Firearms Law 2021: Firearms in estates, prohibited persons and restoration, and gun trusts

Joshua G. Prince, Esq. | Chief Counsel, Firearms Industry Consulting Group

Josh has represented more than 8000 individual clients with varied firearms issues under Federal and State law. Josh has represented more than 800 different FFLs in dealing with ATF and DDTC on all aspects of federal regulation of firearms. Josh has represented numerous areas shooting clubs and gun ranges with firearms issues under Federal and State law. Josh has received grants from Firearms Policy Coalition and the NRA to support under-funded litigants in defense of their gun rights in multiple, unrelated matters, including in relation to the AG/PSP’s attempted regulation of 80% lowers.

Howard S. Wolfe | Prince Law Offices P.C

Mr. Wolfe worked for the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF/BATFE) for thirty-six years. Of those thirty-six years, he spent thirty years as the Area Supervisor for the Pittsburgh Area Field Office and, on several extended details, held the positions of Acting Director of Industry Operations in Philadelphia and Acting Chief of the National Firearms Act (NFA) Branch in Washington, D.C.

He has conducted or supervised several thousand Firearms Application Investigations, hundreds of Firearms Compliance Investigation, evaluating the compliance of existing business, and was one of the authors of the firearms and explosives portions of the ATF’s latest “Industry Operations Investigator’s Handbook.”

He is now working for Prince Law Offices, P.C., helping Federal Firearms Licensees (FFLs) ensure compliance with the federal laws and regulations, performing mock audits and compliance inspections, and assisting with advice on changes that FFLs should implement. As an employee of Prince Law Offices, P.C., all his findings are protected by attorney-client privilege; thereby, ensuring that all work performed is confidential and not subject to disclosure, provided the client does not disclose any of the reports or findings.

Sean Healy | Healy Law Offices P.C

Mr. Healy is an attorney in private practice in Tyler, Texas. He is the lead author of the book The Legal Guide to NFA Firearms and Gun Trusts, written with Alan Gassman, Jonathan Blattmachr and several other attorneys and published in 2016. This book was reviewed in the June, 2019 American Rifleman, a magazine which reaches over 2 million readers. It reached #1 on the list of Amazon Bestsellers in the category of Legal Self-Help. Mr. Healy authored a chapter on NFA trusts in the books Texas Perspectives on Firearms Law (2015) and Essentials of Texas Firearms Law (2020) published by the Texas Bar Books.

He is the NFA Editor for Interactive Legal, working with nationally renowned estate planning attorneys to provide NFA trust forms and supporting knowledge to lawyers throughout the country through their Interactive Legal Suite. Mr. Healy is Texas State Rifle Association’s General Counsel. He has also served as general counsel for two congressional campaigns, and as National Corporate Counsel for American Mensa. He was Course Director for the 2012 and 2013 State Bar Firearms Law Seminars, and has spoken at every annual seminar except one since then. He is scheduled to speak on NFA Trusts at the 2021 NRA National Firearms Law Seminar. He is a mediator for civil, family law, and child protective cases, a member of the American Arbitration Association’s Panel of Mediators, and an arbitrator for the Better Business Bureau and AAA. During law school he served as an appellate advocacy instructor, and he previously served as a college instructor in business law. Firearms instruction: Mr. Healy is also a license to carry instructor, an NRA-Certified Instructor and Training Counselor, with certifications in Pistol, Rifle, and Shotgun; Muzzleloading Pistol, Rifle, and Shotgun; Metallic Cartridge Reloading and Shotshell Reloading; Home Firearms Safety; and Personal Protection in the Home. He is a Chief Range Safety Officer.

He is a nationally-trained instructor trainer for Texas 4-H Shooting Sports, and is qualified as a force-on-force instructor. Speeches and Publications: Mr. Healy testified before a Senate committee as the expert witness for NRA and TSRA regarding House Bill 823, the predecessor to the Motorist Protection Act. He also testified before a committee of the Texas Senate against several harmful gun bills in 2019.

