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by Michael G. Sabbeth
Firearms in an estate present unique administration challenges. Beyond their obvious inherent danger, the legal and prudent treatment of firearms requires specialized knowledge and practices. The uninformed or careless fiduciary risks jeopardizing estate assets and criminal and civil liability.
A lawyer went to the home of his recently widowed client. Her deceased husband’s firearms were sprinkled through- out the home like croutons on a Caesar salad. Retrieving handguns from under couches and dresser drawers, the client waved them around the room and at the lawyer. All the handguns were loaded.
This real-life scenario illustrates one example of why the treat- ment of firearms in an estate by fiduciaries and their legal counsel transcends sophisticated legal analysis. Practical wisdom is re- quired. People could be killed.
Firearms are unique estate assets highly regulated by an aggre- gation of federal, state, and local laws. Errors and ignorance in deal- ing with them in estate administration can result in civil and crim- inal liability for the attorney, the client, and third parties, and can cause irreversible tragedy.
This article addresses definitions and classifications of firearms, persons prohibited from owning or possessing firearms, transferring firearms, appraisals, and fiduciary duties. This article does not and is not intended to advocate higher fiduciary standards of care for personal representatives and their counsel than the law currently establishes regarding the possession and transfer of firearms in the estate administration context.
A Firearm by any Other Name
The attorney should promptly inquire whether firearms—or what appear to be firearms—are among the decedent’s property. The personal representative and all family members of the dece- dent should be unambiguously advised of the importance of find- ing, securing, and identifying firearms in the estate.
If firearms are found among the estate property, the attorney should methodically begin a sequence of actions. The first step is directing a competent, knowledgeable, and qualified person— whether the personal representative or some trained person desig- nated by the personal representative—to gather, unload, and safely secure all firearms. The next step is determining the type and class of each firearm. Justice Potter Stewart may have confidently known pornography when he saw it,1 but absent expertise and perhaps in- vestigation, such confidence likely will be misplaced regarding knowing the class of some types of firearms.
Federal law defines a firearm, in part, as “any weapon (including a starter gun) which will or is designed to or may readily be con- verted to expel a projectile by the action of an explosive.”2 Colo- rado law defines a firearm as “any handgun, automatic, revolver, pis- tol, rifle, shotgun, or other instrument or device capable or intended to be capable of discharging bullets, cartridges, or other explosive charges.”3
For purposes of this article, firearms are divided into three classi- fications: National Firearms Act (NFA)4 firearms; antique fire- arms; and all other firearms. Analysis of federal firearms legislation begins with the NFA, as amended by the Gun Control Act (GCA of 1968),5 and the Firearms Owners Protection Act (FOPA of 1986).6
Identifying all NFA firearms is vital because illegal possession or transfer of an NFA firearm can lead to prison terms; substantial fines; and the forfeiture of the weapon and any vessel, vehicle, or
aircraft used to conceal or convey the firearm.7 The NFA defines several categories of firearms:
• machine guns • short-barreled rifles (SBRs) • short-barreled shotguns (SBSs) • any other weapons (AOWs) • suppressors • destructive devices (DDs).8 Under Colorado law, a “dangerous weapon” is defined in CRS
§ 18-12-102(1) as a firearm silencer, machine gun, short shotgun, short rifle, or ballistic knife. The language of the statute regarding machine guns, SBRs, and SBSs tracks the NFA.
Antique firearms are defined based on their date of manufacture and the type of ignition system used to fire a projectile. Any firearm manufactured in or before 1898 that is not designed or redesigned for using rimfire ammunition or conventional center fire ignition with fixed ammunition is an antique firearm.9 Antique firearms are not covered by the NFA. Other non-NFA firearms include the more common bolt action, lever action, pump action, and semi- automatic action rifles, shotguns, and handguns (revolvers and pis- tols). In federal and state jurisdictions, statutes for possession and transfer treat handguns differently from other firearms.
