A new Trust / Legal Entity can of worms, HB1229...

[SAnd]

There is a definition in HB 13-1229 that looks like it could be a real can of worms for some people.

They define "Transferee" as-
(b) As used in this Section, unless the context requires otherwise,"Transferee" means a Person who desires to receive or acquire a firearm from a Transferor. If a transferee is not a Natural Person but a Corporation, Association, Partnership, or Limited Liability Company or Trust, the requirement described in this Subsection (1) shall be interpreted to require a Background Check of each Member, Partner, Officer, or Other Person who holds a beneficial interest in the Corporation, Association, Partnership, or Limited Liability Company or Trust.

I take that to mean that if your Trust or LLC has more than one person listed that they will all have to get a background check whenever you transfer a gun into the Legal Entity. I could see several people lined up to get a check for just one gun. If one of the several fails the check will you have to remove them from the Entity? Is the $10 fee per individual or is it per Legal Entity? If someone is added to the Legal Entity after it posseses a gun will a check be required and how would it be handled?

I posted this here because this is where most of the Trust / Legal Entity people are. If it needs to be moved please do so.

I so confused![Bang]

[Lurch]

My thoughts are rules are meant to be broken.

[NFATrustGuy]

A Gun Trust or NFA Trust is a specialized version of the more generic "Revocable Living Trust." First some terminology just to make sure we're all on the same page:

Settlor or Maker -- This is the person who's creating the Trust.
Trustee -- The person who manages the Trust's assets.
Beneficiary -- The person who is entitled to receive the Trust's assets (or the money from the Trust if the Trust's assets are sold).

At the outset, the same person holds all three roles. <<------THIS IS VERY IMPORTANT

Later on in the Trust document, we name backups to each of the roles--except for the Settlor/Maker. Once the Trust is in existence, you can't change who created it!

Since all three roles are united in a single person, that person has the ability to change any part of the Trust at his discretion--up to and including terminating the trust altogether. At any time, the Settlor/Maker can remove someone as a beneficiary and can add or remove backup Trustees. If the Settlor/Maker/Trustee needs help managing the assets of the Trust, the Settlor/Maker/Trustee has the power to appoint co-Trustee(s). Co-Trustees also have a present day interest in the Trust in that they have present-day powers to manage the Trust's assets.

The only person who has any power in the Trust or any present-day authority to possess/use the assets of the Trust is the person who made it. If he chooses to add a co-Trustee, then the co-Trustee also has power and the right to use/possess the assets of the Trust for as long as he's co-Trustee.

All the other people named as backup Trustees and backup Beneficiaries have what can legally be defined as a CONTINGENT interest in the Trust. Their interests are CONTINGENT on many things... The original Trustee could alter the Trust and remove them at any time--as Beneficiaries and/or Backup Trustees. These people with CONTINGENT interests also have to outlive the current Trustee or Beneficiary.

The Trust documents never specifically mention that backup Trustees and Beneficiaries are CONTINGENT, but it's obvious and implied when the terms of the Trust give the Settlor the absolute authority to modify the Trust in any way--up to and including terminating the Trust altogether.

The section quoted in the original post is another example of poor attention to detail on behalf of our dipshit legislators. The only way it can reasonably be interpreted and applied is to require background checks of those individuals who a have a present-day NON-contingent interest in the assets of the Trust. Otherwise, background checks could be required of unborn children or the spouse you haven't even met yet, much less married!

In my Trust, as I said before, the Settlor is also the Beneficiary as long as he's alive. The backup beneficiaries are: (1) Wife and (2) Your Children. Now... what if you're not married when you create the Trust? What if you don't have kids? What if you have one child, but another on the way? What if your brother who lives in Florida is listed as a backup beneficiary because you're not married and you don't have any children?

The ONLY way the section quoted above is even mildly enforceable is if it applies to those with a present-day interest in the Trust.

For my Trust clients, you simply force any co-Trustees to resign before you add a firearm to your Trust. Go pick up your firearm. You're the ONLY person with a present-day, non-contingent interest in the Trust so a background check is run on you. Go back home and then re-appoint whatever co-Trustees are appropriate. The appointing of Trustees does not constitute a transfer as it is currently defined in the legislation.

