Estate Planning and Estate Administration Issues Posed by Firearms

Estate Planning and Estate
Administration Issues Posed by
Firearms
Presented to the Estate Planning
Council of Middle Tennessee on
September 12, 2016
By Robin L. Miskell, Esq.
Dickinson Wright PLLC

Why do you need to know something
about firearms?
• The number of households that have firearms
range from 38% to 45% depending on the source.
• The number of households that have Title II
firearms is much smaller, but the consequences
of violating federal laws are severe, including up
to a $250,000 fine and 10 years in prison, and the
right to possess such firearms in the future.
• To provide a valuable service to clients that
own firearms.
2

The Basic Right of the Second Amendment
of the United States Constitution
• “A well regulated militia, being necessary to the security of a free
state, the right of the people to keep and bear arms, shall not be
infringed.”
• One interpretation is an individual right theory and to prohibit
legislative bodies from restricting right (right of the people)
• The other interpretation is a collective rights theory providing that
the framers intended only to restrict Congress from legislating away
a state's right to self-defense (well regulated militia)
• There is a series of Supreme Court cases that resulted in the
strengthening of the interpretation of the Second Amendment as
an individual right
3

Agenda
• Definition of firearms under federal and state
law (with pictures)
• Applicable federal and state laws for firearms
• Estate planning with firearms
• Issues and concerns in estate and trust
administration posed by firearms
5

What is the definition of a firearm under
the Gun Control Act?
• The Gun Control Act (GCA) provides that a firearm includes the
following weapons:
– Pistols, revolvers
– Rifles, shotguns
– Frames or receivers
– Machineguns
– Silencers
– Destructive devices
– All other weapons that expel a projectile by the action of an
explosive.
7

What is the definition of a firearm under
the NFA?
• The National Firearms Act provides that a
firearm means:
– Machineguns
– Suppressors/silencers
– Short-barreled shotguns
– Short-barreled rifles
– Destructive devices
– Any other weapons
8

What is a machinegun?
• Machine guns are “any weapon which shoots, is
designed to shoot, or can be readily restored to
shoot, automatically more than one shot, without
manual reloading, by a single function of the
trigger, including any combination of parts.”
• Must be made before May 19, 1986.
• Some parts do not qualify as Title II parts – slide
fire and crank fire.
9

Suppressors/silencers
• Suppressors/silencers – “any device for
silencing, muffling, or diminishing the report
of a portable firearm, including any
combination of parts.”
• These are becoming more common to reduce
damage to eardrums.
• Commonly referred to as “cans.”
12

Short Barreled Shotguns
• Short-barreled shotguns – a shotgun with a
barrel length of less than 18 inches or an
overall length of less than 26 inches.
(Example: sawed-off shotguns)
– Note: The ATF uses a specific method for measuring the
barrel length of a gun by using a dowel rod to stick into the
barrel to the closed bolt or breech face and marking the
end of the barrel on the dowel rod to measure the length
of the barrel.
14

Short Barreled Rifle
• Short barreled rifles – a rifle intended to be
shot from the shoulder with a barrel length of
less than 16 inches or an overall length of less
than 26 inches.
17

Short Barreled Rifle and Weapon Made
From Rifle
18

Destructive Devices
• Destructive devices – any explosive, incendiary or
poison gas (i) bomb (ii) grenade (iii) rocket having
a propellant charge of more than 4 ounces (iv)
missile having an explosive or incendiary charge
of more than 1/4 oz. (v) mine, or any type of
weapon which will expel a projectile and which
has any barrel with a bore greater than 1/2” in
diameter or any combination of parts.
19

Destructive Devices
U.S. Rocket Launcher (Bazooka)
20

Destructive Devices
Street Sweeper
21

Any Other Weapons (AOWs)
• Any other weapon (AOW) – any weapon or device
capable of being concealed on the person from which
a shot can be discharged through the energy of an
explosive; a pistol or revolver having a barrel with a
smooth bore designed to fire a fixed shotgun shell;
and weapons with a combination shotgun and rifle
barrels 12 inches or more, less than 18 inches in
length, from which only a single discharge can be
made from either barrel without manual reloading.
• Example: Cane guns or pen guns.
23

