Tuesday, February 12, 2013

Gun Trusts

Guns are a hot topic right now. Probably too hot, actually. I think we can all agree, whatever side of the fence you are on, that some sort of reform needs to be done, while respecting the Second Amendment. Either with background checks, closing the private seller loophole,  funding for mental health, or something else. But enough politics.

That said, guns are still legal to own in Texas, and many of my clients have guns. Some of these guns are already required to be specially registered with the Bureau of Alcohol, Tobacco, and Firearms (ATF) as they fall into a special class of items under the terms of the National Firearms Act (NFA).


The 1934 National Firearms Act was essentially a tax levied by Congress, but the real purpose was to thwart and curtail possession of "gangster" type weapons, some thought to be a specific response to the St. Valentine's Day Massacre allegedly orchestrated by Al Capone. All sound suppression devices, short barreled rifles and shotguns (less than 18 inches in length), machineguns, and a catch-all class of "other weapons" were listed, and a $200 tax stamp was imposed on any transfer.  That was a lot in 1934 dollars, and it worked. Weirdly,  it has not changed since.

The registration also required detailed data that the government then used to prosecute registrants who lived in states where possession was illegal, or that could not possess the items for other reasons. Sound like entrapment? Well it was.  This lasted until the Supreme Court held that using the self-supplied information for prosecution violated the 5th Amendment protection against self-incrimination.

A 1968 amendment fixed the problem, and you now cannot be prosecuted for a violation prior to or concurrent with your application to register an item. However, after a 90 day moratorium, this also took away the mechanism to register a currently unregistered NFA item, interestingly enough. So, if you have, or come upon, an unregistered NFA item, run away. You're breaking the law. And call a lawyer.

Current Status:

The NFA is still in effect. You still have to go through this process if you want any of the above listed items. Recently, Texas, along with a number of other states, has approved the use of sound suppression devices/silencers for hunting use.  This has been met with some controversy, as many people think of "silencers" as something assassins use in movies to kill people. Hence, why they are included in the same category as a machine gun. Others, (such as the Finnish Government, where you can apparently purchase a silencer at any hardware store) think that silencers/sound suppression devices should be mandatory,  due to the noise associated with firearms and the potential for hearing loss of those nearbye, and are very much different than machine guns. With that, and the current rush to try and buy any and all firearm related items before any new legislation, many individuals are purchasing items listed under the NFA.

NFA Application process:

Should you decide to purchase a NFA item, there is a process to go through. A long process. Once your item arrives from a licensed dealer, you must complete an ATF form 4 transfer.  It is not very complicated, but you will need the serial number of the item, a valid description, and some more identifying information.

If you decide to apply for the item in your name, then after your dealer fills in the required info, you have to submit a photo, fingerprints, and have the chief law enforcement officer (sheriff or police chief) sign off on your application. This can be a pain. Further, only you can possess the NFA item. If you let someone borrow it, they are breaking the law. If you pass away, then your heirs might be breaking the law if the proper structure is not in place.

Here is where a "gun trust" comes in. With the trust format, you apply as settlor/trustee of a trust. This way, you do not have to give your photograph, fingerprints, or have the chief law enforcement officer sign off. This saves a little time in the application process. The real benefit, however, is that it allows any of your named trustees to possess the item outside of your presence. This allows your family and hunting buddies to share in your item and not break the law. Further, many trusts set out a beneficiary designation, so you can dictate exactly who the item will go to, instead of just to your estate. All good things.

Regardless of what route you take, the background check process is extensive. A gun trust will not, I repeat, WILL NOT, allow someone who would otherwise be disqualified from possessing an NFA item to acquire it. They still run a background check on you. Either way, several months or more are common wait times to hear back.


A "gun trust" is what it sounds like, and it is also not what people think. It is not an asset protection device, and it is not a place to put all your guns. I get lots of calls asking for both of these, but that is not the purpose of this specific trust. The best use, until the law changes one way or the other, is for the responsible use and acquisition of NFA items. Nothing more. That said, it is a very useful tool for those who have that specific need.

Tuesday, February 5, 2013

Protect your ASSets.

Pun intended. Watch Nightline lately? Or most any other news program or paper?  Who do you trust with your privacy? Yes, I'm talking about racy photos you send to your paramour(s). Be careful with these (see the links above). But I am also talking about your passwords to digital accounts.

The point here, is not just to protect your ASSets, but all your assets.  Where we have discussed in earlier posts the ways to attempt to safeguard your real, physical assets, we have seldom taken on discussing your digital ones.

Ever been locked out of your email? Its a pain. What if your parent/partner/sibling passed away, and had essential information on their email? How would you access it? What about accessing their social media profiles? Banking records and accounts? Ever thought about this?

Like so many things planning related, a checklist is usually the best way to go about things.

  • Financial and business accounts passwords. Seems obvious, but do you have these written down somewhere? And have a backup to these? How will anyone know about your online stock account, if you don't tell someone, or have a list written down?

  • Email Account passwords. You should change these regularly, but also have them written down, just in case. Gmail, for example, offers some recourse, but like anything you have to mail or fax a request in to, don't hold your breath.

  • Social Media. Some people live on social media, others make their living from it. This can be a real estate asset. Facebook will memorialize an account for you, but I think that is a little creepy. Twitter has a similar policy for deleting an account.

  • Itunes, music, pictures, etc. Bruce Willis did us a favor. Anyone every read those ten page contracts you AGREE to when you buy something on Itunes? Yeah, me either. I guess we should have just gone to the local music store and purchased a CD though, because when you die your song library is going to be worthless. WORTHLESS. How many millions/billions of dollars has itunes made, only for a life estate in the music? What a joke. I get it, from a business standpoint, similar to how, originally, you couldn't just transfer your itunes to someone else's computer or ipod. Now, they charge you $0.30 more. Genius? Maybe, but now when I die, my family has to pay for the same bad one-hit-wonder again at inflation adjusted, 2067 prices? Criminal. In all seriousness, this is the easy one. Back up your hard drive. Then back it up again. Keep the backups in different locations. (Houses burn down. Trust me).

Take Away: The easiest way to accomplish all this is have a pen and paper and a couple of extra hard drives. Every month, back up your stuff, update it, and keep one (or more) off site. Keep it in a safe deposit box. It is not that hard, and it is not that expensive. There are online companies you can pay to have real time, online access and storage, but you probably don't need that. I thought that would be a great business idea: maybe it is, but I was convinced my malpractice insurance wouldn't go for it.

Like any good boy scout/doomsday prepper/zombie apocalypse afficionado, the motto is the same. Just be prepared. Same goes in estate planning.

Also, Valentine's day is coming up. Remember, if you want to forever memorialize your most private and itimate moments via digital media, just make sure you trust who is on the other end. It could come back to haunt you, and you could end up in a class action lawsuit.