With the increase in use of trusts for ownership of NFA firearms, many individuals are asking whether they can use Quicken Will and Trust Maker or Legal Zoom to create their gun trust. The main reason for using Quicken/Legal Zoom is itheir cheap price. As always, you get what you pay for. While Quicken and Legal Zoom may (see issues listed below) be a viable option for typical trust assets (bank account, car, jewelry, stocks), they are NOT designed for NFAfirearms. To the unwary NFA owner, the lack of NFA specific provisions in the trust may result in illegal transfer of a NFA firearm, breaches of duties and/or obligations of trustees, forfeiture of the firearm(s), and possible criminal charges, such as illegal possession of a NFA firearm. Moreover, when you don’t have an attorney advising you, you may be surprised to learn that your designated beneficiary may not receive the NFA firearms because of the elective share issueor, due to divorce, your soon-to-be ex-spouse may an interest in the trust’s assets, regardless of whether they are the designated beneficiary.
Prince Law Offices understands the desire to keep expenses down when it comes to NFA acquisitions, so our pricing is extremely competitive to enable all NFA owners the ability to have a NFAspecific trust drafted, as well as, competent legal advice on the issues and pitfalls to avoid. It is unlikely that you will find another firm willing to draft you a generic trust, let alone a NFA specific trust, for the price we charge. Moreover, we have reviewed several trusts that were created by Quicken that were invalid and until they were amended, the possession was illegal and subjected the individuals to 10 years in jail and penalties of up to $250,000 per violation. Nevertheless, for those who are interested in the issues with Quicken and Legal Zoom, we have prepared the following:
Issues with Quicken
1. No free updates and old language, in order to keep your trust up to date, you need to purchase the software every year and hope they have dealt with changes in your state laws. Quicken seems to be slow at incorporating small or significant changes in the law. Quicken does not let you know what years statutes its language is based upon. Quicken states that when their users report problems they try to fix the program. Unfortunately, their users are not lawyers, and their users never find out about the problems. Their family may find problems when it is to late to make changes, but they have no way to ask, nor to they attempt to ask the beneficiaries to report problems.RESULT: Illegal possession and transfer of a machine gun and forfeiture action by the BATFE.
2. Review your document is the advice given to the users by Quicken. Quicken’s instructions also state to make sure that your document says exactly what you want it to. Although Quicken recommends that you have your document reviewed by an attorney, they neglect to mention that useful advise in their instructions under the review section. Lawyers have differing interpretations, how can a non-lawyer pretend to understand what the outcome of the language they choose will be. RESULT: Incomplete legal advice that could result in Illegal Possession and Transfer of a NFA Firearm and a forfeiture action by the BATFE.
3. Register your trust with the court? Quicken incorrectly advises that you must register your living trust with your local court.RESULT: No adverse effect.
4. Quicken Will and Trust Maker Doesn’t Provide Legal Advice. The instructions state later that Quicken publishes legal forms that are useful in many situations but they can not tell you whether or not a form is right for you, given your circumstances. Only a lawyer can do this and you should consult a licensed attorney in your state. Moreover, there are NO NFA provisions to inform the trustees of their duties and obligations. RESULT: Illegal possession and transfer of a NFA firearm and forfeiture action by the BATFE.
5. Revocation and Amendments: The Quicken trust allows revocation after one of the grantor’s dies. Typically a revocable trust becomes irrevocable and cannot be changed once a settlor or grantor dies. Quicken does make this distinction when dealing with an amendment and states that the trust cannot be amended once a Grantor dies. I am not sure why or how they allow a trust to be revoked but not amended after the death of a Grantor. RESULT: Illegal Possession and Transfer of a NFA firearm and forfeiture of the firearm.
6. Income. The Grantors are required to take all income from the trust at least annually. It would seem that this creates assets that are subject to probate and may not be what the individuals desire.RESULT: Added legal expenses at death.
7. Successor Trustee. The successor trustee is chosen automatically but there does not appear to be an ability for someone else to choose a more appropriate trustee at the time one is needed. Quicken does give the last serving trustee the ability to appoint a new trustee if the successor trustee is unable or unwilling to serve. What happens if the trustee ceases serving because of death, who would have the power to appoint a new trustee? Quicken leaves this question unanswered. While a trust will not fail for want of a trustee, the court will have to appoint someone. That individual is unlikely to be familiar with NFAfirearms which may result in the Illegal Possession and Transfer of aNFA Firearm and a forfeiture action by the BATFE.
8. Powers. The Quicken trust states that the trustee has all the authority and powers allowed or conferred on a trustee under Pennsylvania law. They do not tell you what these powers or authorities are or where to find a list of them. Also are they the powers granted when the document was signed, or when one goes to use the powers. While this may not seem important one should consider the substantial changes made in the area of a trustee’s powers within the last 2 years in Pennsylvania.Moreover, Quicken does not advise the trustee on how to purchase, distribute, or possess the items, nor is the power to use the items available to the Trustee under the Quicken Trust. RESULT: Trustee may have insufficient powers and result in the need for litigation and additional attorney fees. Moreover, it may result in Illegal Possession and Transfer of aNFA Firearm and a forfeiture action by the BATFE.
9. Incapacity: Quicken gives the power to determine incapacity to a person, rather than a court conservator or guardian, or physicians. Under this trust it would be very easy for your children or whom ever you select to declare you incapacitated, remove you a trustee, and appoint a successor trustee of their choice. RESULT: You may lose control of your own trust!
