Trusts, NFA Trusts Tagged With: guns, NFA firearms

ATF 41F — Update

January 24, 2016 by Gregory Leave a Comment

Below is a slightly revised version of an e-mail I just sent my gun trust clients:

We finally know the effective date of the ATF’s new rules regarding gun trusts, responsible persons, and other related matters. That date is Wednesday, July 13, 2016.

Once the new rules become effective, gun trust grantor/trustees will be a responsible person and thus subject to the new photo/finger prints/CLEO notification (not signature) requirements. So will any co-trustees they appoint–though it appears that can be fixed by limiting the powers of those co-trusees. (I’ll keep you all posted on this. I’m waiting on further guidance from the BATFE.) Mind you, the photo/finger print/notification are only required at the time of a new transaction.

Beneficiaries and successor trustees should not be considered responsible persons under the new rules.

FWIW, I think gun trusts come out well in spite of the new rules. No, you don’t need a gun trust to avoid the CLEO signature requirement, but they still allow trustees to share the trust’s NFA items. In addition, a well-drafted gun trust provides guidance to trustees and to successor trustees on how to handle firearms properly, so they can avoid the “incidental felony.” Finally, the whole process of setting up a gun trust and then administering it forces grantor trustees to consider how they are going to distribute/handle their firearms upon their death and incapacity. These last two reasons have lead me to think that gun trusts are actually a safety measure and an aid to more responsible gun use and ownership.

In short, I continue to think people who have gun trusts–my clients, at least–made a good decision to set one up.

Filed Under: 41F, Estate Planning, Gun Trusts, NFA Trusts, Responsible Person Tagged With: CLEO, guns, NFA firearms, responsible person

Directing Your Health Care with an Advance Health Care Directive–with the Stress on the Word Advance

January 16, 2016 by Gregory Leave a Comment

I have an 87 year old client who was born, raised, and has lived in Wyoming her entire life–that is, except for the five or six winter months she has spent in southern Utah each of the last few years. She’s at that age when her health and her health care are becoming an ever more important concern to her. One of those concerns, of course, is what to do should she become sick and unable to express her wishes about end-of-life decisions. What can she do to make those decisions now and insure that her wishes are carried out by her loved ones and doctors?

The Tools. The answer–in Wyoming, Utah, and most other states–is the Advance Health Care Directive, a document or documents in which an individual does one or both of the following: 1. Appoint and give authority to a health care agent (a son or daughter, for example) and 2. Give instructions about those difficult end-of-life decisions (whether to have a feeding tube, for instance).

As in most areas of medicine and the law, the terminology or jargon people use to describe these documents can be confusing–it certainly confused me when I first began studying the subject. But it the end, it’s all rather simple. The first document, the one appointing a health care agent, is no more than a very specific power of attorney or POA. If it’s your POA, then you are the principal and the appointed person is your health care agent. Essentially, you empower your agent to act as you would act if you were still able, to stand in your shoes in other words. bp-cuff

The second document, the one with all the instructions, is the so-called living will. Generally, the living will tends to be more specific than a health care power of attorney. Don’t want feeding tubes, CPR, artificial ventilation, that sort of thing? You say so in a living will. That’s not to say, you can’t be that specific in a health care power of attorney. But think of it this way: with a health care agent, you are giving authority to act in your place to someone you know and who knows you–probably very well. That person may not need very specific instructions because of that knowledge. A living will, however, tends to be directed more generally at not only your family and friends, but also at doctors, nurses, and others who may not know you so well. With people like that, you want to be very specific.

Both Wyoming and Utah have fill-in-the-blank forms for both documents. They’re free and generally in the same booklet or file. Hospitals located in each state often have their own versions. Here’s one from Wyoming Medical Center, a hospital based in Casper. Utah-based Intermountain Health Care provides similar forms. As both hospital-provided forms stress, you don’t have to both appoint an agent and give directions. In fact, at the beginning of both forms, you’ll find a section where you can say that you DO NOT want to choose an agent for your health care.