Smooth Bore Shot
Revolver
Smooth Bore, Shot-
Pistol
24

25
Tear Gas Pen Guns

Wallet Holster
26

Antiques
• An antique firearm is a firearm (other than a machinegun or
destructive device):
– either manufactured in or before 1898, or
– replica of gun made in or before 1898 if not designed or redesigned
for using rimfire or conventional centerfire fixed ammunition, or uses
rimfire or conventional centerfire fixed ammunition which is no longer
manufactured in the U.S. and is not readily available, or
– any muzzle loading rifle, muzzle loading shotgun or muzzle loading
pistol designed to use black powder. 18 USC §921(a)(16).
• These weapons can be purchased without going through a
Federal Firearms License (“FFL”) holder.
27

Curios and Relics
• Curios and relics are defined as:
– Manufactured 50 years prior to current date;
– Firearms which are of special interest to collectors
by reason of some quality other than is associated
with firearms intended for sporting use or as
offensive or defensive weapon; or
– Certified by a museum.
28

Curios and Relics
• A person may obtain a license to collect curios and relics.
18 USC §923(d)(1)(B).
– In the case of a corporation, partnership or association,
any individual possessing power to direct management
and policies of the corporation, partnership or association
may obtain a license
– a trust is not included in the definition of a person and
may not obtain a license
• If a person has a curios and relics license, such weapons
may be obtained without going through a FFL holder.
29

What is the definition of firearm under
Tennessee law?
• Prohibited weapons include, unless the
person is in compliance with the NFA:
– Explosive or explosive weapon (includes bombs,
grenades, etc.);
– Device designed to shoot an explosive weapon;
– Machine gun (defined as any firearm that is
capable of shooting more than two (2) shots
automatically, without manual reloading, by a
single function of the trigger);
30

Tennessee law? (continued)
– Short barrel rifle or shotgun;
– Firearm silencer;
– In addition to NFA - Hoax device (means any
device that reasonably appears to be or is
purported to be an explosive or incendiary device
and is intended to cause alarm or reaction of any
type by an official of a public safety agency );
31

Tennessee law? (continued)
– In addition to NFA - Knuckles (means any
instrument that consists of finger rings or guards
made of a hard substance and that is designed,
made or adapted for the purpose of inflicting
serious bodily injury or death by striking a person
with a fist enclosed in the knuckles);
– Other implement to cause serious injury that has
no common or lawful purpose.
32

Agenda - How are firearms regulated?
• NFA
• GCA, amended the NFA
• How to Make, Transfer, and Purchase Title II Firearms
• ATF Regulations - Final 41F regulations
• Transportation
• Executive Action
• Tennessee Law
33

How are firearms regulated?
Federal law - NFA
• National Firearms Act (“NFA”) - The NFA was
enacted in 1934 under the Sixteenth Amendment
(Congress’ power of taxation) to curtail the
gangland crimes.
• The $200 transfer tax was implemented in 1934
and remains in force today. The amount of the tax
can be compared to $3,438 in 2013.
• The NFA is located in the Internal Revenue Code.
34

Federal law - NFA (continued)
• The NFA governs the purchase, sale, transfer, use
and ownership of certain “Title II” firearms,
including machineguns, suppressors/silencers,
short barreled shotguns, short barreled rifles,
destructive devices, and any other weapon.
• The penalty for unlawfully possessing a regulated
firearm may be up to $250,000 fine and ten years
in prison (26 USC §5871), along with forfeiture of
the firearm as illegal contraband (26 USC §5872).
36

Federal law - GCA (continued)
• Gun Control Act of 1968 (“GCA”) - Title I is the
original Gun Control Act and Title II was the
incorporation of the 1934 NFA into the Gun
Control Act.
• The GCA was enacted to cure the
constitutional flaw in the NFA found by the
Supreme Court in Haynes v. U.S., 390 U.S. 85
(1968).
37

GCA
• Interstate firearms transfers are prohibited except
among licensed manufacturers, dealers and
importers, commonly referred to as federal firearms
license (“FFL”) holders.
• A dealer cannot sell a firearm to an out of state
resident unless it is a sale of a long gun (rifle or
shotgun) by personal delivery and the dealer knows
that the sale is in compliance with the law of the
state of the resident.
• No sales of pistols to out of state residents.
38

