Gun Trust: Funding And Proof Of Ownership
Do You Have Proof Of Ownership And Is Your Gun Trust Funded
The law requires a trust in Texas to always be funded in order to be created. Section 112.005 of the Texas Property Code (Trust Code in Texas) provides: A trust can’t be created unless there’s trust property. Moderate funding is adequate to start a trust where the other formal requirements for the establishment of a trust are met. In a lawsuit over an estate in San Antonio, the Court of Appeals ruled the funding of a trust with one dollar was sufficient corpus to fulfill the requirements for funding to a valid trust. In Re: Estate of Canales, 837, S.W.2d 662 (Tex. Civ. App. – San Antonio, 1992). The action of signing and drafting to a revocable trust doesn’t form a trust unless it’s funded. This is the reason some ATF examiners have questioned ATF Form 4 transferees regarding NFA trust funding.
If a trust has not been funded the transfer could possibly be to a non-existent entity and for that reason invalid. A gun trust is required to be funded to be in existence and valid.
Funding for a Class 3 gun trust can be accomplished in many ways. An account with a bank is generally opened or property can be transferred into the trust. The property in the trust is known as being the “res” as well as “corpus”. It is necessary to document transfers of property into an NFA gun trust. Because over serveral gernations a gun trust will still be in effect and survive the death its creator (grantor or settlor), issues often arise as to what property the trust actually owns. If you find no-one living to ask, documents will have to be reviewed to check ownership.
A form 4 or bill of sale are the documents that show the transfer of a title into the gun trust. Without one or the other there is no written proof from the conveyance of NFA or other tangible physical property within the trust. This may very well lead to expensive litigation in the foreseeable future if not done correctly in a timely manner. Not too long ago, litigation arose within a large estate of a Kerrville oilman. Because the trustee of the trust created by the oilman’s will did not keep very good records, it was difficult and quite expensive to figure out what property was actually contained in the trust and what was not. A few of the items to be moved to the trust or left to the heirs had stickers with the trust or beneficiaries names thereon. However, after a period the glue had dried out and the stickers had fallen off of the items making it difficult to establish who was simply entitled to what property.
For example, the sticker over the back of a $25,000.00 painting by Salinas, hanging on the a wall in the estate’s mansion, had fallen off. The sticker around the back from a less expensive armoire with another heir’s name thereon had also come off. Both stickers were found lying about the floor, right 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 can be avoided by 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 would be sufficient proof of transfer of 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 critical 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.