For what it’s worth, in many, if not most, cases, both documents should be used, the living will/instructions document backing up the health care power of appointment. In that case, the living will is essentially saying, “and to make myself perfectly clear: I have discussed these matters with my health care agent, and what we discussed is reflected in my living will. That said, if there’s any chance that a provision in my living will contradicts any authority I granted my agent in my power of attorney, the document with the more expansive powers governs.”

Do You Need a Lawyer to Fill Out the Forms? No. The forms I’ve linked to above meet the requirements of state law. So long as you fill them out correctly, sign, and have them properly witnessed, they are better than nothing–much better.

But the question isn’t do you need a lawyer? The question is should you consult an attorney about a health care directive? I think the answer is yes. For one, a good advisor can help you carefully consider the many issues that come into play in choosing a health care agent. Good attorneys are trained to think dispassionately and out of the box. Not everyone is suited to make end-of-life decisions, for example. A good advisor will help you choose someone who is. Likewise, deciding in advance whether you want a feeding tube or CPR are hard choices. A good advisor who has been down that road before with other clients, will be a good guide for you.

Beyond that, health care directives are just one part–an important part–of a more comprehensive estate plan. As I make clear on this website’s home page, virtually everybody needs an estate plan. Read that page again and see if you agree. If you see yourself on the list for “Do I need estate planning?” then we should talk–about that plan–and an advance health care directive.

But back to my 87 year old client. Remember, she now spends significant time in both Wyoming and Utah and has doctors in Montana. In our planning together, one of her concerns is that her wishes for end-of-life health care be carried out whether she is in Wyoming enjoying the great summers, in southern Utah soaking in the warm winter sun, or shopping in Billings, Montana. Though the laws governing advance health care directives are quite similar in all three states, there are some important differences, differences that could call into question a Utah directive in Wyoming or Montana and vice versa, at least in the eyes of an overly careful hospital administrator.

That said, all three states have provisions in their laws that either grant reciprocity to health care directives from other states or seem to. Utah law states that a health care provider or facility,

may, in good faith, rely on any health care directive, power of attorney, or similar instrument (a) executed in another state . . . (Utah Code §75-2a-121. Reciprocity — Application of former provisions of law).

Montana law is equally explicit:

A declaration executed in a manner substantially similar to 50-9-103 in another state and in compliance with the law of that state is effective for purposes of this chapter (Montana Code §50-9-111. Recognition of declarations executed in other states).

Wyoming law is not so clear. In fact, an attorney I spoke with at one of Wyoming’s largest hospitals suggested it may take two sections of the Wyoming Code to do what Montana and Utah did in one, and even then things remain a little murky. In fairness, the attorney also told me that particular hospital honored directives from other states as did the other Wyoming hospitals the attorney was aware of.

Here is the relevant wording of the two sections of the Wyoming Code I just referred to. You be the judge:

§35-22-408. Obligations of health care provider. . . . a health care provider or institution providing care to a patient shall:
(i) Comply with an individual instruction of the patient and with a reasonable interpretation of that instruction made by a person then authorized to make health care decisions for the patient . . .

And

§35-22-416. Uniformity of application and construction. This act shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject matter of this act among states enacting it.

Like I said, it appears that all three states recognize directives from other states. Nevertheless, when my client and I are finished, she will have an advance health care directive–both the POA and the Living Will–that complies with the provisions of the law governing such directives and powers of attorney in all three states.

Updated to include the relevant statutes from Utah, Wyoming, and Montana and to discuss reciprocity in more detail.

Filed Under: Advance Health Care Directive, Estate Planning, Health Care Power of Attorney, Living Will, Power of Attorney Tagged With: end-of-life planning, health care, reciprocity

Trying to Think Straight About 41F: Who is a “Responsible Person”?

