This is a topic that’s relevant to any gun owner with a family. Without the gun trust, politically incorrect guns could get confiscated:
Estate planning can get complicated when it involves transferring a collection of art, cars or other such possessions. It gets trickier still for guns.
Whether it is grandpa’s Browning rifle from World War II, an antique pistol from the Revolutionary War passed down through generations, or a collection of hunting guns, firearms present some unique legal challenges. Some lawyers and advisers say these often can be solved through the use of a so-called gun trust.
Typically set up as a revocable living trust, a gun trust is crafted specifically to hold firearms, with the gun owner generally acting as the trustee.
They are most commonly used to hold certain federally-restricted items, such as silencers, because they can help cut down on some of the paperwork needed to possess, transfer and own such possessions. But estate planners say they are increasingly being used to create a road map for families left to handle a deceased loved-one’s collection.
For one thing, many executors or trustees might not be familiar with state and federal laws for firearms, as well as safety, storage, or the best way to liquidate a collection. By setting up a specific gun trust, a successor trustee that is well-versed in firearms and the laws affecting them can be named to handle the transfer of the collection.
Bob Klosterman, a Longboat Key, Fla.-based wealth adviser, recalls how one client with an extensive and valuable gun collection sought a plan to help his wife handle the sale of the collection if he were to pass away.
“The big issue was who would be the likely buyers and, among those, who could he trust to treat his family fairly,” says Mr. Klosterman, whose firm, White Oaks Wealth Advisors Inc., manages about $430 million.
The client ended up making a list of the collectors he had relationships with and instructed his wife and family in how to proceed with a liquidation. In that instance, no trust was created but, looking back on the case, Mr. Klosterman now says having a trustee with firearms knowledge could have been helpful.
A successor trustee can make sure the beneficiaries are legally allowed to access or own the firearms. The U.S. Gun Control Act of 1968 bars giving or selling a gun to someone who is, for example, under indictment for a serious crime or is an addict. A trustee can also help create contingency plans in case a beneficiary becomes a so-called prohibited person at some point.
“Think about the trust as a means to keep the client safe and legal, and to provide all of the guidance to the heirs and beneficiaries so they stay safe and legal,” says Matthew Bergstrom, managing attorney of Fairfax, Va.-based Arsenal Attorneys, which specializes in firearms law for clients nationwide.
Another benefit of a gun trust: Avoiding the probate process that could expose a collection and the beneficiaries to becoming part of the public record.
Privacy is especially important to many collectors with valuable items that could become the target of thieves, says Mr. Bergstrom. “They don’t want the possibility of a public record showing who inherits their firearms that could wind up on the Internet with the beneficiary’s name tied to all of these guns.”
A gun trust doesn’t always make sense for a client, especially if the heirs are likely to be experienced with firearms themselves. Trusts also aren’t usually worth creating for those with very few, lower-value firearms that aren’t subject to certain federal restrictions.
“If someone is a hunter and has one deer rifle, or a couple of guns for personal defense, I wouldn’t create a trust for him,” Jeff Crown, a trust and estate lawyer in Rocky Hill, Conn. who has experience estate planning for gun owners. “Trusts are mostly for people that have more than a few guns,” or have valuable firearms, such as a high-end shotgun, he adds.
Some financial advisers say that it’s important to ask clients about their firearms, since clients don’t always think to tell their wealth advisers about their guns.
Brian Kuhn, a Fulton, Md.-based certified financial planner with Planning Solutions Group, which manages about $500 million, says he didn’t always ask his clients if they had guns until recently. He added that topic to his routine list of estate-planning questions after a recent conversation with an estate-planning attorney, who explained the issues.
Now, “as I come across people who own guns, I’m making sure they talk to an attorney that specializes in gun trusts,” he says.
Source: http://online.wsj.com/articles/estate-planners-use-gun-trusts-to-smooth-firearms-transfer-1415630087
