Gun Trusts in Arizona
Update May 13, 2016 The final draft of new ATF Rule 41F was released on January 4 and goes into effect on July 15, 2016. The new rule adds a sheriff notification requirement when filing ATF Form 1 or Form 4 to make or transfer a NFA firearm, whether using a Gun Trust or filing individually. When using a Gun Trust, each "responsible person" will also need to include a photograph and fingerprint cards. In most cases, only current trustees are responsible persons under the new definition. Successor trustees and beneficiaries would not be considered responsible persons even if the trust permits a current trustee to extend to them a temporary privilege to use and possess firearms within close physical proximity of the trustee (provided they are not "prohibited persons" under the law).
Note: The following article was updated after the release of new ATF Rule 41F.
What is a Gun Trust?
A Gun Trust is a legal entity intended to own firearms and used as an alternative to individual ownership. It is usually drafted as a revocable living trust for the limited purpose of holding title to personal firearms and related accessories. A Gun Trust is most beneficial for persons in possession of federally-regulated firearms, also known as Title II or NFA firearms. When properly drafted, a Gun Trust promotes responsible handling of firearms, and is entirely legal.
The Gun Control Act and its accompanying federal regulations govern the ownership and use of firearms. Title I grants authority to the states for regulation of handguns and most rifles and shotguns. Title II refers to the National Firearms Act (“NFA”), and it regulates short-barreled rifles and shotguns, suppressors (silencers), machine guns, destructive devices (“DD”), and other weapons (“AOW”). NFA firearms must be registered with the Bureau of Tobacco, Alcohol, Firearms, and Explosives (“BATFE” aka "ATF"). There are severe criminal penalties for possession, use, or transportation of NFA firearms in violation of federal laws.
What are the benefits of a Gun Trust?
The primary benefits of a Gun Trust are:
*** Expands list of eligible possessors of NFA firearms. A Gun Trust may expand the list of eligible persons who may possess, use, or transport a NFA firearm. Any trustee is eligible, including the initial trustee and any later named co-trustees. For example, you might establish a Gun Trust and later add your spouse and child as co-trustees.
*** Prevents accidental felonies. A Gun Trust may authorize a current trustee to grant temporary use and possession of NFA firearms to successor trustees, beneficiaries, and other persons while in close physical proximity to the trustee. For example, a trustee lets a friend borrow the trustee's NFA firearm while both are at the shooting range. This may be permitted by the trust document assuming the friend is not a "prohibited person" under the law. Also, a properly drafted Gun Trust will strictly prohibit unauthorized use and handling of NFA firearms during the initial trustee's lifetime and after death, and educate all persons involved about relevant laws and regulations. This will help prevent the trustee and the trustee's family from committing accidental felonies.
*** Estate planning. Upon incapacity or death of the initial trustee, a successor trustee is pre-designated to manage the trust and possess and distribute firearms without any probate or other court interference.
*** Inheritance protection. Upon incapacity or death of the initial trustee, a Gun Trust may provide long term protection of the trust property from creditors of the beneficiaries and in the event of a beneficiary's bankruptcy or divorce.
Important Note: Until July 13, 2016, Gun Trusts benefit from a simpler registration or transfer process for NFA firearms. The trustee does not have to submit fingerprint cards or a photograph and need not notify the local Chief Law Enforcement Officer ("CLEO"), usually the Sheriff, prior to submitting the application to the ATF. After July 13, 2016, a new process will be used that is the same for both individuals and trusts. Past and pending applications are not affected by this rule change, so this is an excellent time to take advantage of the current rules and use a Gun Trust to purchase NFA firearms.
Do all gun owners need a Gun Trust?
Currently, there is no registration or licensing of non-NFA firearms in Arizona (with the exception of voluntary permits to carry a concealed weapon). Thus, a handgun owner, who does not own any NFA firearms, need not be concerned about federal regulations when creating a Gun Trust. However, a Gun Trust is a responsible method for firearm ownership of any kind because of its estate planning benefits.
What about using an existing trust, corporation, or LLC instead?
A Gun Trust incorporates specific provisions regarding the Gun Control Act and its accompanying regulations while other trusts rarely do. For example, a typical living trust might permit distribution or handling of firearms to or by a prohibited person without calling attention to the unique legal issues presented when doing so. It might also complicate the process of purchasing a firearm if the number of responsible persons for NFA firearms is not carefully limited.
In Arizona, a Gun Trust is a better option than a corporation or limited liability company because business entities must be registered with the Arizona Corporation Commission. A trust is private and not under the oversight of any government entity.
How do I purchase a NFA firearm using a Gun Trust?
After identifying the NFA firearm to be purchased, the registration process involves sending two copies of ATF Form 4 (ATF Form page here), which should be printed as a double-sided document, a copy of the entire trust document, and $200 per firearm. Beginning in July 2016, you will need to file ATF Form 5320.23 for each responsible person (trustee) including a passport-type photograph and two FBI Form FD-258 fingerprint cards. In addition, you will need to send a copy of Form 4 or 5320.23 to the chief law enforcement officer in the place where the applicant is located (usually the sheriff). If purchasing from a dealer or broker, they should help you complete this process as part of the sale. It is important not to list the NFA firearm you are purchasing on a list of trust property (usually referred to as Schedule A) until after the ATF has issued the tax-paid stamp approving the transfer. Processing times have decreased in recent years as a result of the ATF training more form processors. Common wait times are now 3 to 4 months, but they are projected to increase again due to high demand in early 2016.