Estate Planning and Estate Administration Issues Posed by Firearms

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<ul><li><p>Estate Planning and Estate Administration Issues Posed by </p><p>Firearms </p><p>Presented to the Estate Planning Council of Middle Tennessee on </p><p>September 12, 2016 </p><p> By Robin L. Miskell, Esq. Dickinson Wright PLLC </p></li><li><p>Why do you need to know something about firearms? </p><p> The number of households that have firearms range from 38% to 45% depending on the source. </p><p> The number of households that have Title II firearms is much smaller, but the consequences of violating federal laws are severe, including up to a $250,000 fine and 10 years in prison, and the right to possess such firearms in the future. </p><p> To provide a valuable service to clients that own firearms. </p><p>2 </p></li><li><p>The Basic Right of the Second Amendment of the United States Constitution </p><p> A well regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms, shall not be infringed. </p><p> One interpretation is an individual right theory and to prohibit legislative bodies from restricting right (right of the people) </p><p> The other interpretation is a collective rights theory providing that the framers intended only to restrict Congress from legislating away a state's right to self-defense (well regulated militia) </p><p> There is a series of Supreme Court cases that resulted in the strengthening of the interpretation of the Second Amendment as an individual right </p><p>3 </p></li><li><p>4 </p></li><li><p>Agenda </p><p> Definition of firearms under federal and state law (with pictures) </p><p> Applicable federal and state laws for firearms </p><p> Estate planning with firearms </p><p> Issues and concerns in estate and trust administration posed by firearms </p><p>5 </p></li><li><p>6 </p></li><li><p>What is the definition of a firearm under the Gun Control Act? </p><p> The Gun Control Act (GCA) provides that a firearm includes the following weapons: </p><p> Pistols, revolvers </p><p> Rifles, shotguns </p><p> Frames or receivers </p><p> Machineguns </p><p> Silencers </p><p> Destructive devices </p><p> All other weapons that expel a projectile by the action of an explosive. </p><p>7 </p></li><li><p>What is the definition of a firearm under the NFA? </p><p> The National Firearms Act provides that a firearm means: </p><p> Machineguns </p><p> Suppressors/silencers </p><p> Short-barreled shotguns </p><p> Short-barreled rifles </p><p> Destructive devices </p><p> Any other weapons </p><p>8 </p></li><li><p>What is a machinegun? </p><p> Machine guns are any weapon which shoots, is designed to shoot, or can be readily restored to shoot, automatically more than one shot, without manual reloading, by a single function of the trigger, including any combination of parts. </p><p> Must be made before May 19, 1986. </p><p> Some parts do not qualify as Title II parts slide fire and crank fire. </p><p>9 </p></li><li><p>Thompson Submachine Gun </p><p>10 </p></li><li><p>Machinegun Parts </p><p>11 </p></li><li><p>Suppressors/silencers </p><p> Suppressors/silencers any device for silencing, muffling, or diminishing the report of a portable firearm, including any combination of parts. </p><p> These are becoming more common to reduce damage to eardrums. </p><p> Commonly referred to as cans. </p><p>12 </p></li><li><p>Suppressors/Silencers </p><p>13 </p></li><li><p>Short Barreled Shotguns </p><p> Short-barreled shotguns a shotgun with a barrel length of less than 18 inches or an overall length of less than 26 inches. (Example: sawed-off shotguns) Note: The ATF uses a specific method for measuring the </p><p>barrel length of a gun by using a dowel rod to stick into the barrel to the closed bolt or breech face and marking the end of the barrel on the dowel rod to measure the length of the barrel. </p><p>14 </p></li><li><p>Short Barreled Shotgun </p><p>15 </p></li><li><p>Weapon Made from a Shotgun </p><p>16 </p></li><li><p>Short Barreled Rifle </p><p> Short barreled rifles a rifle intended to be shot from the shoulder with a barrel length of less than 16 inches or an overall length of less than 26 inches. </p><p>17 </p></li><li><p>Short