Do You Need A Rocky Mountain Gun Trust?
After heated debate, Colorado enacted two laws affecting all gun owners and any person in the presence of a firearm. The first law requires a background check anytime there is a transfer of possession of a firearm. The second law prohibits the sale, transfer or possession of ammunition magazines with a capacity of more than 15 rounds. Both laws go into effect on July 1, 2013. Between now and July 1, 2013, does a transfer of firearms and magazines to a Rocky Mountain Gun Trust make sense? We think it just might.
Gun trusts are very popular with people who purchase firearms restricted by the National Firearms Act (the “NFA”). Certain firearms (silencers, short barrel rifles, short barrel shotguns and automatic firearms) require application to the Bureau of Alcohol Tobacco and Firearms (the “BATF” or “ATF”) and payment of a $200.00 stamp tax before a person can take possession of the restricted, NFA firearm.
Even then, only the person who is issued the tax stamp may be in possession of the restricted, NFA firearm. That means no sharing and no transfer of possession even on a temporary basis. Violation of the NFA is a serious offense and can result in 10 years in federal prison and up to a quarter million dollars in fines.
Under the rules promulgated by the ATF, a trust can apply for a restricted firearm and have the tax stamp issued in the name of the trust. Depending on how that trust is drafted, the trustees and sometimes trust beneficiaries can be in lawful possession of the restricted, NFA firearm so long as they are not prohibited by some other law from being in possession of firearms. For this reason, the “NFA Trust” has gained popularity over the years by hobbyists and professionals alike. The NFA trust allows multiple individuals to share possession of the restricted, NFA firearm while making those individuals jointly responsible for the proper handling of the firearm.
Starting on July 1, 2013, all transfers of possession of a Colorado firearm require a timely background check. This goes far beyond a sale and transfer of ownership. Any transfer of possession requires an analysis of whether a background check is needed. Want to loan your hunting rifle to your neighbor for a 4 day hunting trip? Background check required. Want to gift or loan your firearm to a boyfriend/girlfriend? Background check required. Want to gift or loan your firearm to a family member? Better be sure they are within the defined exception. Are you in immediate fear of bodily injury and death and not in your own home? As silly as it sounds, you need a background check before you can take possession of a firearm and defend yourself. The bottom line is any transfer of possession, no matter how temporary and no matter how good the reason, now requires some thought and analysis about a background check.
We have drafted several hundred NFA trusts over the last decade. Colorado’s recent transfer of possession law has created a demand the Rocky Mountain Gun Trust. Much like the NFA trust, a Rocky Mountain Gun Trust simplifies the background check analysis, assuming the trust and trustees are put in place prior to July 1, 2013. All trustees should be able to share possession of the trust firearms without the constant fear of violating Colorado’s transfer of possession law. Firearms placed in the trust prior to July 1, 2013 will probably not be subject to disclosure and defacto registration. Depending on how the new law is enforced, trustees may be able to come or go without triggering the need for a background check.
Should Colorado further restrict firearm ownership, the Rocky Mountain Gun Trust can flee Colorado on a moment’s notice.
The other new law is a ban on ammunition magazines capable of holding more than 15 rounds (a “large-capacity magazine”). However, a person should be able to possess a large-capacity magazine if he or she owns the large capacity magazine prior to July 1, 2013 and maintains continuous possession after that date. If the person is a natural person, upon their death, transfer of the large-capacity magazine is prohibited within the state of Colorado. But what if the person is a trust? Can that trust continue to possess the large capacity magazine after the death of the settlor and/or a trustee? Assuming a person entitled to be in possession of a large-capacity magazine includes a trust and its trustees, a large-capacity magazine within the trust should remain available to the trustees.
Between now and July 1, 2013, there is a unique window available to Colorado gun owners. A Rocky Mountain Gun Trust is one way to preserve the family firearms for multiple generations while allowing the firearms to be in the possession of multiple individuals without violating Colorado’s new transfer of possession law. After July 1, 2013 the Rocky Mountain Gun Trust still makes good sense. However, background checks will be required upon the transfer of Colorado firearms to the Rocky Mountain Gun Trust.