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ATF 41 F — The Official Document

April 5, 2016 by Leave a Comment

I don’t think I ever posted a link to the official (or at least, the official looking) ATF 41 F as it appeared in the Federal Register. Here it is.

To refresh your memory, ATF 41F affects the firearms trusts (aka gun trusts and NFA trusts). It goes into effect on July 13, 2016. Until then, firearms trusts are the most effective and least intrusive way for you to purchase NFA items, including suppressors or silencers–in my humble opinion. After July 13, 2016, I think firearms trusts remain the best way to purchase those items, for most–but not all–the same reasons. Again, in my humble opinion.

No, the CLEO’s signature on individual applications will no longer be required, and

Yes, so-called “responsible persons” will be required to provide fingerprints and photographs, BUT

-Firearms trusts set up a structure that protects against unwise and often uninformed use/misuse of NFA firearms while you’re alive, misuse that can result in severe penalties and fines, and

-Firearms trusts establish a framework for sharing NFA items while you’re alive, a framework not available to people who purchase NFA items in their capacity as individuals, and

-Firearms trusts provide a mechanism for distributing your prized firearms to your beneficiaries when you die, again without running afoul of the law.

No, for my money, a well-drafted firearms trust remains the best way to purchase NFA firearms, now and after July 13, 2016.

Filed Under: 2nd Amendment, 41F, Estate Planning, Firearms, Gun Trusts, NFA Trusts, Responsible Person, Trusts

A Stunning (Gun) Win for 2nd Amendment Rights

March 25, 2016 by Leave a Comment

The headline in the March 22, 2016, Washington Post article says it all: “Unanimous pro-Second-Amendment stun gun decision from the Supreme Court.” Unanimous as in every justice apparently agreed with the following sentiment expressed in the per curiam opinion by the nation’s highest court.

The Court has held that “the Second Amendment extends, prima facie, to all instruments that constitute bearable arms, even those that were not in existence at the time of the founding,” District of Columbia v. Heller, 554 U. S. 570, 582 (2008), and that this “Second Amendment right is fully applicable to the States,” McDonald v. Chicago, 561 U. S. 742, 750 (2010). In this case, the Supreme Judicial Court of Massachusetts upheld a Massachusetts law prohibiting the possession of stun guns after examining “whether a stun gun is the type of weapon contemplated by Congress in 1789 as being protected by the Second Amendment.” 470 Mass. 774, 777, 26 N. E. 3d 688, 691 (2015).

The court offered three explanations to support its holding that the Second Amendment does not extend to stun guns. First, the court explained that stun guns are not protected because they “were not in common use at the time of the Second Amendment’s enactment.” Id., at 781, 26 N. E. 3d, at 693. This is inconsistent with Heller’s clear statement that the Second Amendment “extends . . . to . . . arms . . . that were not in existence at the time of the founding.” 554 U. S., at 582.

The court next asked whether stun guns are “dangerous per se at common law and unusual,” 470 Mass., at 781, 26 N. E. 3d, at 694, in an attempt to apply one “important limitation on the right to keep and carry arms,” Heller, 554 U. S., at 627; see ibid. (referring to “the historical tradition of prohibiting the carrying of ‘dangerous and unusual weapons’”). In so doing, the court concluded that stun guns are “unusual” because they are “a thoroughly modern invention.” 470 Mass., at 781, 26 N. E. 3d, at 693–694. By equating “unusual” with “in common use at the time of the Second Amendment’s enactment,” the court’s second explanation is the same as the first; it is inconsistent with Heller for the same reason.

Finally, the court used “a contemporary lens” and found “nothing in the record to suggest that [stun guns] are readily adaptable to use in the military.” 470 Mass., at 781, 26 N. E. 3d, at 694. But Heller rejected the proposition “that only those weapons useful in warfare are protected.” 554 U. S., at 624–625.

For these three reasons, the explanation the Massachusetts court offered for upholding the law contradicts this Court’s precedent. Consequently, the petition for a writ of certiorari and the motion for leave to proceed in forma pauperis are granted. The judgment of the Supreme Judicial Court of Massachusetts is vacated, and the case is remanded for further proceedings not inconsistent with this opinion.