10. Beneficiaries. Although Quicken does appear to do a better job of checking the names of a beneficiary to make sure it is not a grantor, they only look for an exact match and do not question names that are close or provide a warning for any name. I found that it was possible to name yourself as your own beneficiary using a slightly different name, misspelling, or middle initial. This creates several problems and can void the trust. RESULT: Invalid trust resulting in Illegal Possession and Transfer of a NFA Firearm and a forfeiture action by the BATFE.
11. Survivorship. The quicken trust voids a gift to a beneficiary if that beneficiary dies within 120 hours. This may or may not be the result that you desire. RESULT: Beneficiary does not receive the designated assets even though you desire otherwise.
12. Spendthrift provisions. Quicken does not make a mistake in this area because they do not address the concept. RESULT: Creditors of the beneficiary(ies) can attach to the assets of the trust.
13. Choice of law, venue, arbitration, required notices under the Pennsylvania Trust code. Quicken does not address these, perhaps they are not important. RESULT: Whether that is true depends on your circumstances and what happens in the future, where you live when you die, where your beneficiaries live when you die. Every trust should address these issues including the requirements of the new Pennsylvania Trust code, but if you use Quicken you will not have the benefit of these provisions either.
14. There are many mistakes in the Quicken documents, most disturbing might be some of the things that are not included in a Quicken trust. Quicken gives none of the flexibility to a trust that make it useful for the common person. RESULT: A trustee under a Quicken trust could not do anything, including shooting a NFAfirearm owned by the trust, without creating liability to a beneficiary because by default they must act as a prudent trustee. If you have a trust created by Quicken 2009, 2008, 2007 or a previous version, you should have it reviewed by an estate planning lawyer.
15. The trustee is not permitted to use any assets of the trust. Many individuals are surprised by this because of their general lack of knowledge regarding trust laws. Under trust law, if you use the items, the devaluation, is is a breach of the duty that is created under the trust. RESULT: Civil liability of you and other trustees to the beneficiary(ies).
16. Combination of trusts. Quicken and most trusts provide that similar trusts can be combined. Our trust specifies that if this happens the NFA trust will be the surviving trust so that the benefits of the language and flexibility of the powers and duties are not lost. Quicken, on the other hand, would have the newer trust’s provisions empowered. RESULT: Could result in Illegal Possession and Transfer of a NFA Firearm if the trustee is unfamiliar with NFA firearms.
17. You die with debts, a Quicken trust will direct the sale of the NFAitems to pay your debts. This is contrary to the desires of most NFAowners- they want to preserve their class III items and pay the debts from other monies if possible.
Issues with Legal Zoom
1. The Grantor/Settlor is not properly defined. RESULT: May cause the trust to be invalid; thus, Illegal Possession and Transfer of a NFAFirearm and forfeiture action.
2. Problems when property is transferred from decedents will (if they own other NFA firearms). RESULT: Probate hassles and additional money spent on legal fees.
3. Allows for the revocation of the trust when the trust has NFAfirearms. While a typical trust could be revoked at any time, a trust holding NFA firearms cannot be revoked prior to transfer of those firearms. RESULT: Illegal Possession and Transfer of a NFA Firearm and forfeiture action.
4. No requirement of trustee to be legally able to possess the items. Similar to Quicken, the default provision is that a trustee cannot do anything that would devalue the property, including shooting the firearm at the range. RESULT: Illegal Possession of a NFA Firearm, breaches of fiduciary and trustee duties and obligations (civil liability), and forfeiture action by the BATFE.
5. Problems dealing with homestead properly. Also why would you place a homestead in a NFA trust? A Gun (NFA) Trust should be used solely for firearms. RESULT: Additional legal fees after your death.
6. Termination of trust creates problems because Trustee cannot transfer items in time. The trustee must file an application to transfer the firearms with the BATFE and await approval PRIOR to transferring possession of the firearm to the beneficiary or the trust terminating. RESULT: Illegal Possession and Transfer of a NFAFirearm and forfeiture action by the BATFE.
7. Nothing to warn unknown future trustees about compliance with state or federal law or what actions are necessary. RESULT: If a unknowing trustee transfers the NFA firearm inappropriately, Illegal Possession and Transfer of a NFA Firearm and forfeiture action by the BATFE.
8. No power for individual to open bank accounts or deal with theBATFE when there are multiple trustees. All NFA firearms purchased by the trust should be purchased through the trust’s bank account.RESULT: Limitations on powers of trustees and may cause problems upon the death of the grantor/settlor.
9. Successor Trustee must sell off assets to divide equally among heirs if there are not an equal number of each items for each beneficiary. RESULT: You cannot preserve the NFA firearms for your children or specifically give one NFA firearm to one child and anotherNFA firearm to a different child.
10. No power to use NFA firearms in the trust. RESULT: The trustee violates his/her duty to Beneficiary to preserve and maximize assets in the trust. Thus, the trustee would be open to a civil liability.
11. Absence of information regarding geographic restrictions.RESULT: Moving the firearm across state lines, without prior approval of the BATFE, may result in an Illegal Transfer/Possession of a NFA firearm and a forfeiture action by the BATFE.
12. Absence age restrictions or provision allowing the trustee to determine when the beneficiary is of a level of maturity to understand and possess the NFA firearm. RESULT: Denied transfer by theBATFE; no provisions for the trust to hold the firearm may result in a court ordering the sale of the NFA Firearm.
This list, while modified for PA, was originally compiled by Attorney David Goldman of http://www.guntrustlawyer.com in an article labeledUsing Quicken to prepare a trust: The good, the bad, and ugly!. His article also has links to other articles that he wrote on Legal Zoom and other insufficient legal services.