He now serves as Frontline Activist Leader (formerly Election Volunteer Coordinator) for the National Rifle Association Institute for Legislative Action, covering Texas Congressional District 1. He has given numerous speeches, continuing legal education presentations to judges and lawyers, and televised interviews on firearms matters and other subjects, including an extensive interview that aired on CNN. Volunteer Activities: Mr. Healy is a life member of the National Rifle Association and Second Amendment Foundation. He served as Republican Party Vice Chairman and General Counsel for Smith County, Texas (2020-21).
He served for eighteen years on the East Texas Friends of NRA Committee. He also served on the Friends of NRA State Fund Committee for North Texas for thirteen years. Mr. Healy represented eight states on the Young Republican National Federation National Committee, and held numerous other state and local offices, including President of the Tyler Young Republicans. He has volunteered on several campaigns, served as a delegate to five Republican Party of Texas state conventions, and served on the RPT Ballot Security Task Force during two elections. He has completed a few campaign schools including the RNC Western Regional Campaign School and ballot security training.

He has also served and as Local Secretary (local President) and certified Proctor for East Texas Mensa. He served as a state officer for years for the Texas Junior Chamber of Commerce, and as President of the Tyler Jaycees. He served for seven years on the Board of Directors of Azleway, Inc. and its charter school Board of Trustees, including one year as Chairman of the Board. Firearms Competitions and Outside Activities: Mr. Healy has participated in over 150 firearms competitions, including matches organized by the United States Practical Shooting Association (USPSA), International Defensive Pistol Association (IDPA), and Steel Challenge Association. He is also a private pilot and a Panel Attorney for the Aircraft Owners and Pilots Association. Mr. Healy’s law practice focuses on business law, civil litigation, family law, representation of property owners’ associations, and firearms and aviation matters.

Session I – Firearms in Estates | 12:00pm – 2:10pm
1. Meaning of Terms and Definitions | 12:00pm – 12:12pm
2. Prohibited Person (Sean Healy will review in-depth) | 12:12pm – 12:24pm
3. Different types of Firearms – NFA vs. GCA | 12:24pm – 12:36pm
4. No registry of GCA firearms; registry of NFA firearms | 12:36pm – 12:48pm
5. Gifting firearms prior to death | 12:48pm – 1:00pm

Break | 1:00pm – 1:10pm

6. Estate Planning considerations | 1:10pm – 1:22pm
7. Gun Trust (Sean Healy will review in-depth) | 1:22pm – 1:34pm
8. Will drafting considerations | 1:34pm – 1:46pm
9. Estate administration where firearms are part of the estate | 1:46pm – 1:58pm
10. Estate Administration where decedent was an FFL | 1:58pm – 2:10pm

Break | 2:10pm – 2:20pm

Session II – Prohibited Persons and Restoration of the Right to Keep and Bear Arms | 2:20pm – 3:20pm
1. Introduction | 2:20pm – 2:32pm
2. Prohibitions on Possessing Firearms or Ammunition | 2:32pm – 2:44pm

a. Federal Law

i. Prohibited Persons
ii. Related Federal Prohibitions

b. Texas Law

3. Restoration of Gun Rights | 2:44pm – 2:56pm

a. Proving the Rights Were Never Lost – NICS Appeals
b. Applying to ATF for Rights Restoration
c. Pardon and Civil Rights Restoration
d. Specific Procedures for Removing Specific Disabilities
e. As-Applied Challenges

i. U.S. v. Marzzarella
ii. Binderup v. Attorney General
iii. Other Circuits

4. Practical Considerations | 2:56pm – 3:08pm

a. Guns and Family Law

i. Express Prohibitions
ii. Prohibitions by Operation of Law

b. Guns and Criminal Law

i. Express Prohibitions
ii. Prohibitions by Operation of Law

c. Written Admonishments
d. Transferring Guns

5. Conclusion | 3:08pm – 3:20pm

a. Appendix 1 – Prohibited Persons and Restoration of Gun Rights
b. Appendix 2 – Warning – Orders
c. Appendix 3 – Warning – MCDV

Break | 3:20pm – 3:30pm

Session III – Gun Trusts and the Lethal Pitfalls in Drafting Them | 3:30pm – 4:30pm
1. Introduction | 3:30pm – 3:40pm

a. Crimes Committed with Legal NFA Firearms are “Minimal”
b. Number of Registered NFA Firearms
c. Effect of Gun Control Laws on National Defense and Law Enforcement
d. Scope and Purpose of This Paper
e. Changes from Prior Versions
f. Professional Considerations: Business, Ethics, and Avoiding Malpractice