It is so ordered. (emphasis added)

I bolded some key words in the opinion because they are so emphatic about the meaning of the Heller decision. Who knows what the future holds–now that Justice Scalia has died–but this opinion should be comforting to those concerned about their 2nd Amendment rights. (By the way, do read the linked-to WashPo article. Eugene Voloch is an important voice on the Constitution.)

Filed Under: 2nd Amendment, Bill of Rights, Firearms, Gun Trusts, NFA Trusts, Supreme Court

Why Not Use My Revocable Living Trust as a Gun Trust?

March 18, 2016 by Leave a Comment

Question Mark_YellowI just took a call from a fellow who asked a very good question: Why not use my revocable living trust as a gun trust? The short answer to that question is, “because.”

But if that’s too short for you, here’s a longer version I gave him–in bullet points:

  • Guns are not like virtually any other property. They are regulated. Those regulations come with stiff fines and possible imprisonment if you should accidentally violate them. Gun trusts take that into account. Regular trusts don’t.
  • To transfer your home or your bank account, it’s a relatively simple matter of signing a deed or changing the name on the account. You don’t have to worry about who the transferee is and what he’s been up to lately. To transfers any firearms, you always have to be worried about what the transferee has been up to recently or even way back when because if he’s been up to no good, he could be a “prohibited person,” and you could get into trouble for selling or giving your gun to him.
  • Transferring–giving or selling–an NFA item is even more problematic. With each and every transfer, there’s fingerprints, photos, forms, signatures, and the like AND a $200 tax AND a long waiting period before you can actually, physically transfer the darn thing. What if when you die or become incapacitated, your trustee doesn’t understand that? Big problems could ensue. (Yes, I know that the transfer tax doesn’t apply when the transfer is from the estate of a decedent to a lawful heir.)
  • A well-drafted gun trust takes care of the problems I just described because it comes full of instructions and warnings about the relevant law and issues–guidance, if you will–so your trustee knows what and what not to do.
  • A well-drafted gun trust also allows for sharing of NFA items without incurring the wrath of the gun gods. I’ve yet to see a regular revocable living trust that does that.
  • Finally, know this: when you buy an NFA item using a trust, you have to send a copy of the complete trust to the BATFE, which keeps it on file. Do you want to send them your revocable living trust that names all your children, speaks of how you want to disinherit your youngest and how you want the gold buried in your backyard to go to your brother Willard and that you want $1,000,000 of your estate to go to the American Red Cross? I wouldn’t either. A well-drafted gun trust won’t disclose that kind of information.

Anyway, that’s why you don’t want to use your regular revocable living trust as a gun trust.

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

Empty Chamber Indicator — Update

March 16, 2016 by Leave a Comment

Ok, so in my first post on the Empty Chamber Indicator, I referred rather cryptically to the television production Behind the Scenes, indicating I might report back later. Well, it’s later.

Yesterday I returned to my office to find a phone message from a man asking me to call Michael Alexander, the producer of Behind the Scenes, which, it turns out, produces short informational documentaries to fill a three-minute space on PBS between the ending of one program and the beginning of another. On commercial TV, that space is filled by commercials.

As I mentioned yesterday, the list of people who’d been featured on Behind the Scenes was pretty impressive, including Colin Powell and G.H.W. Bush and many similar personalities from the world of government, business, medicine, you name it.

The phone message said that Mr. Alexander wanted to talk to me about doing a short documentary on estate planning in general, but more particularly on gun trusts (also known as NFA trusts). I was impressed. First, how did they find me? My blog? My Facebook page? LinkedIn? Other sites I’m listed on? I was also skeptical.

And then Mr. Alexander returned my call. Apparently the company’s legit. And they were interested in talking to me about doing a short documentary on gun trusts. Oh, and as part of the bargain, I needed to fork over some dollars.

Now I don’t say this disparagingly. I don’t think I was being scammed. You see, not only did they distribute their short films through PBS–some 300+ stations, according to Alexander–they also would make sure even shorter versions of the PBS documentaries were shown 50 times on any five TV stations I chose in Utah and Wyoming (I’m not sure whether that was 50 total or 50 x 5 or 250 times). And, they would also “narrowcast” the programs to targeted audiences in the Internet. That’s a lot of publicity.