January 6, 2016 by Gregory Leave a Comment

After stewing over ATF 41F for a few days, the rule is finally starting to make sense to me, at least the definition of the so-called “responsible person” in a gun trust. Of course, it has always been obvious that a Grantor/Trustee of a gun trust is a “responsible person” or RP. However, it seems that co-trustees, special trustees, and beneficiaries of most any stripe in a well-drafted gun trust might avoid shouldering the burdens of an RP–if they satisfy the conditions in two different rules or sentences in newly amended § 479.11. Here’s the relevant text of that section:

§479.11 Meaning of terms.

* * *

Person. A partnership, company, association, trust, corporation, including each responsible person associated with such an entity; an estate; or an individual.

* * *

Responsible person. 1.) In the case of an unlicensed entity, including any trust, partnership, association, company (including any Limited Liability Company (LLC)), or corporation, any individual who possesses, directly or indirectly, the power or authority to direct the management and policies of the trust or entity to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of, the trust or legal entity. 2.) In the case of a trust, those persons with the power or authority to direct the management and policies of the trust include any person who has the capability to exercise such power and possesses, directly or indirectly, the power or authority under any trust instrument, or under State law, to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of, the trust. Examples of who may be considered a responsible person include settlors/grantors, trustees, partners, members, officers, directors, board members, or owners. An example of who may be excluded from this definition of responsible person is the beneficiary of a trust, if the beneficiary does not have the capability to exercise the powers or authorities enumerated in this section. (emphasis and numbers supplied, except in the section heading)

The first rule of the road to freedom from the burdens of a “responsible person” is stated the first sentence in the paragraph labeled “responsible person.” The second rule is in the second sentence of the same paragraph.

Each rule is slightly, but importantly, different from the other. The first rule has one “and” in it. The second has two. Thus, the first rule has two “get out of jail free cards,” the second has three. Cotrustees and beneficiaries must satisfy both rules before they’re free of the “responsible person” burdens imposed by ATF 41F.

Based on all of this, I’m thinking I would analyze the provisions of a trust governing co-trustees or beneficiaries essentially following the logic of these diagrams (click to enlarge), beginning with Rule 1 and then Rule 2, making sure the powers and authorities of each cotrustee, special trustee, or beneficiary are limited in the trust document, so those persons don’t fit within the definition of a “responsible person.” (By the way, it seems that the words “direct” and “possesses” in the rules are particularly important, so I’ve bolded them in the diagrams.)

What kept bothering me as I initially read the rules and the commentary was that the commentary seemed at times to contradict or modify the actual rules. That confusion was at least in part due to my thinking that there was only one rule in the “responsible person” paragraph in §479.11. Once I finally settled on the idea that there were two different rules or sets of conditions in that paragraph, things started to make a little more sense.

Things made even more sense after I diagramed the two rules or sets of conditions and compared my diagrams to the wording in each part of the commentary that used the actual wording of the rules or paraphrased them in some way. Basically, I asked in each case, did the wording on a particular page of commentary make sense in light of either or both rules or sets of conditions?

What I discovered by doing that is that words in the commentary that at first seemed to be all over the map and had seemed to contradict or confuse the wording in the “responsible person” paragraph in §479.11, suddenly made more sense.

I stress that this is not my final thinking on the subject, and I’m open to correction. More importantly, what I’ve done above doesn’t begin to touch on what some of the words mean in the rule. We need to understand the meaning of words such as “direct,” “management,” “policies,” “possess,” “transfer,” “directly or indirectly,” “capability,” before 41F makes complete sense.

Fun times.

Filed Under: 2nd Amendment, 41F, Estate Planning, Gun Trusts, NFA Trusts Tagged With: ATF 41F, guns, NFA firearms

ATF 41F: There’s a Horse in Here Somewhere, but I Haven’t Found It!

January 6, 2016 by Gregory Leave a Comment

Having read the relevant parts of the 41F document released Monday, December 4th, here are some of my thoughts.

First, the actual rule:

479.11 Meaning of terms.

* * *

Person. A partnership, company, association, trust, corporation, including each responsible person associated with such an entity; an estate; or an individual.

