Responsible Persons Best Practices: Appointing Co-Trustees to Your Gun Trust

Introduction

If you’ve purchased a firearms trust from me, your trust–assuming it’s either a Gold or Silver trust–comes with two different trustee appointment forms: A Co-Trustee Appointment form and a Special Trustee Beneficiary Appointment form. The first form contemplates longer-term appointments. The latter form is for short-term appointments, as short as an afternoon of target shooting. The purpose of this best practices guide is to help you use those appointment forms appropriately.

My general approach is to counsel my clients to have one initial trustee in their gun trust; that’s almost always the person who purchases the trust from me. I then suggest that they can use the co-trustee form to appoint other trustees later—if they want. Once they’ve made the appointment, I explain, they can always revoke the appointment later.

Responsible Persons

After talking to some other gun trust attorneys, I’ve decided to lay out some co-trustee best practices in more detail for my clients, especially as it relates to the appointment and removal of co-trustees as those positions relate to a category of people referred to in firearms law as Responsible Persons.

  • Responsible Persons are those persons in a trust who must fill out Form 23 (the Responsible Person Questionnaire), and be fingerprinted and photographed.
  • Responsible Persons include Settlors (aka Grantors and Trustmakers), Trustees, and Co-Trustees.
  • Successor Trustees (those who become trustees when you die or become incapacitated) and Remainder Beneficiaries (those who get the guns when you die) are not Responsible Persons.  

Trustee Appointments

With that introduction, what are the best practices when using the trustee appointment forms that came with your trust? Here’s a brief summary:

  1. Co-Trustees (named in the original trust),
  2. Co-Trustees (appointed via the Co-Trustee appointment form), and
  3. Special Trustee Beneficiaries (appointed via Special Trustee Beneficiary appointment form)

will all be treated as Responsible Persons if they hold that office at the time of a Form 1 or 4 application and will have to submit a Form 23, fingerprints, and photos along with the initial/original trustee(s) of the trust.

If any of the three categories of trustees are appointed via appointment form or by amendment to the trust between the time of an application and the day it is approved, they should consult with NFA Branch, which almost certainly means filing a Form 23 etc.

None of the three categories of trustees, if they are added after the application is approved, have to file a Form 23 unless and until a new application is filed.

After an application is approved and before the next application (if any), best practice is to make short-term, temporary trustee appointments, using the Special Trustee Beneficiary form; otherwise, newly minted, long-term co-trustees should plan on filing Form 23, fingerprints, etc. at the time of the next application. They can, of course, resign their appointment rather than go through the process, but they shouldn’t plan on being re-appointed soon afterward, certainly not in a we’re-gaming-the-system-sort-of way. Substance trumps form in this case.

In all cases when you appoint a trustee, whether long-term or temporary, whether by amendment or by appointment form, always

  • have them sign the trustee declaration form, attesting to the fact that they are not a “prohibited persons,”
  • keep a copy of the appointment and declaration in your files, and
  • make sure they carry a copy/photo of the signed appointment when they are carrying the NFA item—always.

These three bullet points also apply to appointments of beneficiaries.

Important: when in possession of an NFA item, a trustee should also have evidence (copy or original or photo on phone) of the item’s tax stamp.

One final thought, just a reminder, I hope: Beneficiaries using an NFA item should always remain in a trustee’s presence. Co-trustees are free to roam.

In a later post, I’ll provide a handy table laying out these rules.

I Can Help

If you would like to explore these or other ideas further, schedule a virtual meeting with me by clicking on the red button in the lower right-hand corner of this webpage for a free consultation.

Be careful out there.

ATF 41 F — The Official Document

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.

ATF 41F — Update

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.IMG_2331 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.

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