GCA (continued)
• In 1986, the GCA was amended by the Firearm
Owner’s Protection Act (“FOPA”) in 1986 to prohibit
possession of machineguns except possession of
machineguns by government agencies and those
persons in possession as of the date of the
amendment (May 19, 1986).
• Machine guns may be lawfully possessed in 1986
may continue to be sold and transferred through
application to the Bureau of Alcohol, Tobacco and
Firearms (“ATF”).
39

GCA (Prohibited Possessors)
• The GCA lists prohibited possessors of regulated firearms who
pose a threat to public safety :
– A person convicted of a crime punishable by imprisonment
exceeding one year;
– A person who is a fugitive from justice;
– A person who is an unlawful user of or who is addicted to a
controlled substance;
– A person who has been adjudicated as a mental defective
or who has been admitted to a mental institution;
– An alien who is unlawfully in the U.S. or is admitted under
a nonimmigrant visa;
40

GCA (Prohibited Possessors)
Continued list of persons prohibited from possessing
firearms:
– A person who has been discharged from the Armed Forces
under dishonorable conditions;
– A person who has renounced his U.S. citizenship;
– A person subject to a court order which restrains the
person from harassing, stalking or threatening an intimate
partner or partner’s child;
– A person who has been convicted of a misdemeanor crime
of domestic violence.
41

How to Make, Transfer and Purchase Title II
Firearms
• The manufacture of a Title II Firearm requires
application and approval from the ATF (Form 1
– application to manufacture firearm) and
payment of a $200 tax stamp and registration
of the firearm in the National Firearm
Registration and Transfer Record (NFRTR).
– The making of a firearm includes cutting the barrel
of a shotgun or rifle.
42

How to Make, Transfer and Purchase Title II
Firearms (continued)
• The purchase or transfer of a Title II firearm requires
application, the filing of a Form 4, and approval from
the ATF and payment of a $200 tax (except AOWs
which only require a $5 tax stamp unless making
one) and registration of the firearm in the NFRTR.
• Distribution of estate firearms is tax free (use Form 5
– tax-exempt transfer of corpus of trust to
beneficiary or during a probate from an estate to a
beneficiary or heir)
43

Final ATF Regulations 41F
• The Final Regulations were effective July 13,
2016. The proposed regulations were issued on
September 9, 2013 although the final regulations
were substantially different.
• The goal of the final rule was to ensure that the
identification and background check
requirements apply equally to individuals, trusts
and legal entities who apply to make or receive
NFA firearms.
44

Final ATF Regulations 41F (cont’d)
• Prior to new regulations, gun trusts were beneficial
because (i) only one Trustee must comply with
background check and all Trustees share in ability to
use and control; and (ii) no consent or notification to
Chief Law Enforcement Officer was needed for a
Trustee, but was for an individual.
– Note that Tennessee was one of the few states that
enacted a law that said that approval “shall issue.” In
other words, the CLEO did not have any discretion, which
was a complaint in many other states. T.C.A. §39-17-1361.
45

• Defines a “responsible person” in relation to a
trust, partnership, association, company or
corporation.
– For example, a responsible person now includes
all Trustees.
– A responsible person does not include a
beneficiary of a trust, if the beneficiary does not
have the capability to exercise powers or authority
to direct management of trust.
46

• Requires a responsible person to complete
ATF Form 5320.23, to submit photographs and
fingerprints when transferring or making of an
NFA firearm;
• Requires notification of the local chief law
enforcement officer (“CLEO”) of an application
for the transferring or making of an NFA
firearm.
47

• Eliminates the requirement for an individual
to obtain certification signed by the CLEO.
• If a new Title II firearm is added to a gun trust,
the new rules apply, unless gun trust has
already complied with new rules within the
preceding 24 months.
• Adds a new section to address the possession
and transfer of firearms registered to a
decedent.
48

Transportation
• Interstate transfers by a person are prohibited.
A FFL holder may ship to another FFL holder.
• Title I Firearms:
– A person may ship firearms to other individuals in
same state but there are various shipping
requirements beyond the scope of this
presentation.
49

Transportation (continued)
– A person must transfer firearm to a FFL holder in
the state of the recipient. Then the recipient must
fill out a Form 4473 to pick up the firearm.
– A person may mail his own rifle or shotgun to
himself in care of another person but the recipient
should not open the package and keep it
somewhere safe.
50

– A person must transfer firearm to a FFL holder in
the state of the recipient. Then the recipient must
fill out a Form 4473 to pick up the firearm.
– A person may mail his own rifle or shotgun to
himself in care of another person but the recipient
should not open the package and keep it
somewhere safe.
51