Registered NFA Firearms
Only NFA firearms such as machine guns are registered under federal law. An unregistered NFA firearm is contraband and can- not be transferred. Possession of an unregistered NFA firearm is a felony. If an NFA firearm is in the estate, the attorney must deter- mine if the firearm was lawfully registered to the decedent. The National Firearm Registration and Transfer Record (NFRTR) is the central registry of all NFA firearms in the United States that are not in the possession or under the control of the U.S. govern- ment. The registry includes: (1) the identification of the firearm; (2) the date of registration; and (3) the identification and address of the person entitled to possession of the firearm.
Registration of NFA firearms is mandatory. An exception to the registration requirement is a firearm legally brought back from a war—perhaps a captured firearm—which may be possessed legally if proper paperwork can be produced.
Persons or their fiduciaries who have firearms registered to them in the NFRTR are required to retain proof of such registration.10 Proof consists of a copy of the ATF form registering the firearm to the possessor. If the decedent’s representative is unable to locate such records, the representative may write to the NFA Branch to inquire into the registration status of the firearm. The written in- quiry should be accompanied by documents establishing the repre- sentative’s legal authority to represent the estate, such as Colorado Letters of Administration or Letters Testamentary.11
The NFRTR may be unreliable regarding accurate records. If unable to find the registration, the attorney should contact the BATFE, in writing, to determine the weapon’s status. Although ATF is prohibited from disclosing tax information (which all NFA registrations are) the ATF may disclose the owner information of the firearm to persons lawfully representing registrants of NFA firearms.
Attorney David Goldman from Jacksonville, Florida, shared an anecdote that illustrates the hazards of dealing with NFA firearms. A personal representative brought an unregistered SBR—inno- cently or otherwise—to a gun shop for appraisal. A BATFE agent
happened to be in the shop. The personal representative was arrested.
An unregistered NFA firearm cannot be registered. The NTF Handbook advises the decedent’s representative to contact an ATF office to arrange for the disposal of the firearm. Transporting the unregistered firearm without obtaining instruction from the ATF is not advised.
No economic benefit to the estate accrues when an unregistered NFA firearm is transferred to BATFE. A legally transferable regis- tered machine gun may be worth hundreds of thousands of dol- lars. The parts of an unregistered firearm also may have consider- able value. The BATFE allows for an unregistered firearm to be decommissioned into parts, thereby eliminating its character as an NFA firearm.12 In the event an unregistered NFA firearm is found, careful reading of the Handbook is recommended to become edu- cated about the decommission process.
Decommissioning the firearm may yield the estate a substantial amount of money. Some writers have hinted (although not assert- ed) that disposing of the firearm to the BATFE rather than de- commissioning it may be a breach of a fiduciary duty or even attor- ney malpractice.
It is prudent to become familiar with Colorado law on the nuances of legal versus illegal firearms. For example, in Colorado, it is unlawful to possess a defaced firearm, which is defined as a firearm where distinguishing identification marks have been re- moved.13
Federal and state laws prohibit several classes of persons from owning or possessing firearms. A primary purpose of the Gun Control Act and the Uniform Firearms Act is to prevent “prohib- ited persons” from possessing firearms. A person prohibited at the federal level is prohibited from owning or possessing a firearm in any state.
The Gun Control Act defines nine categories of prohibited per- sons. A prohibited person is one who:
. 1) is under indictment for or convicted of a crime punishable by imprisonment for a term exceeding one year;
. 2) is a fugitive from justice;
. 3) is an illegal drug user;
. 4) is adjudicated mentally defective;
. 5) is an illegal alien;
. 6) has been dishonorably discharged from the U.S. military;
. 7) has renounced his or her U.S. citizenship;
. 8) is under a restraining order against harassing, stalking, or in- timidating an intimate partner or child; and
. 9) has been convicted of a crime of domestic violence.14
Transfers of Firearms
The main considerations regarding transfers of firearms are un- ambiguous: no prohibited person may receive a firearm and the transfer of an NFA firearm must be authorized by the BATFE. Only a person, including a personal representative, qualified under federal and state law may legally posses a firearm. Firearms trans- fers in most cases will be mundane and have little risk of conflict- ing with federal and state law or being infused with liability concerns. Some transfers, however, may be cause for trepidation and scrutiny.