2. National Firearms Act (NFA) Trusts | 3:40pm – 3:54pm

a. Summary of Legal Principles
b. The Law

i. Federal Law

1) National Firearms Act

(a) General Provisions
(b) Definition of “Firearm”
(c) “Assault Weapons”
(d) Machine Gun Freeze
(e) Definition of “Person”
(f) Requirements for Acquiring NFA Firearms
(g) Criminal Penalties
(h) Death of Owner

2) Gun Control Act

(a) Definition of “Firearm”
(b) GCA Provisions Applicable to NFA Firearms

I. Prohibited Persons
II. Minors
III. Transfers to Prohibited Persons

(c) Criminal Penalties

ii. Texas Law

1) “Prohibited Weapons” and Criminal Penalties
2) Hunting with Suppressors
3) Trusts

(a) Same person as settlor, trustee, and beneficiary
(b) Spendthrift Trusts
(c) Same person as settlor and beneficiary
(d) Powers of trustees

c. Recent Developments

i. ATF Regulation 41F (Responsible Persons, etc.)

1) Original Proposal, Docket No. ATF 41P
2) Public Response
3) Final Rule, Docket No. ATF 41F
4) Issue Regarding Transfers from an Estate to a Beneficiary
5) Transition Period
6) What was the law like before Regulation 41F?
7) Advantages of NFA trusts that existed before Regulation 41F

(a) ATF processed applications by trusts more quickly
(b) CLEO approval was not required for trusts
(c) Fingerprints and photos were not required for trusts

8) When are you required to submit information on “responsible persons”?
9) Impact on gun trusts and other entities

ii. Electronic Filing

1) 7/10/13 Rule
2) Evolution of eForms System
3) Wait Times

(a) Current Wait Times
(b) Past Wait Times

4) Changes with Regulation 41F
5) Future Improvements

iii. Bump Stocks

1) State Laws
2) Las Vegas Shooting
3) DOJ’s New Bump Stock Rule.
4) Bump Stock Lawsuits
5) Are Bump Stocks “Machine Guns?

iv. Stabilizing Braces
v. Zero Tolerance for FFL’s

d. Advantages of Gun Trusts

i. Access to NFA Firearms
ii. Protection From Criminal Prosecution
iii. Continuity
iv. Estate Planning Benefits
v. 24-Month Exemption
vi. Advantages of Non-NFA Gun Trusts

e. Steps Involved in Acquiring or Making NFA Firearms (Including Forming a Trust, if Desired)

i. Order NFA Firearm
ii. If using a trust, draft and execute it
iii. Complete and submit form 4 (or Form 1)
iv. Submit two complete copies of Form 4 (or Form 1) with the proper tax
v. Notify the CLEO
vi. Wait for ATF to approve the application and return it with the tax stamp
vii. Complete Form 4473 and submit to NICS check
viii. Take possession of (or “make”) the NFA item

f. Risks

i. Normal estate planning risks
ii. Interstate transportation of NFA firearms
iii. Inadvertent transfers to prohibited persons
iv. Transfers without Form 4
v. Inadvertent violation of firearms laws
vi. Changes to the law

g. Losing Form 4; Problems with the NFRTR
h. Drafting NFA Trusts

i. Conduct an adequate consultation with the client
ii. Consider the client’s overall situation, and general estate planning needs
iii. Thoroughly educate the client (and to the extent possible, the other trustees) regarding the legal principles and requirements for acquiring, possessing, and transferring NFA firearms
iv. Start with the standard form
v. Draft a valid trust
vi. Customize the trust for its intended purpose
vii. Limit civil liability as much as possible
viii. Limit criminal exposure as much as possible
ix. Maximize client’s control of the trust and assets
x. Determine what assets the trust will hold
xi. Maximize flexibility of the trust
xii. Provide continuity
xiii. Maximize privacy
xiv. Include related documents

1) Letter of explanation
2) Removal of Trustee
3) Appointment of Additional (or Successor) Trustee
4) Change of Beneficiary
5) Assignment (to add property to trust)
6) Declaration of Trust

i. Sources of Gun Trusts

1) Download or Copy the forms
2) Standard living trust form from office supply store, Quicken, or LegalZoom ($5.00 to $50.00)
3) Gun Shop NFA Trusts ($20.00 to $25.00)
4) Inexpensive lawyer-drafted trusts ($195.00 or so)
5) Professional gun trusts ($500.00 to $3,500.00)

