Using a Gun Trust for multiple people is a common scenario that we discuss with people. Our general recommendation is that it is not a good idea to have several people contribute firearms to a single trust for the purpose of sharing ownership and use of the firearms.
While it is not such a bad idea, if people are going to be contributing firearms to your trust, most people want to use a trust like a company where each person will have equal rights. The equal rights scenario is a generally a bad idea because your gun do not necessarily go to who you want.
Imagine the following example. Adam, Burt, and Charlie want to form a trust so that they can each use all the firearms in a single Gun Trust. Adam is married and has children, Burt is single, and Charlie has a live in girlfriend. Each is planning on purchasing a silencer so that there will be three silencers to share. It would be important to add Adam’s wife and Charlie’s girlfriend on the trust to protect them from constructive possession and inadvertent transfers which are both violations of the NFA and have penalties that can include 10 years in jail and a 250,000 penalty.
Some of the problems in creating a trust like this are:
- If Adam gets a divorce, will his wife have a claim against the silencers contributed by Burt and Charlie?
- What if Adam, Burt, or Charlie no longer trust one or more of the others.
- Can Adam, his wife, and Burt override Charlie
- What if one moves or becomes a prohibited person?
- Will Adam’s silencer go to his children or to someone else in the Gun Trust or the child or spouse of another person who is involved with the trust.
- Who will be responsible for the taxes if any are owed as a result of buying or selling Trust assets?
- While Adam may trust Burt does he trust who Burt will want to use the restricted items in the trust?
- What if any of the trustees has a financial problem, will the assets of the trust be subject to the claims of creditors of all three?
As you can see, there are many potential pitfalls in creating a trust like this. On the other hand if Adam sets up a trust and makes Burt and Charlie co-trustees and they each contribute property, Adam gets to control the use, possession, and eventual disposition of the property. This is not bad for Adam but may not be fair to Burt or Charlie.
If each of them setup their own trust, they can select the others as authorized users and then can each select what they would like to have happen to the property upon their death.
To solve these problems we would recomend a series of reciprocal trusts.
Adams Trust could name his wife, Burt, and Charlie as co-trustees.
Burt could name Adam and Charlie as co-trustees.
Charlie could name his girlfriend, Adam, and Burt as co-trustees.
Each could choose what they wanted to have happen to their properly upon their death or incapacity and make changes to the trust as they see fit regardless of what the others thought.