The transfer of an NFA firearm is defined as the “selling, assign- ing, pledging, leasing, loaning, giving away, or otherwise disposing of an NFA firearm.15 This definition is applicable to the transfer of any firearm, including non-NFA firearms. Federal law prohibits a person from selling or disposing of any firearm or ammunition to any person prohibited from possessing or receiving a firearm if the transferor knows or has reasonable cause to believe that the re- cipient of the firearm is legally prohibited from possessing or re- ceiving firearms.16
Two classes of people are relevant when discussing transfers: a federal firearms-licensed dealer (FFL dealer)17 and a non-licens- ee. Typically, a personal representative and the attorney are not FFL dealers. An FFL dealer as transferor has greater legal duties than a non-licensed transferor. For a non-FFL transferor (the typ- ical case) no duty exists to determine whether the intended recipi- ent is a prohibited person. Absent knowledge or a reasonable ba- sis to believe the recipient is a prohibited person, a transfer of a non-NFA firearm may take place.
An FFL dealer must perform a state InstaCheck (background check) on the intended transferee. The intended transferee must be approved before the transfer from the FFL dealer to the trans- feree can occur. In Colorado, this process is done through the Colorado Bureau of Investigations.18
A non-FFL dealer licensee intrastate transfer of a non-NFA firearm to a non-FFL dealer licensee does not require an Insta- Check. (As discussed above, an NFA firearm transfer has addi- tional restrictions.) The transfer remains subject to the operative mental state of knowing or having cause to believe that the trans- feree is a prohibited person.
Distribution of an NFA firearm to an heir or beneficiary quali- fied under local, state, and federal law is a transfer and must be done in accordance with the NFA. Before the firearm may be law- fully transferred, approval from BATFE must be obtained by fil- ing an application to transfer and register the firearm. The trans- fer may be completed without payment of the generally applicable $200 transfer tax.19
If the NFA firearm is being transferred to a dealer rather than to an heir or beneficiary, a BATFE Form 4 must be completed, a tax paid, and approval obtained. Transfer of an NFA firearm by auction can be done only through an auction house licensed to possess NFA firearms. Although beyond the scope of this article, an auction house can transfer an NFA firearm only to a qualified person approved by the BATFE.
The fiduciaries (personal representative and attorney) must safely secure firearms, identify their type, and understand transfer laws for each class of firearm. The attorney may wish to take possession of the firearms during the estate administration process if the per- sonal representative cannot or chooses not to do so. However, when doing so, extreme caution is urged on the part of the attorney for a number of reasons, including potential liability for accidents, theft, and damage.
The attorney accepting possession of firearms must be a quali- fied person. Indeed, the prudent personal representative might de- mand a background check of the attorney. If neither the personal representative nor the attorney is willing to take possession of the
firearms, the attorney should petition the court for the appoint- ment of a special personal representative empowered solely to pos- sess and transfer the firearms. In either scenario, adequate insur- ance for the firearms should be acquired. When dealing with firearms, the fiduciaries, particularly the personal representative, have unique duties that transcend the general obligations to mar- shal and inventory the assets, evaluate them, and distribute the property or proceeds from the sale of property to the proper bene- ficiaries.
Practice Tips and Hypotheticals
The following discussion presents practical considerations relat- ing to the types of firearms that may confront the fiduciary and applications of the laws that should influence the decisions of the prudent fiduciary. Recall that a non-licensee transfer of a firearm to another non-licensee does not require a determination that the recipient is not a prohibited person. That is the law, but it may not be prudent fiduciary behavior.
ØThe fiduciary must know whether a firearm can be distrib- uted to a beneficiary in the beneficiary’s venue. For example, an assault-type weapon cannot be distributed in California, and a handgun can be distributed in Pennsylvania only to a person with an appropriate license.