Barreled Rifle and Weapon Made From Rifle </p><p>18 </p></li><li><p>Destructive Devices </p><p> Destructive devices any explosive, incendiary or poison gas (i) bomb (ii) grenade (iii) rocket having a propellant charge of more than 4 ounces (iv) missile having an explosive or incendiary charge of more than 1/4 oz. (v) mine, or any type of weapon which will expel a projectile and which has any barrel with a bore greater than 1/2 in diameter or any combination of parts. </p><p>19 </p></li><li><p>Destructive Devices U.S. Rocket Launcher (Bazooka) </p><p>20 </p></li><li><p>Destructive Devices Street Sweeper </p><p>21 </p></li><li><p>Destructive Devices Mortar </p><p>22 </p></li><li><p>Any Other Weapons (AOWs) </p><p> Any other weapon (AOW) any weapon or device capable of being concealed on the person from which a shot can be discharged through the energy of an explosive; a pistol or revolver having a barrel with a smooth bore designed to fire a fixed shotgun shell; and weapons with a combination shotgun and rifle barrels 12 inches or more, less than 18 inches in length, from which only a single discharge can be made from either barrel without manual reloading. </p><p> Example: Cane guns or pen guns. </p><p> 23 </p></li><li><p>Smooth Bore Shot Revolver </p><p>Smooth Bore, Shot-Pistol </p><p>Any Other Weapons (AOWs) </p><p>24 </p></li><li><p>Any Other Weapons (AOWs) </p><p>25 </p><p>Tear Gas Pen Guns </p></li><li><p>Any Other Weapons (AOWs) </p><p>Wallet Holster </p><p>26 </p></li><li><p>Antiques </p><p> An antique firearm is a firearm (other than a machinegun or destructive device): either manufactured in or before 1898, or </p><p> replica of gun made in or before 1898 if not designed or redesigned for using rimfire or conventional centerfire fixed ammunition, or uses rimfire or conventional centerfire fixed ammunition which is no longer manufactured in the U.S. and is not readily available, or </p><p> any muzzle loading rifle, muzzle loading shotgun or muzzle loading pistol designed to use black powder. 18 USC 921(a)(16). </p><p> These weapons can be purchased without going through a Federal Firearms License (FFL) holder. </p><p>27 </p></li><li><p>Curios and Relics </p><p> Curios and relics are defined as: </p><p> Manufactured 50 years prior to current date; </p><p> Firearms which are of special interest to collectors by reason of some quality other than is associated with firearms intended for sporting use or as offensive or defensive weapon; or </p><p> Certified by a museum. </p><p>28 </p></li><li><p>Curios and Relics </p><p> A person may obtain a license to collect curios and relics. 18 USC 923(d)(1)(B). </p><p> In the case of a corporation, partnership or association, any individual possessing power to direct management and policies of the corporation, partnership or association may obtain a license </p><p> a trust is not included in the definition of a person and </p><p>may not obtain a license </p><p> If a person has a curios and relics license, such weapons may be obtained without going through a FFL holder. </p><p>29 </p></li><li><p>What is the definition of firearm under Tennessee law? </p><p> Prohibited weapons include, unless the person is in compliance with the NFA: </p><p> Explosive or explosive weapon (includes bombs, grenades, etc.); </p><p> Device designed to shoot an explosive weapon; </p><p> Machine gun (defined as any firearm that is capable of shooting more than two (2) shots automatically, without manual reloading, by a single function of the trigger); </p><p> 30 </p></li><li><p>What is the definition of firearm under Tennessee law? (continued) </p><p> Short barrel rifle or shotgun; </p><p> Firearm silencer; </p><p> In addition to NFA - Hoax device (means any device that reasonably appears to be or is purported to be an explosive or incendiary device and is intended to cause alarm or reaction of any type by an official of a public safety agency ); </p><p>31 </p></li><li><p>What is the definition of firearm under Tennessee law? (continued) </p><p> In addition to NFA - Knuckles (means any instrument that consists of finger rings or guards made of a hard substance and that is designed, made or adapted for the purpose