• Title II Firearms:
– A transfer to another person must be after
application and approval of a Form 4 and payment
of a tax. Such transfer may be made in-state after
approval of the Form 4.
– A transfer to another person out of state must be
through a FFL holder in the transferor state and in
the transferee state.
52

– If you are moving to another state with a Title II
firearm, you must file and receive approval of a
Form 5320.20 (Form 20).
– NFA firearms may be transferred directly
interstate to a lawful heir without going through a
dealer. If an out of state beneficiary comes and
picks up the firearm from the Personal
Representative or Trustee following approval of
transfer by the ATF, transfer through a FFL holder
is not needed.
53

Executive Action
• Issued by President Obama on January 4, 2016 (not
legally binding and does not follow definition of
engaging in business)
– Clarifies that if you are in the business of selling firearms, you must get
a license and conduct background checks. The Executive Action
provides that “it doesn’t matter where you conduct your business –
from a store, at gun shows, or over the internet: If you’re in the
business of selling firearms, you must get a license and conduct
background checks.” The ATF has clarified that there is no specific
threshold number of firearms purchased or sold that triggers the
license requirement, but that it is important to note that even a few
transactions when combined with other evidence can be sufficient to
establish that a person is “engaged in the business.”
54

Executive Action (continued)
– Engaged in the business is defined in 18 USC Section
921(a)(21)(C) as “a dealer who devotes time, attention,
and labor to dealing in firearms a regular course of trade
or business with the principal objective of livelihood and
profit through the repetitive purchase and resale of
firearms, but such term shall not include a person who
makes occasional sales, exchanges, or purchases of
firearms for the enhancement of a personal collection or
for a hobby or who sells all or part of his personal
collection of firearms.”
55

Tennessee Law
• Prohibited firearms (discussed above) – NFA
firearms plus hoax devices and knuckles –
States can be more restrictive
• No prohibition on assault rifles (if properly
registered under the NFA)
• No state registration of firearms
• No magazine capacity restrictions
56

Tennessee Law (continued)
• Prohibited transfers:
– sell, loan, gift a firearm to a minor (exceptions)
• Defense if for sporting purposes
– sell to intoxicated person
– sell to a prohibited possessor discussed above
under federal law, or to a:
• Person convicted of stalking
• Person addicted to alcohol
• Committed to be mentally defective or in an institution
57

• Tennessee distinguishes between possession
and carrying of firearms.
– It is unlawful to carry a firearm unless:
• it is unloaded,
• you are at your own premises, residence or place of
business
• you have a carry permit for a handgun, or
• you are using it for lawful hunting, trapping, fishing,
camping, sport shooting, or other lawful activity.
58

• Exception to prohibition of carrying a weapon if
person has loaded weapon in vehicle and the person
is not prohibited from possessing or purchasing a
firearm and is in lawful possession of the vehicle.
• The holder of a carry permit may transport and store
a firearm or firearm ammunition in the motor vehicle
while utilizing any public or private parking area if:
vehicle is parked legally, firearm kept from view if
permit holder in vehicle or locked within trunk, glove
box, or interior if permit holder is not in vehicle.
59

– Summary – You can carry a loaded firearm only if for
hunting or sporting purposes or you are at your own
residence or place of business, or you are in your vehicle
and you are not a prohibited possessor.
• In other words, you can load your firearm at home,
carry it in your car to work, or go to a shooting range or
hunt, and then return to home with your loaded
firearm. You can’t have a firearm in a parking lot unless
have a carry permit.
– You can carry a handgun with a permit (either open or
concealed).
60

Estate Planning with Firearms
• When is a gun trust needed? A gun trust is useful if a
person owns Title II firearms. It is informal, private
and cost-efficient (as compared to other options) and
achieves the following objectives:
– Prevention of an accidental felony
– Allows temporary use by others (beneficiary or trustee)
– Provides guidance on possession and transfer after death
or disability
– Avoids probate and simplifies the process of transfer upon
death or disability
61

Estate Planning with Firearms (continued)
• Is a gun trust needed with only Title I
weapons? - No. A client does not need a gun
trust if a person owns only rifles, shotguns and
pistols (“Title I guns”), although the personal
representative or trustee must still be careful
to follow state law in transferring these types
of guns. We will discuss estate planning
options for Title I guns below.
62