Unless the fiduciary has a high degree of confidence regarding the legal status of the beneficiary, it is recommended that the fidu- ciary receive from each beneficiary or other transferee a notarized document that lists all the prohibited categories mentioned above and requires the intended transferee to sign under oath that the transferee is not disqualified by any of the prohibited categories. The highest level of protection is to have all transfers conducted through an FFL dealer, if justified by circumstances, such as the ex- istence of beneficiaries the fiduciary does not know or where trans- fers are made to non-beneficiaries who are strangers to the estate. Some practitioners routinely advise clients to use FFL dealers in all but the most conservative instances.The fiduciary can ask a fed- eral firearms dealer to do a background check; the fee for such service is nominal.
ØA common scenario occurs when the sale of a decedent’s gun collection is advertised by e-mail among friends and is held at the decedent’s home. Often, however, many strangers show up at the home and some buy firearms. Sales and transfers in the home can be legal but they might not be prudent. Although there is no duty to inquire as to whether the purchaser is qualified, a purchaser may be under the influence of alcohol or drugs. The issue is risk man- agement rather than technical legal compliance.
An extreme example would arise if the personal representative affixed posters to neighborhood telephone poles advertising “Estate Sale of Guns at Joe’s House” or if the sale was announced on Twitter or Facebook. Although technical legal compliance with transfers may have occurred, if a prohibited person acquired a firearm and then committed a crime, expensive litigation against the estate and fiduciaries likely would ensue and no prudent lawyer could guaran- tee an outcome favorable to the estate or its fiduciaries.
ØA fiduciary bringing a firearm to an FFL dealer (often a gun shop) for consignment is deemed a transfer, as is an appraisal if the dealer takes possession of the firearm. If sometime before the expi- ration of the consignment or appraisal period the fiduciary became a prohibited person, the dealer cannot transfer the firearm back to the fiduciary. In such an instance, the personal representative must leave the firearm for sale, sell the firearm to the dealer at perhaps an improvident price, or petition the court to appoint a special fi- duciary to legally take possession of the firearm.
ØA seemingly harmless scenario that dramatically illustrates the vulnerability of fiduciaries when dealing with firearms can innocuously arise if the personal representative allows a benefici- ary or potential non-beneficiary purchaser to shoot the firearm for reasons as mundane as to determine whether the gun “fits” or whether the purchaser can handle the recoil. If the firearm is a vin- tage shotgun with Damascus steel barrels, a not uncommon firearm among collectors or that are handed down from previous generations, the shotgun likely cannot safely discharge modern high-pressure ammunition. It is quite likely the Damascus barrels will explode on firing one or more of such cartridges, possibly caus- ing injury or death to the shooter and to others in proximity. More- over, the destruction of an estate asset possibly worth tens of thou- sands of dollars would result.
If an injury occurred, the fiduciary who supplied such modern ammunition to the shooter or who failed to expressly inform the shooter not to use such ammunition exposes the estate, as well as himself or herself, to liability, probably without a right of contribu- tion or indemnification from the estate. Simply stated, the fiduciary dealing with firearms has to know what he or she is doing, and so should the attorney advising the fiduciary. As a general proposi- tion, the fiduciary and the attorney should be on notice to seek in- put from an expert if either or both lack the high degree of knowl- edge required when dealing with firearms.
ØThe fiduciary does not want his or her actions to result in harm to a beneficiary or to family or friends. For example, assume a fiduciary transfers a firearm to a nonprohibited beneficiary who lives with a prohibited person. A risk of criminal liability of the prohibited person can arise under the theory of constructive pos- session if the beneficiary does not properly isolate the firearm.
As a general rule, the nonprohibited person retains a Second Amendment right to possess or own a firearm, but does have a duty to prevent access to the firearm by the prohibited person. In United States v. Huet, the court stated:
[B]ans on felon possession of firearms also affect their law- abiding spouses, girlfriends and boyfriends, and other house- mates: Those people might be unable to safely possess guns in their homes because of the possibility that their felon housemate will be seen as ‘constructive[ly] possess[ing]’ the gun, and that they themselves will therefore be seen as criminally aiding this illegal possession.” There are limits on the constructive posses- sion doctrine (at least in the view of many courts), for instance if the housemate keeps the gun locked in a combination-locked safe.20
Also, under certain facts, the nonprohibited beneficiary might become criminally liable for permitting the possession of a firearm by a prohibited person. Although no fiduciary breach of duty would have occurred by transferring a firearm to a qualified trans- feree, and although the consequences of such a transfer are beyond the scope of the fiduciary’s duty, the prudent fiduciary should be aware of such possibilities and consider implementing an alternative asset distribution plan.