j. Different Types of Gun Trusts

i. “Equal Powers” Trusts
ii. Benevolent Dictatorships
iii. Earmark Trusts
iv. Irrevocable Trusts
v. Testamentary Trusts

k. Alternatives to Gun Trusts

i. Individual Ownership
ii. Corporation/Business entity

l. Privacy

i. Information that Must Be Disclosed to ATF
ii. Information that Must be Disclosed to the CLEO
iii. Trusts and Privacy
iv. Corporations and Privacy
v. Practice Notes on Privacy

m. Operating Gun Trusts

i. RELAX – You Don’t Need a Law Degree to Run an NFA Trust
ii. The Elephant in the Room – This is NOT Your Father’s Living Trust
iii. Source of Authority
iv. Operating an NFA Trust
v. Basic Training for Trustees
vi. The Duty to Preserve and Protect Trust Property
vii. Trustees’ Liability
viii. Routine Matters
ix. Acquiring and Spending Money
x. Recordkeeping

n. Unusual Situations

i. Moving the Situs of an NFA Trust
ii. Appointing and Removing Trustees
iii. Amending NFA Trusts

o. Terminating a Gun Trust

3. Lethal Pitfalls in Drafting Gun Trusts | 3:54pm – 4:07pm

a. Truly Lethal Pitfalls – Resulting in Prison, Disbarment, or Bankruptcy

i. Terminating your NFA trust immediately when the settlors die
ii. Letting Prohibited Persons possess or have access to guns or ammunition
iii. Actually giving possession of guns or ammunition to Prohibited Persons
iv. Allowing ANYONE other than a Trustee to have possession of or access to NFA firearms
v. Transferring an NFA firearm before submitting the form and getting it approved
vi. Actually INSTRUCTING your trustees to commit felonies
vii. Failing to warn your trustees NOT to commit felonies.
viii. Appointing one person as sole settlor, trustee, and beneficiary
ix. Failing to have at least two trustees at ALL times
x. Failing to submit and get approval of Form 5320.20 for interstate transport of MG’s, DD’s, SBR’s, and SBS’s
xi. Allowing your Trust to become invalid

b. Less Lethal Pitfalls

i. Failing to educate your client
ii. Failing to educate the client’s trustees
iii. Failing to Waive the Duty to Make Trust Property Productive
iv. Failing to Properly Assign Liability for Damage or Destruction of Trust Property
v. Choosing the wrong trust name
vi. Failing to adjust the Trustees’ powers
vii. Failing to give the Settlor the superior right to control and possess trust property
viii. Requiring the Trust to spend money
ix. Failing to keep proper records
x. Failing to safely store firearms.
xi. Neglecting to add a dispute resolution clause to the trust
xii. Not giving spouses their proper status
xiii. Failing to make provisions for beneficiaries under 21
xiv. Failing to build in sufficient flexibility
xv. Last resort
xvi. Omitting or using poor definitions
xvii. Forgetting that the law changes
xviii. Failing to ensure that Trustees read the Trust and agree to comply with its terms

4. Legal Issues with Inheriting Firearms | 4:07pm – 4:20pm

a. Introduction
b. Applicable Gun Laws

i. Federal firearms laws.

1) Prohibited Persons
2) Age Restrictions
3) NICS Check
4) Interstate Transfers
5) Mailing and Shipping Firearms
6) National Firearms Act
7) Firearms Owner’s Protection Act
8) Flying with Firearms

ii. Texas firearms laws

1) Prohibited Persons
2) Prohibited Weapons
3) Places Weapons Prohibited
4) “Carrying” a Handgun

(a) Longstanding ban
(b) Judicial Exceptions
(c) 1995 Concealed handgun law
(d) 2005 Motorist Protection Act
(e) Inapplicability to rifles and shotguns
(f) Recent amendments to license to carry law.
(g) 2021 Constitutional carry and other
(h) Second Amendment Sanctuary State
(i) Practical application for personal representatives

iii. Firearms laws in other states
iv. Choice of Law

c. Transferring Firearms to Beneficiaries

i. Who Gets the Guns?
ii. What Estate Planning Method Will Be Used?

1) Last Will and Testament
2) Trust
3) Inter Vivos Transfer
4) Intestate Succession

iii. Who Should Be in Charge?
iv. Drafting Concerns
v. Safe Storage
vi. Special Concerns with NFA Firearms
vii. Recommended Steps for the Executor to Take

5. Conclusion | 4:20pm – 4:30pm