There you go...[Coffee][Coffee]

Rod

PS... An analogy that might make the idea of a contingent interest more clear:

Your 75 year old mother owns a valuable piece of land. You are her only son and she tells you that she's leaving it to you in her Will. It's common knowledge that people can change their Wills any time before they die so what you have is a CONTINGENT interest in that piece of land. It is CONTINGENT on you not pissing off your Mom so bad that she takes you out of the Will and donates the land to the church or whatever. Try to go get a loan on the property you think you're going to inherit... the banker will explain your CONTINGENT interest in no uncertain terms.

[Irving]

Would you only need to amend the trust by removing the co-trustees when you PURCHASE the gun, or when you ADD it to the trust?

[SAnd]

Thanks for the explanation.

I often think Shakespeare had it right as he meant it. In the original context of his time and place the "lawyers" he referred to were the legislators of the English Parliament, not lawyers as we use the term here and now.
"The first thing we do, let's kill all the lawyers". King Henry VI Part 2 (Act IV, Scene II) Shakespeare

[TFOGGER]

Since we're on the subject of trusts, can a trust possess magazines? Assuming the trust can survive the Maker, could this be a way around the imminent ban?

[NFATrustGuy]

@Irving:

You'd remove extra co-Trustees whenever you're adding firearms to the Trust. If the Trust is the initial purchaser, then yes, at the time of purchase. If you purchase the item as an individual, then you--as an individual--would undergo a background check and the Trust is irrelevant unless and until you decide to add it to the Trust.

The interesting part question would be whether or not you'd have to undergo 2 background checks if you buy the item in your name on Monday and then transfer it to your Trust--with YOU as the only Trustee--on Tuesday. My guess is the answer would be YES--2 background checks required.

Keep in mind that we're talking about normal firearms in this instance--not NFA-regulated items. NFA-regulated items would need 2 separate tax stamps in the situation I described above where you buy it individually and then transfer it to the Trust a few days later.

Gotta love those legislators!

Rod

[NFATrustGuy]

@TFOGGER:

Yes, a Trust can own magazines. And yes, it might be a way to get around the pending ban.

The play would be to put the magazines into the Trust prior to July 1. The Trust then owns the magazines for all eternity. The ownership never changes, hence there is no "transfer" as defined by the new, poorly-written law. I don't remember anything in the law or the definitions section of the law that would define a change of Trustee or the addition of a co-Trustee as a "transfer". Somebody help me out here, I don't have a copy of the law in front of me...

Of course as Mr. Kneecapper will soon point out, how do THEY know what you or I or anyone owns in terms of magazines right now? If I show up at the range in 6 months with my AR-15 and twenty 30-round magazines, how do they prove that I possess those items illegally? Keep in mind that the burden of proof is on the prosecution. I may have purchased them on July 2, 2013 and I may be a complete criminal... or I may have owned them for many, many years. Pursuant to the 5th Amendment, I can refuse to answer the question of when I purchased the items and there's nothing they can do to compel my answer.

I would not want to be the first prosecutor trying to convict somebody based on any of these new laws.

There was a saying in law school that bad facts make for bad laws. I think this was shorthand for the "but we've GOT to do SOMETHING" mentality that we're seeing with gun laws today.

Bad laws.

Rod

[Great-Kazoo]

@TFOGGER:

Yes, a Trust can own magazines. And yes, it might be a way to get around the pending ban.

The play would be to put the magazines into the Trust prior to July 1. The Trust then owns the magazines for all eternity. The ownership never changes, hence there is no "transfer" as defined by the new, poorly-written law. I don't remember anything in the law or the definitions section of the law that would define a change of Trustee or the addition of a co-Trustee as a "transfer". Somebody help me out here, I don't have a copy of the law in front of me...

Of course as Mr. Kneecapper will soon point out, how do THEY know what you or I or anyone owns in terms of magazines right now? If I show up at the range in 6 months with my AR-15 and twenty 30-round magazines, how do they prove that I possess those items illegally? Keep in mind that the burden of proof is on the prosecution. I may have purchased them on July 2, 2013 and I may be a complete criminal... or I may have owned them for many, many years. Pursuant to the 5th Amendment, I can refuse to answer the question of when I purchased the items and there's nothing they can do to compel my answer.

I would not want to be the first prosecutor trying to convict somebody based on any of these new laws.

There was a saying in law school that bad facts make for bad laws. I think this was shorthand for the "but we've GOT to do SOMETHING" mentality that we're seeing with gun laws today.