* * *

Responsible person. 1.) In the case of an unlicensed entity, including any trust, partnership, association, company (including any Limited Liability Company (LLC)), or corporation, any individual who possesses, directly or indirectly, the power or authority to direct the management and policies of the trust or entity to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of, the trust or legal entity. 2.) In the case of a trust, those persons with the power or authority to direct the management and policies of the trust include any person who has the capability to exercise such power and possesses, directly or indirectly, the power or authority under any trust instrument, or under State law, to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of, the trust. Examples of who may be considered a responsible person include settlors/grantors, trustees, partners, members, officers, directors, board members, or owners. An example of who may be excluded from this definition of responsible person is the beneficiary of a trust, if the beneficiary does not have the capability to exercise the powers or authorities enumerated in this section. (emphasis and numbers supplied, except in the section heading, here and below)

Okay, now, let’s see if I’ve got this straight:

Under § 479.11, “in the case of an unlicensed entity, including any trust, partnership, association [etc],” I am a “responsible person” if I “possess, directly or indirectly, the power or authority to direct the management and policies of the trust or entity to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of, the trust or legal entity.”

Correct so far?

But what about the next sentence? There I learn that “in the case of a trust, those persons with the power or authority to direct the management and policies of the trust [meaning “those persons” referred to in the first sentence, I assume] include any person who has the capability to exercise such power [which power? well, it must be “the power or authority to direct the management and policies of the trust or entity to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of, the trust or legal entity,” as explained in the first sentence] and possesses, directly or indirectly, the power or authority under any trust instrument, or under State law, to receive, possess, ship, [etc. etc.] for, or on behalf of, the trust.”

Do you see the problem? It seems to me that the second sentence in the definition of a “responsible person” essentially states the “receive, possess, ship, transport” language twice, the first time by implication, that is, by referring back to the first sentence via the words “such power.” It states the “receive, possess, ship” language explicitly the second time, but adds the critical word “and” before the word “possesses.”

Am I missing something here? If not, then my question is: Does the second sentence stand apart and alone from the first sentence, or does the second sentence refine and narrow the first sentence? In other words, with regard to trusts, is “responsible person” defined one way or two different ways in § 479.11?

In the alternative, maybe the words “such power” in the second sentence refer back only to the words “power or authority to direct the management and policies of the trust” a few words back in the same sentence. That reading makes more sense, but even so, I’m left wondering whether the rule has one or two definitions of “responsible person” for trusts.

On a separate note, someone today was touting the importance of the word “and” before the word “possesses” in the second sentence. There are really two important “ands” in the definition: the one before “possesses” and the one between “management and policies.” Thus, for example, if the trust instrument explicitly granted a co-trustee the power or authority to direct the management but withheld the power or authority to direct the policies of the trust, arguably, that co-trustee wouldn’t be a responsible person, would s/he?

And finally, what does the word “capability” mean in the context of “such power” and how important is the word “direct”? (Very important, I would argue.)

Oh, and one more: did anyone notice the plurals “powers or authorities” in the beneficiary example at the end of the definition of “responsible person”? It’s the only use of those plurals in the entire document.

Of course, all this may be beside the point, given how often and how poorly paraphrased the definition of “responsible person” is used throughout the 248 page document. Take a look at pages 4, 32, 105, 114, 118-119, 124-125, 137, 145-146, and 209-210. On one page, the paraphrase/explanation seems to clarify who qualifies as a “responsible person.” On the next, clarity takes a holiday.

For example, consider pages 118-119 of the commentary (emphasis all mine):

First the commentary tells us that “the definition of ‘responsible person’ in this final rule applies to those who possess the power or authority to direct the management and policies of an entity insofar as they pertain to firearms.” (Note that the bolded words do not appear in the actual rule. The concern seems to be with management and policies.)

Then the goal posts shift to “[in trusts] those possessing trust property—trustees—are also the individuals who possess power and authority to direct the management and policies of the trust insofar as they pertain to trust property, including firearms.” (Note here, the additional underlined words, also not part of the actual rule. Also note that we’re now talking about “possessing trust property” and “management and policies.”

