Funding And Proof Of Ownership: Gun Trust
Texas law requires a trust to always be funded to be created. Section 112.005 of the Texas Property Code (Texas Trust Code) provides: “A trust can not be created unless there's trust property.” Nominal funding is sufficient to start a trust where other formal requirements for the establishment in the trust are met. In the battle over a large estate, the San Antonio Court of Appeals ruled that funding to a trust with $1.00 was sufficient corpus to meet the funding requirements to a valid trust. In Re: Estate of Canales, 837, S.W.2d 662 (Tex. Civ. App. – San Antonio, 1992). The mere drafting and signing of one's revocable trust does not form a trust unless it's funded. For this reason there has been questioning on in part by ATF examiners for ATF Form 4 transferees regarding NFA trust funding.
If a trust is not funded the transfer could very well be to a non-existent entity and thus invalid. A gun trust ought to be funded to be in existence and valid.
Funding of a Class 3 gun trust may be accomplished in many ways. An account with a bank is often opened or property can be transferred to the trust. Trust property is know for being the “res” or the “corpus”. It is vital to document transfers of property into an NFA gun trust. Considering that gun trust can last several generations and survive the death its creator (grantor or settlor), issues often arise about what property the trust actually owns. When there is no one living to ask, documents must be reviewed to ascertain ownership.
The document which shows a transfer of title into the gun trust is a Form 4 or Bill of Sale. Without one or the other there is no written proof of the conveyance of NFA or other tangible physical property in the trust. There is a possibility this could lead to expensive litigation in the future if not completed correctly in a timely manner. Not too long ago, litigation arose from the large estate of a Kerrville oilman. Since the trustee in the trust created by the oilman’s will failed to keep good records, it turned out difficult and quite expensive to figure out what property was actually in the trust and what was not. A number of the items to be moved to the trust or left to their heirs had stickers with the trust or beneficiaries names thereon. However, after a period the glue had dried up and also the stickers had fallen off the items making it difficult to establish who was simply entitled to what property.
For example, the sticker on the back of a $25,000.00 painting by Salinas, hanging over the a wall inside the estate’s mansion, had fallen off. The sticker around the back of a less expensive armoire with another heir’s name thereon had also fallen off. Both stickers were found lying on the floor, next to one another, behind the armoire covered in dust. The dispute over who received the expensive painting versus the less expensive armoire needed to be resolved. In any gun trust setting this issue could be avoided by simply filling out a bill of sale conveying the property at issue (i.e. 1862 Sharps rifle, Serial # 3354) to the NFA gun trust and keeping the bill of sale with all the original gun trust document. This should be sufficient proof of transfer from the non-NFA item into the trust. The transfer of NFA items into a gun trust require an approved Form 4 to be valid.
It is essential that a gun trust be funded and transfers into the trust be properly documented. Martin Seidler, a Texas gun trust lawyer, solves these issues by properly drafting each NFA trust which he prepares along with a custom Bill of Sale with instructions for use.
Tags: class 3 trust, gun trust, nfa gun trust, nfa trust