• Is a gun trust needed if a person owns one
Title II firearm? Possibly not, if:
– He or she stores the firearm in a place for which he or
she only has the key.
– He or she does not share the firearm or let anyone
else borrow the firearm.
– He names a Personal Representative that understands
the significance of Title II firearm transfers, or advises
his or her Personal Representative to contact an FFL
holder for assistance.
63

• Other options other than a gun trust for Title
II weapons:
– Corporations:
• Must file an annual report and must pay an annual
license fee;
• There is a risk of administrative action or dissolution
resulting in criminal violations.;
• If using this type of entity, one cannot use a generic
form of bylaws for firearms.
• Loss of privacy due to public company filings
64

– Limited Liability Companies:
• Provides a liability shield
• Is perpetual
• The member can be a regular revocable trust
• Faster to obtain tax stamp because only need to provide ATF
with Articles of Organization and Certificate of Good
Standing. Do not need to send in Operating Agreement.
• Can hold a Curio and Relics License (whereas a trust cannot)
65

Estate Planning – Gun Trust
• What are the requirements of a gun trust?
– Same requirements as a trust:
• Valid trust agreement under state law
• Settlor has capacity
• Settlor indicates intention to create a trust
• Trust has a definite beneficiary
• Single person is not sole trustee and beneficiary (results
in invalid trust). Many trusts found online have this
problem.
66

• The Trust should immediately hold res or something of
value, e.g. the settlor may contribute ten dollars by
attaching a ten dollar bill to the Trust upon execution of
the Trust.
– Other requirements:
• Permits legal transfers of firearms by gift, sale, and
sharing to persons that are not prohibited possessors
(needs to be spelled out who is a prohibited possessor,
or at least refer to the federal and state laws).
67

• Trust should provide for what happens if a Trustee or a
beneficiary becomes a prohibited possessor or
disqualified person.
• There should be no power to change trust name.
Because the gun trust is registered in the NFA Registry,
a change in the trust name would require re-registry of
the firearm.
• Trust describes some of the Trustee’s duties to ensure
proper transfer, use and identification of beneficiaries
based on federal and state law, including the proper
procedure to transfer to beneficiaries.
68

– Usually a gun trust is revocable, so that the Settlor
may make changes. Anyone can be designated as
a co-Trustee of the trust. With the gun trust as
the registered owner, the actual ownership of the
trust can be easily changed. As long as the trust
remains the registered owner, no transfer has
occurred. This may be useful in the event that
future federal or state legislation is enacted
banning certain weapons.
69

– There are varying opinions on whether a gun trust
should hold Title II and Title I weapons. The
prevailing sentiment seems to be that a gun trust
should hold only Title II weapons. However, if the
client owns Title I weapons, these should be
addressed in the client’s estate plan by other
means.
– To be safe, no Trustee should be under 21.
– Transfers to minors should be controlled until
reach a certain age.
70

– If more than one person is a Trustee, the client
should consider that not all Trustees should be
treated alike. Consider having only one Trustee to
have the ability to sell or transfer the firearms
during his lifetime if competent, then upon his
death or incapacity, another Trustee may have the
power to sell firearms.
71

– The Trust may provide that a Trustee has the power
and authority to allow a person to provide temporary
use of the firearms without committing a felony if for
a valid purpose (target shooting).
– The Trust should have a provision to prevent a
generation-skipping transfer (“GST”) Tax by including a
testamentary general power of appointment in the
trust for a child if there is a possibility that a
generation-skipping transfer will occur, or allocate GST
exemption upon death of Settlor.
72

– The Trust should have a list of inventory with the
serial numbers listed.
– Commonly, a gun trust will have forms attached to
change the beneficiary or successor Trustee.
– Transfers to a gun trust require the payment of a
transfer tax. If a gun trust purchases the firearm,
only one payment of the transfer tax is required.
73

Estate Planning – Gun Trust Not Used
Title II Firearms
• Title II Firearms – The issue is who is the Personal
Representative and is he/she capable of handling
Title II firearms.
– The Personal Representative must be an acceptable person
(not a prohibited possessor) to receive Title II firearms if
not held in a gun trust.
– The Will should require that the Personal Representative
satisfies all of the qualifications prior to appointment.
74

