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Create a gun trust

Law of the Land

Varnum LLP | May 3, 2017

 Reisner 2

I am frequently asked "what is a gun trust and when should I create one?" The short answer is that gun trusts are created primarily to acquire, possess and use firearms regulated by the National Firearms Act of 1934 (the NFA).  These firearms are known as NFA Firearms or Title II Firearms. The long answer requires a little bit of history of firearms laws.

The Gun Control Act of 1968 classified firearms as either "Title I Firearms" or "Title II Firearms." The vast majority of rifles, shotguns, and handguns used for hunting or sport shooting are Title I Firearms. Individual state law governs the transfer of Title I Firearms. Title II Firearms are governed by the NFA. The NFA regulates six general categories of Title II Firearms: (i) machineguns, (ii) short-barreled rifles, (iii) short-barreled shotguns, (iv) silencers/suppressors, (v) destructive devices, and (vi) any other weapon regulated by the NFA. Title II Firearms are subject to registration and transfer requirements administered by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (the ATF). 

On Sept. 2, 2011, the Michigan Attorney General issued an opinion stating that silencers/suppressors were legal to possess in Michigan if the owner was in compliance with the NFA.  With suppressors now legal, many Michigan residents started the ATF process to acquire one. 

At the time, this paperwork required the signature of the Chief Law Enforcement Officer (CLEO) where the applicant resided. Despite suppressors being legal, some CLEOs refused to sign the necessary ATF paperwork.  However, an applicant could avoid getting their CLEO's signature by purchasing a suppressor through a gun trust.  Gun trusts quickly became the preferred way to acquire a suppressor or other legal Title II Firearm in Michigan.

Fast forward to July 13, 2016, the effective date for ATF Final Rule 41F.  Final Rule 41F amended the regulations regarding Title II Firearms.  The purported goal of the rule was to insure that the ATF's identification and background check requirements applied equally to individuals, trusts, and legal entities who apply to acquire Title II Firearms. Specifically, Final Rule 41F changed the NFA regulations by requiring "responsible persons" of such trusts or legal entities to complete ATF Form 5320.23 National Firearms Act Responsible Person Questionnaire and to submit photographs and fingerprints in connection with acquiring a Title II Firearm. 

While ATF Final Rule 41F makes it more cumbersome for gun trusts to acquire Title II Firearms, gun trusts are still the preferred way for multiple individuals to have access to and use of Title II Firearms. Gun trusts also help avoid unintentional violations of the NFA.  In this regard, under the NFA, possession of a Title II Firearm, either actual or constructive, by a person not registered with the ATF and not under the supervision of the registered owner of the Title II Firearm is in violation of the NFA.  With a gun trust, any Trustee who is not a prohibited person may have access to and use the Title II Firearm.  A gun trust also provides probate avoidance for Title II Firearms and the ability for Title II Firearms to be held for multiple generations.  So, while registering a Title II Firearm to a gun trust is more paperwork than it was in the past and may require additional fees, you should still consider the advantages of acquiring a Title II Firearm through a gun trust.  There are several ways to create a gun trust. Many estate planning attorneys are familiar with trusts, but for legal peace of mind, consider using an experienced lawyer who understands the NFA-specific requirements.

Dean Reisner is a partner at Varnum LLP and focuses his law practice on business transactional matters, corporate and real estate work, estate planning, and agricultural law. He grew up on a 1000-acre farm in Sanilac County, where his family continues to grow corn, beans and wheat.

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