But it wasn’t free. I won’t disclose the terms here because, well, because. Suffice it to say, it wasn’t cheap, though for the right firm at the right time, doing the deal with Mr. Alexander could be a good decision.

Fame is fleeting. Imagined fame even more fleeting. Oh well.

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

Empty Chamber Indicator

March 16, 2016 by Leave a Comment

For reasons I may disclose later, I was checking out the website of the TV program Behind the Scenes. I looked at some of the program’s past episodes and guests and quickly realized that Behind the Scenes keeps some good company. I was on site, however, to see what kind of journalism the program practiced. I was particularly interested in how it covered some hot button subjects. Guns, for example.

ECIWatch the brief episode at this link and tell me what you think. If you’re interested in purchasing an Empty Chamber Indicator, the product discussed at that link, go here.

 

Filed Under: 2nd Amendment, Firearms, Gun Trusts, NFA Trusts Tagged With: ,

Quote for the Day

March 15, 2016 by Leave a Comment

Failure to address the new issues raised by Rule 41F will expose owners of firearms trusts to the risk of committing a new kind of accidental felony, i.e. related to a failure to document an RP [responsible person]. Firearms trusts must be reviewed–and likely revised–to clarify the roles of the parties involved and whether or not they are RPs. If new NFA applications are made following implementation, it might be advisable to limit the number of “responsible persons” as defined by Rule 41F to avoid substantial paperwork or risking liability for unlawful transfer of an NFA firearm. The legal consequences of failing to comply with the NFA can be severe, including fines of up to $250,000 and up to 10 years in prison, as well as confiscation of the firearm(s) involved.

C. Dennis Brislawn, JD and Matthew T. McClintock, JD, WealthCounsel Federal Rules Brief: The Impact of BATF Rule 41F on Firearms Trusts

Filed Under: 41F, Firearms, Gun Trusts, NFA Trusts, Quote for the Day

Quote for the Day

March 4, 2016 by Leave a Comment

“Think about the [gun] trust as a means to keep the client safe and legal, and to provide all of the guidance to their beneficiaries so they stay safe and legal.”

Matthew Bergstrom, attorney

Filed Under: 2nd Amendment, Estate Planning, Firearms, Gun Trusts, NFA Trusts, Quote for the Day Tagged With: ,

NFA Firearms in an Estate: What’s an Executor (or Trustee?) to Do?

March 1, 2016 by Leave a Comment

Question Mark_YellowYou’re the executor or personal representative of an estate (they’re the same thing, by the way) or a trustee of a trust. The owner of some NFA firearms has died, and you’re left to deal with the aftermath. (Of course, the real “owner” of any NFA arms in a trust is the trustee, but generally, the initial trustee is the grantor of the trust, who we on the outside looking in, view as the owner.) What can you do with the NFA firearms? If you turn them over to the decedent’s heir under the will or the beneficiaries of his trust, do you have to pay the transfer tax?

Fortunately, the BATFE has been fairly helpful on this point, though it could have been more clear. On September 5, 199, the Bureau issued a letter in which it said the following:

If there are unregistered NFA firearms in the estate, these firearms are contraband and cannot be registered by the estate. The executor of the estate should contact the local ATF office to arrange for the abandonment of the unregistered firearms.

So now you know what to do with unregistered NFA items–if you’re an “executor of the estate,” that is. Did the Bureau also mean “trustee of a trust”? Maybe. Later in the same letter, after the word “heir” has been repeated a number of times, we do see this language:

NFA firearms may be transferred directly interstate to a beneficiary of the estate.

Beneficiary. Is that the same as an heir? Though they are often used interchangeably, the two terms are not precise synonyms. Often the word heir is use to define someone who receives property under a will or via a state’s intestacy laws. Beneficiary, on the other hand, is just as often used to describe someone who receives property under trust. Again, they are also used interchangeably. How is the BATFE using the terms in this letter? Inquiring minds would like to know. Maybe this line from the letter helps,

A lawful heir is anyone named in the decedent’s will or, in the absence of a will, anyone entitled to inherit under the laws of the State in which the decedent last resided. (emphasis supplied)

Hmmm. This sounds like intestacy, but is that all? Does “under the laws of the State” mean the same thing as “operation of law” (see below)?