Title II Firearms
• There are not many good options other than a gun
trust to name a Personal Representative, but the
following are a few possibilities:
– If the client has a significant collection, he or she may
desire to designate a Personal Representative that is
knowledgeable about Title II firearms. Then have that
Personal Representative transfer remaining property to a
trust with spouse/descendants as Trustees/beneficiaries.
– Name a general Personal Representative and counsel them
to get advice from attorney or FFL holder.
75

Title II Firearms
– You could attempt to bifurcate the Personal
Representative duties, but there is no statutory
authority for this. To implement this procedure,
the special Personal Representative or Special
Administrator may have to get a court order to
make this plan work. This worked in Pennsylvania,
a non-UPC state.
76

Title II Firearms
• Distribution provisions – To be
comprehensive, you should include the
restrictive language from the gun trust, such
as a beneficiary may not be a prohibited
possessor, federal and state laws apply to
transfers, etc.
• A client may desire to name alternate
recipients in case the first one does not
qualify.
77

Title I Firearms
• For Title I firearms, commonly, in states that follow
the Uniform Probate Code (UPC) (like Arizona), a
client will use a separate statement designating
certain personal property, including Title I firearms,
to specific beneficiaries.
• In Tennessee, since it is not a UPC state, you would
treat the disposition of firearms in the same manner
as specific personal property, possibly as a specific
gift in a Will.
78

Title I Firearms
• There are age restrictions for a firearm, and in Tennessee, as
discussed above, a few other restrictions in order to possess a
firearm, such as a person can’t be addicted to alcohol or
adjudicated as a mental defective. As a result, it is a good
practice to state in the specific gift provision that the
beneficiary must be eligible under federal and state law to
possess the firearm.
• The client may desire to name alternative recipients, just in
case the first recipient is not eligible to possess the firearm.
• You may suggest that the client prepare a personal firearms
record or inventory.
79

Estate Administration Issues -
Next of Kin
• What should “next of kin do” with firearms on
the death of a loved one?
– Secure firearms.
– Determine if Decedent had a Will or a gun trust:
• If Decedent had a Will, the person that is named as the
Personal Representative should contact an attorney to
obtain appointment as the Personal Representative,
administer the estate and avoid criminal liability. The
Personal Representative has no authority until
appointed by the court.
80

Next of Kin
• If Decedent had a gun trust the person that is named as
Trustee should contact an attorney to assist him or her
in administering the Trust in accordance with its terms
to avoid criminal liability.
• If Decedent had neither a Will nor a gun trust, contact
an attorney to determine if a probate needs to be
opened and who is entitled to priority as Personal
Representative.
81

Personal Representative
• What should a Personal Representative do if
decedent owned firearms?
– Secure firearms in a safe location until further
information is obtained regarding the type of firearms,
whether they are registered, and who is the registered
owner.
– Determine if the Decedent had a Will and/or a Gun
Trust
– Obtain appointment as Personal Representative.
82

• Contact attorney for guidance pursuant to federal and
state law, if needed.
• Consider insurance for guns depending on value.
• If no beneficiary is designated to receive guns, have
them appraised.
• Sell guns to reputable dealer.
83

• If Decedent owned Title II firearms:
– Prior to the new final regulations, a Personal
Representative could not possess a Title II firearm
legally. The new regulations provide that a Personal
Representative may possess a firearm legally during
the period of administration. 27 CFR §479.90a.
84

– If there is a significant collection of firearms, and the
Personal Representative is not qualified or knowledgeable,
consider obtaining an order from the court appointing a
special administrator to take control of firearms for sale
and transfer.
– If a specific heir is not designated, then the Personal
Representative may transfer to any qualified person (as a
sale) using Form 4.
– The Personal Representative must perform a reasonable
investigation into the background and status of the
designated recipient of the firearm.
85

– The Personal Representative must file Form 5 and obtain
approval for a non-taxable transfer to a beneficiary.
– The Personal Representative must avoid transfer across
state lines without proper forms. A Form 20 is used for
transporting firearms across state lines. However, after
filing and approval of a Form 5, a Personal Representative
may transfer a firearm to a beneficiary by personal delivery
in state of decedent’s domicile.
86