ØAlthough a beneficiary who is a prohibited person cannot possess a bequeathed firearm, he or she does retain a property right in it. Thus, the estate may be required to sell the firearm and give the beneficiary the proceeds or substituted property of equal value. In the alternative, the non-qualified beneficiary could give the firearm to someone else, as long as he or she never gains possession of the firearm.
Ø When distributing firearms, the fiduciary has a duty of loyalty to the estate and its beneficiaries. Distribution of firearms must be fair and not self-serving, as in the instance that could arise where a personal representative is a beneficiary and has knowledge of the value of firearms equal to or greater than other beneficiaries. A dis- cussion of this issue took place in the unpublished opinion in The Matter of the Estate of Howell. There, the Delaware Chancery Court concluded:
They challenge Jon’s allocation of the firearms. The values of the firearms were set by a friend and social acquaintances of Jon, and he then, exercising his fiduciary powers, selected for himself the firearms that he wanted based on those valuations. In essence, Sue and Lynn argue that if Jon is to use his power to allocate the firearms, he must obtain an independent valuation of the firearms. Alternatively, if appraisals by Jon’s friends and acquain- tances are to be used, then they should be entitled to select from the collection (perhaps after having first had a full and fair opportunity to have them valued by an appraiser).
By picking the more valuable firearms, presumably the true “collectible” firearms, Jon carried out a strategy that raises seri- ous questions as to the fairness and impartiality of the distribu- tion process. If Jon had set the value for the various firearms himself, it is clear that the approach he chose could not with- stand even a superficial duty of loyalty analysis.
Therefore, in light of all the circumstances and, in particular, Jon’s decision to distribute to himself the more valuable firearms, I find that Jon’s approach to valuing and distributing the guns was not consistent with his duty of loyalty and was unfair to his beneficiaries.21
The personal representative may hire appraisers to evaluate estate property.22 The rules defining fair market value for house- hold and personal effects appear in Internal Revenue Code (Code) § 20.2031-6(a):
The fair market value . . . is the price which a willing buyer would pay to a willing seller, neither being under any compul- sion to buy or to sell and both having reasonable knowledge of relevant facts.23
This section also describes the requirements for taking inventories and the fiduciary obligations to affirm the evaluations. Section 20.2031-6(b) defines the value thresholds for requiring a valuation:
Notwithstanding the provisions of paragraph (a) of this section, if there are included among the household and personal effects articles having marked artistic or intrinsic value of a total value in excess of $3,000 . . . the appraisal of an expert or experts, under oath, shall be filed with the return. . . .
The vast majority of the millions of firearms in households are more or less fungible and the markets are well established. De- pending on conditions, values can be established with a high de- gree of accuracy and consistency over the years. However, many firearms are relatively rare and unique. The value of custom or rare, vintage firearms can be stunning. Firearms from some custom makers of sporting arms, for example, cost from hundreds of thou- sands to in excess of $1 million.
Value is determined by an array of variables. The prestige of an engraver, for example, can add as much as $100,000 to a firearm’s value. Slight dents and scratches on these “high-grade” or “best” firearms can significantly reduce value.
Of course, the time limitation for selling the firearms will sub- stantially influence their sales price. The resale of some custom or “bespoke” firearms may occur in an hour, or may take years. If bene- ficiaries want their money immediately, they will receive sales offers at considerably less than what might be offered within a lengthier span of time when the fiduciary is determined to maximize value to the estate. The valuation process is far more art than science when dealing with firearms in these very limited niche markets.
If the estate is not taxable and the filing of a federal estate tax return is not required, no appraisal is required. However, for rea- sons beyond the scope of this article, even if an estate tax return is not technically required, under some circumstances, it might be prudent to get appraisals, file an estate return, and start the statute of limitations regarding the finality of the evaluations for the bene- ficiaries’ tax basis.