of inflicting serious bodily injury or death by striking a person with a fist enclosed in the knuckles); </p><p> Other implement to cause serious injury that has no common or lawful purpose. </p><p>32 </p></li><li><p>Agenda - How are firearms regulated? </p><p> NFA </p><p> GCA, amended the NFA </p><p> How to Make, Transfer, and Purchase Title II Firearms </p><p> ATF Regulations - Final 41F regulations </p><p> Transportation </p><p> Executive Action </p><p> Tennessee Law </p><p>33 </p></li><li><p>How are firearms regulated? Federal law - NFA </p><p> National Firearms Act (NFA) - The NFA was enacted in 1934 under the Sixteenth Amendment (Congress power of taxation) to curtail the gangland crimes. </p><p> The $200 transfer tax was implemented in 1934 and remains in force today. The amount of the tax can be compared to $3,438 in 2013. </p><p> The NFA is located in the Internal Revenue Code. </p><p>34 </p></li><li><p>35 </p></li><li><p>How are firearms regulated? Federal law - NFA (continued) </p><p> The NFA governs the purchase, sale, transfer, use and ownership of certain Title II firearms, including machineguns, suppressors/silencers, short barreled shotguns, short barreled rifles, destructive devices, and any other weapon. </p><p> The penalty for unlawfully possessing a regulated firearm may be up to $250,000 fine and ten years in prison (26 USC 5871), along with forfeiture of the firearm as illegal contraband (26 USC 5872). </p><p> 36 </p></li><li><p>How are firearms regulated? Federal law - GCA (continued) </p><p> Gun Control Act of 1968 (GCA) - Title I is the original Gun Control Act and Title II was the incorporation of the 1934 NFA into the Gun Control Act. </p><p> The GCA was enacted to cure the constitutional flaw in the NFA found by the Supreme Court in Haynes v. U.S., 390 U.S. 85 (1968). </p><p>37 </p></li><li><p>GCA </p><p> Interstate firearms transfers are prohibited except among licensed manufacturers, dealers and importers, commonly referred to as federal firearms license (FFL) holders. </p><p> A dealer cannot sell a firearm to an out of state resident unless it is a sale of a long gun (rifle or shotgun) by personal delivery and the dealer knows that the sale is in compliance with the law of the state of the resident. </p><p> No sales of pistols to out of state residents. </p><p>38 </p></li><li><p>GCA (continued) </p><p> In 1986, the GCA was amended by the Firearm Owners Protection Act (FOPA) in 1986 to prohibit possession of machineguns except possession of machineguns by government agencies and those persons in possession as of the date of the amendment (May 19, 1986). </p><p> Machine guns may be lawfully possessed in 1986 may continue to be sold and transferred through application to the Bureau of Alcohol, Tobacco and Firearms (ATF). </p><p> 39 </p></li><li><p>GCA (Prohibited Possessors) </p><p> The GCA lists prohibited possessors of regulated firearms who pose a threat to public safety : </p><p> A person convicted of a crime punishable by imprisonment exceeding one year; </p><p> A person who is a fugitive from justice; </p><p> A person who is an unlawful user of or who is addicted to a controlled substance; </p><p> A person who has been adjudicated as a mental defective or who has been admitted to a mental institution; </p><p> An alien who is unlawfully in the U.S. or is admitted under a nonimmigrant visa; </p><p>40 </p></li><li><p>GCA (Prohibited Possessors) </p><p>Continued list of persons prohibited from possessing firearms: </p><p> A person who has been discharged from the Armed Forces under dishonorable conditions; </p><p> A person who has renounced his U.S. citizenship; </p><p> A person subject to a court order which restrains the person from harassing, stalking or threatening an intimate partner or partners child; </p><p> A person who has been convicted of a misdemeanor crime of domestic violence. </p><p> 41 </p></li><li><p>How to Make, Transfer and Purchase Title II Firearms </p><p> The manufacture of a Title II Firearm requires application and approval from the ATF (Form 1 application to manufacture firearm) and payment of a $200 tax stamp and registration of the firearm in the National Firearm Registration and Transfer