Bad laws.

Rod

Thank you for Mr, and not SIR.
IF you insist on adding Magazines to the trust i would "Suggest" You put them in a s

MFG: Brownells- Capacity per mag -20 rounds Qty of 20 round magazines - 100
Center IND. Capacity per mag- 30 rounds Qty of 30 rd Center Ind Mags - 100

and so on. Even IF you may or may not be in possession of said items, WHO KNOWS ? UNLESS they are DATED 7/1/2013 and later they are not only LEGAL to Posses but use at your discretion

[TFOGGER]

Thanks for your answer, Rod. I was more thinking of inheritance issues for minor children as they attain the age of majority. Adding them as beneficiaries of the trust seems like a way to get past the "no transfer, no inheritance" portion of the law as it is currently written. I would hope that something with this many holes in it would be shot down as unconstitutionally vague and unjust in depriving property owners of their rights without due process, but that may take many years.

[spqrzilla]

NFATrustGuy, I don't agree with your interpretation of 1229 language. I think that "hold" a beneficial interest will include contingent beneficiaries. All that is going to be a question is when the requirement for the background check is triggered. Also, I am dubious of using a trust to own magazines covered by the ban at this time but that legislation's language is even more vague. However, in the magazine ban, I think the problematic language revolves around the magazine ban's definition of "possession".

[NFATrustGuy]

Fair enough. Disagreements promote discussion...

I'm interested in hearing how others see this.

FWIW, I too am a bit dubious of using a Trust to hold magazines. With the lack of serialization, I just don't see it as much of an issue. They can't prove what you own pre-ban so how do they know whether what you've got is legal or illegal? The only real part of the mag law I could see biting someone in the tookus is the restriction on sales. I could just see some overzealous bureaucrat running a magazine sting operation. Heck, now that pot is legal, I'm sure there are some undercover operatives with time on their hands, right? [facepalm]

Rod

[XC700116]

I you wanted to add magazines to a trust, couldn't you "modify" them in some way (like engraving the trust's name on them) and then serialize them, saying the trust is then the manufacturer, and all items serialized, then they would be individually identifiable and thereby proof of ownership established? Much in the same way that you mark an AR15 lower for SBR purposes on a form 1 only without the NFA side of it.

Just a thought.

[Great-Kazoo]

I you wanted to add magazines to a trust, couldn't you "modify" them in some way (like engraving the trust's name on them) and then serialize them, saying the trust is then the manufacturer, and all items serialized, then they would be individually identifiable and thereby proof of ownership established? Much in the same way that you mark an AR15 lower for SBR purposes on a form 1 only without the NFA side of it.

Just a thought.

WHY? ONLY you and members of your household KNOW, or have an idea what you are in POSSESSION of. No one else knows, UNLESS you decide to Itemize every single mag in your inventory. I have more important things to do then round up every firearm magazine WE own or are in possession of.

[XC700116]

WHY? ONLY you and members of your household KNOW, or have an idea what you are in POSSESSION of. No one else knows, UNLESS you decide to Itemize every single mag in your inventory. I have more important things to do then round up every firearm magazine WE own or are in possession of.

More just thinking out loud and bending the Lawyer's ear on it, and because I'm single with no kids, and I'd like to protect my posessions if I were to arrive at an untimely end and make sure they go to those whom I choose. ie my Brother in MN, my buddy here in CO, etc.

The "only you know what you have" only goes so far as your household and the posessions there in when everyone in your family lives out of state. I can't gaurantee that those items won't disappear from my home between my passing and arrangements to be made where family would be there to get them out. A trust having ownership of them could possibly insulate said items in my case where there might be an issue if I were to meet my ends in an accident. It would also give my family a big heads up with legal documentation on what they should be looking for in my posessions. My firearms and the magazines for them are the only posessions I have that have any threat of being confiscated should something happen to me (at this point in time) So I'm looking for a way to make sure the commies of CO can't get their paws on my shit even after I'm gone. If I had a wife and children it might be different, because someone would be there right away to tell them to pound sand.

And I garuantee that although there's a lot of people that I don't want them to KNOW what I have, they still know it. It's not that hard to take a peak at my purchasing records and see how much stuff I buy on my credit/debit cards. Unless you deal in 100% cash all the time and never order anything over the internet, and never say anything on forums, they can find out if they so choose. I know that sounds pretty tinfoil hat like, but it's the truth, and they keep going down that slippery slope all the time.