Then the goal posts move again—it appears to me, at least—when the commentary “clarifies” that the rule doesn’t apply to “individuals who would not, or could not, possess the firearms.” (Note the absence of the “management and policies” element. Possession of firearms seems key.)

Finally, those damn goal posts move to another end zone, when the commentary informs us that “beneficiaries and other individuals may be considered “responsible persons [if they have the] capacity to control the management or disposition of a relevant firearm on behalf of a trust or legal entity.” (Note that the word dispose appears in the actual rule; however, the combination management or disposition appears just once in the entire document—and you’re reading it. By the way, among the various meanings of “dispose” or “dispose of,” at least one is apt to the rule: “to transfer to the control of another.”)

My concern is that the seemingly constant insertion of new or different words into the “responsible person” equation makes it very difficult if not impossible to determine the proper course of action.

To be fair, as I read and re-read the rule and commentary, things seem clearer. That said, as I read and re-read the picture sometimes becomes muddier. For the moment, all I can think is, What a confusing mess.

Don’t go too far away campers. More to come.

Filed Under: 2nd Amendment, 41F, Estate Planning, Firearms, Gun Trusts, NFA Trusts, Trusts Tagged With: ATF 41F, guns, NFA firearms

Whither ATF 41P? Whither NFA Gun Trusts?

December 2, 2015 by Gregory Leave a Comment

In a post back in September 29th of this year, I wrote about the reluctant Chief Law Enforcement Officer or CLEO problem or obstacle that many hopeful purchasers of NFA firearms encounter when they try to buy a suppressor, short barreled shotgun, or other such that are legal in many, if not most, states. What problem you ask? The problem that in order for individuals to purchase such items, they must submit their photograph, fingerprints, and signed certificate from the local CLEO, certifying that he or she has “no information indicating that the receipt of the firearm would place the transferee [the individual] in violation of State or local law or that the transferee will use the firearm for other than lawful purposes” (CFR §479.85).

Not surprisingly, some CLEOS balked at signing their professional and political life away. Others refused to do so simply because they didn’t like the idea of their citizens owning such firearms. Whatever the reason, the buck stopped there. No signature, no firearm, no recourse (see questions N16 and N17, page 201 of the 2014 version of the ATF Federal Firearms Regulations Reference Guide).

And thus the gun trust. You see, the same laws, rules, and regulations that mandate the CLEO signature for an individual application, specifically provide that the same weapons can be purchased by various entities, including companies, partnerships, associations, estates, and trusts. And no CLEO signature is required when an entity rather than an individual makes the purchase. But that may change–as early as some time in January 2016.

On Monday, September 9, 2013, the AFT proposed amending 27 CFR Part 479 to, among other things, require so-called “‘responsible persons’ of [legal entities, including trusts] to submit . . . photographs and fingerprints, as well as a law enforcement certificate” signed by a CLEO–just like individuals currently have to do. The proposal, referred to by its docket number ATF 41P, was greeted with, shall we say, a great lack of enthusiasm. In fact, the response was so overwhelming and so negative that the AFT has yet to finalize the rule. Just a few days ago, the ATF was saying that the final rule would be out by the end of December 2015. The DOJ has now changed that date to “01/00/2016.” No, I don’t know when “00” is either.

What will the final rule look like? Did the ATF pay any attention to the many well-argued comments that the rule change was not needed, that those who proposed the change had a poor understanding of trust law, that etc. etc. etc.? We’ll see in a month or so. In the meantime, I’d argue, get while the gettin’s good. If and until the rule changes, well-drafted trusts continue to be the best way to buy NFA firearms and suppressors because trustees don’t have to provide photos, fingerprints, or certificates with the local CLEO’s John Hancock. Furthermore, I’d argue that trusts are the best way–or at least a way you should consider–to own all firearms because of the protections built into well-designed gun trusts that protect grantors, trustees, and beneficiaries from committing the so-called “accidental felony.”