Record (NFRTR). </p><p> The making of a firearm includes cutting the barrel of a shotgun or rifle. </p><p>42 </p></li><li><p>How to Make, Transfer and Purchase Title II Firearms (continued) </p><p> The purchase or transfer of a Title II firearm requires application, the filing of a Form 4, and approval from the ATF and payment of a $200 tax (except AOWs which only require a $5 tax stamp unless making one) and registration of the firearm in the NFRTR. </p><p> Distribution of estate firearms is tax free (use Form 5 tax-exempt transfer of corpus of trust to beneficiary or during a probate from an estate to a beneficiary or heir) </p><p>43 </p></li><li><p>Final ATF Regulations 41F </p><p> The Final Regulations were effective July 13, 2016. The proposed regulations were issued on September 9, 2013 although the final regulations were substantially different. </p><p> The goal of the final rule was to ensure that the identification and background check requirements apply equally to individuals, trusts and legal entities who apply to make or receive NFA firearms. </p><p> 44 </p></li><li><p>Final ATF Regulations 41F (contd) </p><p> Prior to new regulations, gun trusts were beneficial because (i) only one Trustee must comply with background check and all Trustees share in ability to use and control; and (ii) no consent or notification to Chief Law Enforcement Officer was needed for a Trustee, but was for an individual. </p><p> Note that Tennessee was one of the few states that enacted a law that said that approval shall issue. In other words, the CLEO did not have any discretion, which was a complaint in many other states. T.C.A. 39-17-1361. </p><p> 45 </p></li><li><p>Final ATF Regulations 41F (contd) </p><p> Defines a responsible person in relation to a trust, partnership, association, company or corporation. </p><p> For example, a responsible person now includes all Trustees. </p><p> A responsible person does not include a beneficiary of a trust, if the beneficiary does not have the capability to exercise powers or authority to direct management of trust. </p><p> 46 </p></li><li><p>Final ATF Regulations 41F (contd) </p><p> Requires a responsible person to complete ATF Form 5320.23, to submit photographs and fingerprints when transferring or making of an NFA firearm; </p><p> Requires notification of the local chief law enforcement officer (CLEO) of an application for the transferring or making of an NFA firearm. </p><p> 47 </p></li><li><p>Final ATF Regulations 41F (contd) </p><p> Eliminates the requirement for an individual to obtain certification signed by the CLEO. </p><p> If a new Title II firearm is added to a gun trust, the new rules apply, unless gun trust has already complied with new rules within the preceding 24 months. </p><p> Adds a new section to address the possession and transfer of firearms registered to a decedent. </p><p> 48 </p></li><li><p>Transportation </p><p> Interstate transfers by a person are prohibited. A FFL holder may ship to another FFL holder. </p><p> Title I Firearms: </p><p> A person may ship firearms to other individuals in same state but there are various shipping requirements beyond the scope of this presentation. </p><p>49 </p></li><li><p>Transportation (continued) </p><p> A person must transfer firearm to a FFL holder in the state of the recipient. Then the recipient must fill out a Form 4473 to pick up the firearm. </p><p> A person may mail his own rifle or shotgun to himself in care of another person but the recipient should not open the package and keep it somewhere safe. </p><p>50 </p></li><li><p>Transportation (continued) </p><p> A person must transfer firearm to a FFL holder in the state of the recipient. Then the recipient must fill out a Form 4473 to pick up the firearm. </p><p> A person may mail his own rifle or shotgun to himself in care of another person but the recipient should not open the package and keep it somewhere safe. </p><p>51 </p></li><li><p>Transportation (continued) </p><p> Title II Firearms: </p><p> A transfer to another person must be after application and approval of a Form 4 and payment of a tax. Such transfer ma...</p></li></ul>

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