WHAT IS A GUN TRUST? THE LEGAL ALTERNATIVE

UPDATE (January 15, 2016): The federal government issued a final rule today, to be effective in July, 2016, that modifies the below analysis. Trustees and responsible persons of a gun trust will now have to submit fingerprints and be subject to a background check when submitting an application to the ATF, but CLEO approval is no longer necessary for individuals or trusts. For more information about how the new regulations will impact gun trusts, we have an in depth analysis posted here.

Original Post…

Who will obtain possession of your firearms when you pass away?

If you live in Michigan and own firearms or suppressors required to be registered by the National Firearms Act (NFA), that question may not have a simple answer. If you own pistols in the State of Michigan and want to transfer your guns to friends or beneficiaries who are not legally allowed to possess them, the fate of your firearms may be in question.

This is where a Michigan Gun Trust, and the legal guidance from a Michigan Gun Trust attorney, can provide peace of mind that your firearms will be transferred legally.

There are two broad categories of guns where a Michigan Gun Trust can be beneficial: handguns required to be registered with the State of Michigan, and weapons registered with the federal government under Title II of the National Firearms Act.

NFA TRUST

The National Firearms Act (NFA) regulates the possession, use, and transfer of several types of weapons. These NFA weapons, also referred to as “Title II” weapons, include: machine guns, short-barreled rifles and shotguns, silencers, suppressors, and destructive devices.

The State of Michigan restricts the possession and use of NFA weapons, unless proper regulations are followed. Under the NFA, you have two ways of acquiring restricted weapons, either individually or through an entity. To obtain these items individually, you must submit fingerprints and a photograph, register with the Bureau of Alcohol, Tobacco, Firearms and Explosives (BATFE), pay the $200 application fee/tax, and obtain the signature of the Chief Law Enforcement Officer (CLEO) of the county where you live. In many counties, the CLEO signature is very hard, if not impossible, to obtain.

This is where a Michigan NFA Trust comes into play, acting as a legal entity for buying NFA registered guns, thereby avoiding the requirement of obtaining the CLEO signature. While the NFA weapons could also be owned by a corporation or LLC, trusts do not require annual filing fees, public disclosure or a separate tax return.

Beyond avoiding the CLEO signature requirement, a Michigan NFA Trust can allow you to name multiple trustees, who are all allowed to legally possess the NFA weapon. And if one of the trustees becomes prohibited from possessing the weapon, the trust would not have to transfer that weapon. The possible penalties of possessing an illegal weapon include up to ten years in prison, a fine of up to $250,000 and confiscation of your weapon – all of which could be avoided through a multiple trustee Michigan NFA Gun Trust.

STATE OF MICHIGAN

When a typical revocable living trust is set up in Michigan, a general assignment of all personal property to the trust is included with the package of documents. But relying on a general assignment could leave you facing unintended consequences when your firearms include registered pistols or NFA weapons. If the beneficiary of your trust is under the age of 18, a convicted felon, or a mentally incompetent, you are inadvertently creating a situation where a registered gun will be transferred to a person who is not legally allowed to own it. Working with a Michigan attorney that understands firearms laws can prevent such an occurrence and a Michigan Gun Trust will avoid many problems in the future.

If you plan to purchase, or already own, any weapons that are required to be registered with the BATFE or State of Michigan, I would be happy to speak with you about the best form of ownership to avoid current problems and plan for the future. There are a number of sites available for you to download a “fill in the blank” gun trust form, but you can rest assured that a Michigan Gun Trust prepared by my firm is tailored to your individual situation will best protect your investment.