[NFATrustGuy]

No worries from me. I encourage the discussion.

Just to be clear--you do NOT have to add serial numbers to your mags to add them to a Trust. Trusts own non-serialized assets all the time. How many dining room tables have you seen with serial numbers?!?

The point I think some of us are trying to make regarding serial numbers is that if your mag doesn't have a serial number, how in the world will the government prove that THAT particular item is illegally held? It's like trying to regulate #2 pencils, but only pencils transferred after July 1.

I don't plan on adding serial numbers to any of my mags and can't think of a good reason why anyone would want to. And for the record... I probably own about a billion 30 round mags at this point... Just in case somebody checks the forum archives after July 1. [Coffee]

@XC700116:

I, too, am single with no children. I have relatives in the area, but it'd probably be weeks before anyone missed me! I've never heard of the 'authorities' searching the house of a recently deceased person unless it appears the death is due to something other than natural causes. I think your stuff would be pretty safe.

As to transferring your mags to out-of-state relatives, I don't know how the government would ever know about it. In the vast majority of estates, there is no need to file a list of the decedent's assets with any government representative. My guess is that your family would come to town, pack up your shtuff and drive it home in a U-Haul. In the note you prepare to your brother asking him to clear the browser cache on your computer, you might also want to include a warning about selling your mags at a garage sale now that Colorado has adopted California's attitude towards firearms and related accessories.

As for divvying up your stuff, you can use a Trust for this or a Will. If you don't have a Will, the state plan would be to give your stuff to wife, kids, grand kids, parents, siblings, etc. in that order. As soon as they find somebody alive in a particular level of the family tree, that's who gets your stuff.

Rod

[TFOGGER]

If you can fill 'em all at one time, that would make you.....DHS...[ROFL1]

[XC700116]

No worries from me. I encourage the discussion.

Just to be clear--you do NOT have to add serial numbers to your mags to add them to a Trust. Trusts own non-serialized assets all the time. How many dining room tables have you seen with serial numbers?!?

The point I think some of us are trying to make regarding serial numbers is that if your mag doesn't have a serial number, how in the world will the government prove that THAT particular item is illegally held? It's like trying to regulate #2 pencils, but only pencils transferred after July 1.

I don't plan on adding serial numbers to any of my mags and can't think of a good reason why anyone would want to. And for the record... I probably own about a billion 30 round mags at this point... Just in case somebody checks the forum archives after July 1. [Coffee]


Gotcha, I was more or less wondering if it may add another layer of "Proof" from our side. Weather or not the burden of proof is legally on the prosecutor or not, I was more thinking it may add a layer of documentation to avoid going to court on the whole thing to begin with in the case of an overzealous prosecutor. Granted if you have that dillhole, you're probably going to court anyway.

Like I said, thiking out loud more than anything.

[Great-Kazoo]

More just thinking out loud and bending the Lawyer's ear on it, and because I'm single with no kids, and I'd like to protect my posessions if I were to arrive at an untimely end and make sure they go to those whom I choose. ie my Brother in MN, my buddy here in CO, etc.

The "only you know what you have" only goes so far as your household and the posessions there in when everyone in your family lives out of state. I can't gaurantee that those items won't disappear from my home between my passing and arrangements to be made where family would be there to get them out. A trust having ownership of them could possibly insulate said items in my case where there might be an issue if I were to meet my ends in an accident. It would also give my family a big heads up with legal documentation on what they should be looking for in my posessions. My firearms and the magazines for them are the only posessions I have that have any threat of being confiscated should something happen to me (at this point in time) So I'm looking for a way to make sure the commies of CO can't get their paws on my shit even after I'm gone. If I had a wife and children it might be different, because someone would be there right away to tell them to pound sand.

And I garuantee that although there's a lot of people that I don't want them to KNOW what I have, they still know it. It's not that hard to take a peak at my purchasing records and see how much stuff I buy on my credit/debit cards. Unless you deal in 100% cash all the time and never order anything over the internet, and never say anything on forums, they can find out if they so choose. I know that sounds pretty tinfoil hat like, but it's the truth, and they keep going down that slippery slope all the time.

. Put everything in the will for family and friends as you see fit. Trust, the items for distribution to residents of CO.