Well, recently, the Bureau issued the final Rule 41F, which affects so-call NFA or gun trusts, among other things:

It [the new rule] also adds a new section to ATF’s regulations to address the possession and transfer of firearms registered to a decedent. The new section clarifies that the executor, administrator, personal representative, or other person authorized under State law to dispose of property in an estate may possess a firearm registered to a decedent during the term of probate without such possession being treated as a “transfer” under the NF A. It also specifies that the transfer of the firearm to any beneficiary of the estate may be made on a tax-exempt basis. (emphasis supplied)

Such transfers are not taxable transfers because they are not “voluntary”; that is, the executor, personal representative, etc. must follow the terms of the will (or trust?) or law. He or she has no choice. That’s all fine and dandy, but are transfers from trust to beneficiaries tax exempt? Come on. Tell us BATFE. You can do it.

In the commentary on the new rule, the Bureau gets a clear as it’s probably going to get in answering that question, when it says:

Transfers of NFA firearms from an estate to a lawful heir are necessary because the deceased registrant can no longer possess the firearm. For this reason, ATF has long considered any transfer necessitated because of death to be involuntary and tax-free when the transfer is made to a lawful heir as designated by the decedent or State law. However, when an NFA firearm is transferred from an estate to a person other than a lawful heir, it is considered a voluntary transfer because the decision has been made to transfer the firearm to a person who would not take possession as a matter of law. Such transfers cannot be considered involuntary and should not be exempt from the transfer tax. Other tax-exempt transfers—including those made by operation of law—may be effected by submitting Form 5. Instructions are provided on the form. (emphasis supplied)

Operation of law would seem to include transfers mandated by language in trusts, trusts which are created under state law, laws that include fiduciary standards that compel trustees to carry out the wishes of the grantor of the trust, whose wishes are stated in the language of the trust. I’m hanging my hat on that.

There are a couple of other things I’d do to make sure that hat fits in every circumstance, but I won’t go into that here.

 

Filed Under: 41F, Administration, Estate Planning, Firearms, Gun Trusts, NFA Trusts, Probate, Trusts, Wills Tagged With: ,

Quote for the Day

February 25, 2016 by Leave a Comment

Regarding the benefits of so-called gun or NFA trusts:

In gun trust planning, it’s in some ways less important to know who owns an NFA firearm and more important to consider who has the right of possession. Access equals possession. A spouse or other family member with access to an NFA firearm registered solely to one family member could be considered in technical violation of the law.

 C. Dennis Brislawn, attorney

 

 

Filed Under: Estate Planning, Gun Trusts, NFA Trusts, Quote for the Day Tagged With: ,

Quote for the Day

February 23, 2016 by Leave a Comment

Although the phrase implies that the carrying of the weapon is for the purpose of “offensive or defensive action,” it in no way connotes participation in a structured military organization.

From our review of founding-era sources, we conclude that this natural meaning was also the meaning that “bear arms” had in the 18th century. In numerous instances, “bear arms” was unambiguously used to refer to the carrying of weapons outside of an organized militia. The most prominent examples are those most relevant to the Second Amendment: Nine state constitutional provisions written in the 18th century or the first two decades of the 19th, which enshrined a right of citizens to “bear arms in defense of themselves and the state” or “bear arms in defense of himself and the state.” It is clear from those formulations that “bear arms” did not refer only to carrying a weapon in an organized military unit. Justice James Wilson interpreted the Pennsylvania Constitution’s arms-bearing right, for example, as a recognition of the natural right of defense “of one’s person or house”—what he called the law of “self preservation.”

Justice Antonin Scalia, District of Columbia v. Heller. 2008.

Filed Under: 2nd Amendment, Estate Planning, Firearms, Gun Trusts, NFA Trusts, Quote for the Day Tagged With: , , ,
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