subject: Proving Ownership And Funding: Gun Trust [print this page] Texas law requires a trust to always be funded in order to be created. Section 112.005 within the Texas Property Code (Texas Trust Code) provides: "A trust can not be created unless there is trust property." Nominal funding is sufficient to set-up a trust where the 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 the funding with the 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 from a revocable trust does not form a trust unless it's funded. This is the reason some officials within the ATF have questioned ATF Form 4 transferees regarding NFA trust funding. If a trust has not been funded the transfer could be to a non-existent entity and thus invalid. A gun trust ought to be funded to be in existence and valid.
Funding from a Class 3 gun trust can be accomplished in several ways. An account with a bank is generally opened or property can also be transferred into your trust. Trust property is know for being the "res" or the "corpus". It is crucial to document transfers of property into an NFA gun trust. Because the gun trust can last several generations and survive the death its creator (grantor or settlor), issues often arise in regards to what property the trust actually owns. When there is no one living to ask, documents must be reviewed to verify ownership. The document which shows a transfer of title into the gun trust is the Form 4 or Bill of Sale. Without either there is no written proof from the conveyance of NFA or other tangible physical property to the trust. This may lead to expensive litigation in the foreseeable future if not completed correctly in a timely manner. A few years ago, litigation arose in the large estate of a Kerrville oilman. Considering that the trustee on the trust created by the oilman's will failed to keep sufficent records, it had become difficult and quite expensive to determine what property was actually in the trust and that which was not. Some 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 from the items making it difficult to determine who was entitled to what property. To illustrate, the sticker on the back of a $25,000.00 painting by Salinas, hanging on the a wall inside the estate's mansion, had fallen off. The sticker around the back of a less costly 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 a gun trust setting this issue is avoided by completing 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 a approved Form 4 to be valid.
It is vital that a gun trust be funded and transfers to 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.
