"Here is an even better explanation from an attorney's website in TX, this isn't even including his discussion of problems concerning scheduling:
"The short answer to this question is, “You get what you pay for.” About once a week I get a call from someone who just got a really great deal on a gun trust, but they are feeling a little uncomfortable since they did not get advice from a lawyer before they purchased it. I have reviewed a few of these now, and I have some real concerns about what is being sold out there as “Do It Yourself” or “Form” gun trusts by some gun shops and other non-lawyer websites.
As an initial matter, a poorly-written trust includes a “Schedule A” or “Schedule 1” to identify all property, including cash and firearms, assigned to the trust. Since the ATF needs a complete copy of the trust as part of the ATF Form 4 application to transfer, every time a customer purchases an NFA firearm from a gun shop, the customer necessarily provides the ATF and the gun shop’s employees with a detailed inventory of trust property (including firearms) assigned to the trust (as well as the customer’s address where the property is located when the customer is at work). For a more detailed discussion regarding why I believe schedules (i.e., exhibits or appendices) should not be used for NFA gun trusts, please read my prior article entitled “To Schedule A or Not to Schedule A, That is the Question.“
The “Do-It-Yourself” or “Form” trust, also includes several other provisions that I do not recommend. For example, the trust form makes no provisions whatsoever for more than one settlor, such as a husband and his wife. In Texas, all property acquired during marriage is community property, so the wife’s interest and ownership of the property in the trust is not even recognized. This could be a disaster for the wife upon the husband’s death, and could result in some very expensive litigation between the wife and the beneficiaries after the husband’s death.
Further, the trustees in the trust form are required to administer the trust for the “benefit and enjoyment” of the beneficiaries, rather than the settlor while he or she is alive. Accordingly, another provision provides that the beneficiaries of the trust (usually the settlor’s children) can unanimously agree to terminate the trust “at any time” and force all of the trust property (usually the husband’s gun collection) to be sold or transferred to the beneficiaries, even while the settlor (usually the husband) is very much alive and well, and regardless of whether the beneficiaries (usually the settlor’s children) are, in either the settlor’s or the trustees’ opinion, mature enough or responsible enough to lawfully use and possess the trust property (usually the parents’ gun collection):
TERMINATION OF TRUST: In addition to the Grantor’s right to revoke and terminate this Trust, if at any time all beneficiaries so consent in writing, the trust shall be terminated and the corpus of the trust sold or transferred, in accordance with the law, and any and all income and corpus shall be divided and distributed to the beneficiaries.
The settlor is provided with cold comfort that if he or she assigns the homestead (house) and any other real property (land) to the gun shop gun trust, the settlor gets to keep “rent-free possession and occupancy” of the real property, even though legal title has now passed to the beneficiaries. Of course, since the settlor is not required to pay rent to the beneficiaries, the settlor is still required to pay all property taxes, insurance, maintenance, and utilities:
Homestead Exemption: If the grantor’s principal residence or other real property is conveyed to this Trust, then the grantor shall have the right to rent-free possession and occupancy for life, although the Grantor will have to pay property taxes, insurance, maintenance and utilities. This is intended provide Grantor with a sufficient beneficial interest to continue any homestead tax exemption.
In my opinion, it would be foolish to ever consider assigning real property to a gun trust, and any so-called “gun trust’ that includes provisions relating to homesteads and other real property is not a real “gun trust.” In addition, because the wife’s community property interest was not even recognized by the trust, this could also result in some very expensive litigation between the wife and the beneficiaries after the husband’s death. Does that trust form still look inexpensive?
Another provision requires the trustees (usually includes the husband and wife) to allow the beneficiaries (usually the children) full use of all trust property (usually the gun collection), even while the settlor (usually the husband) is very much alive and well, and regardless of whether the beneficiaries (usually the children) are, in either the settlor’s or the trustees’ opinion, mature enough or responsible enough to lawfully use and possess the trust property (usually the gun collection). While the “Do It Yourself” gun trust may provide that beneficiaries may also use and possess any NFA firearms owned by the trust, it also states in bold letters that this provision “is not necessarily legal.” Can you envision the beneficiaries being arrested for doing what they thought was legal? What part of “quick & easy gun trust” was a good thing for you, your wife, and your beneficiaries?
The “Do It Yourself” or “Form” gun trust further instructs the settlor how to prepare an amendment to add trustees. Unfortunately, while both the settlor and the new “trustees” may believe that the amendment is valid, I have a real concern about whether the amendment is valid. An invalid amendment means that the new “trustees” are not legally trustees. As a result, when these new “trustees” are in possession of any NFA firearms owned by the trust outside the presence of the initial trustees, they are committing a felony. Does that trust form still sound like a “great example of a do-it-yourself option?”
There are several other provisions that are poorly written and that are either vague, ambiguous, and/or internally inconsistent with other provisions of the trust form. Also, some of the instructions are just plain wrong. Rather than provide an exhaustive list of the problems that I have observed, I would only recommend that your long-term interests in your property (and possibly, your and others’ liberty) may not be well served by a “Do It Yourself” or “Form” gun trust.
If you are thinking about buying a “Do It Yourself” or “Form” gun trust that does not include the advice of a real Texas lawyer, please reconsider. If you have already, purchased the trust form, request a refund. If you have already submitted an ATF application, you may want to go ahead and take your lumps and consider an amendment and restatement of the trust form, which will amend, restate, and supersede the trust in its entirety, but maintain the earlier effective date of the trust. This can be a fairly simple process with legal assistance. However, there are a few mistakes that will not be able to be corrected, even with an amendment and restatement. It really just depends on what you signed, as opposed to what you think you signed. Ask yourself how many trusts you have drafted or evaluated in the last couple of years. Would you hire yourself to be your own legal counsel on an issue this important? Or would you hire a legal professional who is familiar with this area of the law?
A properly prepared NFA gun trust is meant to outlast the settlors and, in many cases, the beneficiaries. When buyers of a “Do It Yourself” or “Form” gun trust finally get around to reading and understanding the ramifications of their trust form, they frequently comment that they only wish they had done it right the first time. Why not do it right the first time?
The typical situation is this. A “Do It Yourself” gun trust is advertised for a cut-rate price ranging from $99.00 to perhaps $150.00. After the customer pays, then the customer receives a “short & simple questionnaire” that takes “about 5 minutes to answer.” The website also advertises that the trust form was designed by an undisclosed “gun trust lawyer,” and that you can even speak directly to the lawyer. Unfortunately, the customer is warned, this lawyer can only “provide technical support for this trust” (whatever that means), and this lawyer cannot and will not do what lawyers are trained and regularly paid to do—provide professional legal advice to their clients. In fact, the lawyer wants the customer to make sure it is understood that the customer is not the lawyer’s client, so the lawyer cannot be held responsible for anything that he actually wrote in the trust form.
As best I can tell, the source of some of these “Do It Yourself” gun trust forms is
www.nfafirearmstrust.com and that form or some variation of it shows up on other websites. Here again, this website advertises that the trust form was prepared by a “group of lawyers,” but the website does not provide any information whatsoever regarding the identity, location, or telephone number of anyone, especially a lawyer. The site also specifically states, “We cannot give you legal advice” and recommends that you consult with an attorney in your own state and “it is up to you to determine how to comply with your state’s laws and your situation.” The only information provided is the identity a limited liability company formed somewhere (try to find us if something goes wrong) and an email address where a customer can request a refund within 30 days of purchase. I suspect that they are located somewhere in the Eastern United States, but I have not been able to confirm this."
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