The dangerous consequences of unsafely handling firearms are self-evident. Less obvious are the financial and criminal conse- quences from wrongful possession and transfers of certain types of firearms and the wrongful possession and transfer of firearms gen-
erally to persons prohibited from owning, possessing, or control- ling them.
The inherent lethal nature of firearms places great demands on fiduciaries and their advisors. The failure to fulfill those demands can result in catastrophic physical harm and incalculable economic damage. This article is a starting point for the prudent fiduciary and counsel, who should be motivated to ask proper questions, evaluate answers, and seek knowledgeable guidance. The goal is to enable fiduciaries to treat firearms in an estate respectfully and in- telligently, thereby reducing the likelihood of harm to fiduciaries and to those relying on their judgment and wisdom and, of course, to enhance society’s safety.
1. Jacobellis v. Ohio, 378 U.S. 184 (1964).
2. 18 U.S.C. § 921 (a) (3). See also Prince, “Grandpop’s Machine Gun in the Chest,” available at blog.princelaw.com/2007/9/25/grandpop-s- machine-gun-in-the-chest (describing other National Firearms Act (NFA) firearms, such as “all other weapons” and suppressors, and difficul- ties that can arise when trying to identify them). See generally U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives (BATFE), National Firearms Handbook 59 ( June 2007), available at www.atf.gov/firearms/nfa/ nfa_handbook); www.atf.gov/firearms/guides/identification-of-nfa- fireamrs.html (information for determining whether a firearm is an NFA firearm).
3. CRS § 18-1-901(h).
4. 26 U.S.C.S. §§ 5801 to 5872; 73 P. L. No. 474, 48 Stat. 1236. BATFE provides some identification assistance with www.atf.gov/docs/ Identification_of_Firearms_pt1.pdf and www.atf.gov/docs/Identification_ of_Firearms_pt2.pdf.
5. 90 P. L. 618, 82 Stat. 1235, 921. 6. 18 U.S.C. § 922(o)(1); 99 P.L. 308, 100 Stat. 452, 102(9). 7. 26 U.S.C.S. §§ 5861(d) and (j) and 5872; 49 U.S.C.S. §§ 781 to
788. 8. 26 U.S.C.S. §§ 5801 to 5872; 73 P. L. No. 474, 48 Stat. 1236). A
short-barreled rifle (SBR), for example, is defined in part as a firearm “hav- ing a barrel or barrels of less than 16 inches in length or an overall length of less than 26 inches.” An SBS is defined in part as “having a barrel less than 18 inches or has an overall length of less than 26 inches.” Instructions for measuring the barrels are contained within the definitions.
9. 26 U.S.C. § 5845. 10. 26 U.S.C. § 5841(e); 27 C.F.R. § 479.101(e) 11. The address of the NFA Branch is: BATFE, National Firearms Act
Branch, 244 Needy Rd., Martinsburg, WV 25405. 12. See generally BAFTE, supra note 1 at 58 and Appendix B (ATF
Rulings 2003-1, 2003-2, 2003-3, and 2003-4). 13. CRS § 18-12-103. 14. 18 U.S.C. § 992(d). 15. 26 U.S.C. § 5845(j).
16. 18 U.S.C. § 922(d)(1) to (9). 17. 18 U.S.C. § 921 (a). 18. See cbi.state.co.us/ic. 19. 26 U.S.C. § 5811. See generally BATFE website, www.atf.gov. 20. United States v. Huet, No. 08-0215 (W.D.Penn., Nov. 22, 2010),
available at scholar.google.com/scholar_case?case=9612442952507442301 &q=us+v.+huet&hl=en&as_sdt=2,6&as_vis=1. See volokh.com/2010/ 11/24/second-amendment-protects-gun-possession-by-the-housemates- of-felons. See also State v. Caekaert, 983 P. 2d. 332 (Mont. 1999).
21. Estate of Howell, Nos. 117657, Civ. A. 17760-NC. (Del. Ch. Feb. 12, 2002 )
22. CRS § 15-12-706. 23. IRC, Chap. 1, Subchap. B, Part 20.