– The Personal Representative may need to obtain an
appraisal of the Title II firearms.
• An FFL Holder is usually a qualified appraiser of the Title II
firearms.
• The Personal Representative may not transfer the Title II firearms
to the FFL Holder, or anyone else, for the purposes of appraisal.
The Personal Representative must maintain possession and control
at all times unless he or she obtains an order appointing a Special
Administrator.
• The Personal Representative may need to take pictures, obtain the
serial number and any other documents to provide to the
appraiser for purposes of obtaining an appraisal.
87

– Similarly, one may not transfer a Title II firearm to
a person for the purposes of repair without a
proper transfer Form. The owner must complete,
file and obtain approval of a Form 5 to transfer the
firearm to a reputable repairman. Although, the
ATF does not consider the conveyance of a Title II
firearm to a gunsmith for repair to be a “transfer”,
the ATF strongly recommends that a Form 5
application be submitted for approval prior to
conveying the firearm for repair.
88

• Unregistered firearms:
– There is a risk that a Personal Representative will
not recognize parts that consist of Title II firearms.
One FFL Holder told the author of an estate of an
older man that made machine gun parts that were
legal at the time that he made them, but the ATF
rescinded the letter stating that they were legal.
Accordingly, the FFL Holder who was appointed as
a Special Administrator found the parts and had to
turn them over to the ATF as contraband.
89

– If the firearms are Title II firearms and are unregistered or
have no serial number, they must be turned over to law
enforcement immediately (as soon as discovered) because
they are contraband.
– Title I firearms also have federal and state requirements.
The Personal Representative should also understand that a
designated recipient may be eligible to receive a handgun,
but ineligible for a license to carry. The Personal
Representative should understand the laws on who is an
eligible person to receive a firearm.
90

Trust Administration Issues – Transfer by
Trustee
• Transfer Requirements:
– If gun trust:
• A properly drafted gun trust will provide instructions to the
Trustee on how to properly transfer the firearms or administer the
guns by holding them in trust.
• It is possible that the laws have changed since the trust was
drafted, so it is prudent to consult with an estate attorney that is
familiar with firearms.
• A transfer Form 5 is required to be filed with the ATF if the firearm
does not stay in trust, although it is a tax-free transfer to a
beneficiary. It is not a tax-free transfer if it is sold to a beneficiary
and a Form 4 will be required. See discussion below.
91

Estate Administration Issues – Transfer by
– If no gun trust:
• Consult with an attorney to ensure compliance with
state and federal laws. It may be possible to consult
with an experienced FFL holder instead. There are
attorneys that are also experienced FFL holders.
• The Personal Representative has authority to control
and sell to a person that is entitled to possess a Title II
firearm. The Personal Representative must file a Form
4 to transfer (sell) to any legal person and a Form 5 if
the transfer is to a beneficiary.
92

Trust Administration Issues -
Trustee of Gun Trust
• If Trust is well written, it should give guidance regarding
current federal and state laws, however, prudence would
require checking federal and state laws to make sure they are
current and the Trustee is not violating any prohibitions.
• Need to make sure the Trustee is:
– Not committing negligent entrustment
– Not committing negligent maintenance
– Not transferring to a prohibited person
– Not criminally possessing any firearms (e.g. Title II firearms that are not
registered)
– Preventing transfers to a State where a firearm would be illegal to possess.
– Follow proper transfer procedures by filing appropriate forms, especially if
firearms are crossing state lines.
93

• Educate Trustees on legal requirements in your state,
administration process and forms
• Educate Beneficiaries on legal requirements, trust
requirements, legal capacity and conditions of use.
• Maintain firearms
• Properly document use of firearms.
• Properly document transfer and purchases of firearms by
maintaining inventory, including copies of forms with serial
numbers.
94

• Questions to ask prior to transfer of firearms:
– What kind of firearm
– Can the transferee possess it
– Is it precluded individually or under state law
– If item is contraband, contact the local ATF office for
proper disposal to avoid criminal liability exposure.
95

Questions?
If you have questions, please contact me at:
rmiskell@dickinsonwright.com
or
(602) 889-5329
96

Estate Planning and Estate Administration Issues Posed by Firearms

Recommended

Recommended

More Related Content

Viewers also liked

Viewers also liked (9)

Similar to Estate Planning and Estate Administration Issues Posed by Firearms

Similar to Estate Planning and Estate Administration Issues Posed by Firearms (14)

Recently uploaded

Recently uploaded (20)

Estate Planning and Estate Administration Issues Posed by Firearms