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HS 141 – Gun Trusts with Michael Margrave

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Michael Margrave

Michael W. Margrave has been a practicing attorney in Arizona since 1968.  Mr. Margrave graduated from Texas A&M University in 1963 and received his Masters Degree in accounting and Law Degree from the University of Arizona in 1965 and 1968, respectively.  Mr. Margrave is also licensed as a Certified Public Accountant, has served as Honorary Consul of the Republic of the Ivory Coast and was the original attorney and Secretary for America West Airlines, Inc. Mr. Margrave concentrates in company law, business acquisition and disposition transactions, real estate law and estate planning. Positions Held: Republic of the Ivory Coast, Honorary Counsel America West Airlines, Inc., Attorney and Secretary.

Michael Margrave is partner in a Scottsdale Law firm, Margrave-Celmins, specializing in business law and estate planning. Michael is a gun enthusiast who is working with contacts at the ATF to add a special kind of Trust to his law practice – The Gun Trust. Michael wants to help fellow gun owners, especially those who would inherit guns from a relative, avoid mistakes that could land them behind bars in this post-Newtown, CT world of panicked firearms buying and draconian gun laws. More info http://mclawfirm.com/estate-planning/gun-trust/factors-in-considering-the-use-of-a-gun-trust.html (Top image: Flickr | Esparta)

Check out this episode

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Narrator: Welcome to the Holistic Survival Show with Jason Hartman. The economic storm brewing around the world is set to spill into all aspects of our lives. Are you prepared? Where are you going to turn for the critical life skills necessary for you to survive and prosper? The Holistic Survival Show is your family’s insurance for a better life. Jason will teach you to think independently, to understand threats and how to create the ultimate action plan. Sudden change or worst case scenario, you’ll be ready. Welcome to Holistic Survival, your key resource for protecting the people, places and profits you care about in uncertain times. Ladies and gentlemen, your host Jason Hartman.

Jason Hartman: Welcome to the Holistic Survival Show. This is your host Jason Hartman, where we talk about protecting the people places and profits you care about in these uncertain times. We have a great interview for you today. And we will be back with that in less than 60 seconds on the Holistic Survival Show. And by the way, be sure to visit our website at HolisticSurvival.com. You can subscribe to our blog, which is totally free, has loads of great information, and there’s just a lot of good content for you on the site, so make sure you take advantage of that at HolisticSurvival.com. We’ll be right back.

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Start of Interview with Michael Margrave

Jason Hartman: It’s my pleasure to welcome Michael Margrave to the show. He is a Scottsdale, Arizona based attorney specializing in business law and estate planning. And today we’re going to talk about kind of a specialty topic, and that is the topic of a gun trust. Yes, you heard me right: a gun trust. Now you’ve heard of a trust before, but how does it apply to guns and gun law, and why this might be important to you. Michael, welcome. How are you today?

Michael Margrave: Well I’m doing real fine. The weather is great out here in Arizona. As I look out the window, I’m inside working but this is a good time of year in Arizona.

Jason Hartman: It’s very nice, very nice. Well, why would someone want to have a gun trust? Well, maybe first, what is a gun trust?

Michael Margrave: Taking it back one step beyond that, a trust is legal arrangement normally put down in writing, comprised of three parties. One party who creates the trust is called the truster, the granter or the settler. The party who manages the trust is called the trustee, and it could be also the same as the granter or settler. And then the third party to a trust is the beneficiary. So, trusts have been common ever since about the year 1000 or so in England, under the English common law. And of course our country was colonized by the British, and so we delved into the English common laws as the base for our legal system.

So every state here in the US has laws governing the creation, management and disposition of trusts. And to some extent there is a uniform trust code that is across the board, although not all states have adopted that code, and often times state will amend it, vary it and so you really can’t say we have a common trust law across the US, although obviously trust created in one state is recognized in another state and so forth.

Jason Hartman: But the laws do vary a little bit from state to state then?

Michael Margrave: Yes they do. And so the gun trust is just kind of a variation of that to serve a particular purpose. So using a general estate planning trust for holding of certain types of fire arms probably won’t work because it’s not drafted with that in mind, and also the bureau of alcohol, Tabaco and fire arms is scrutinizing these trusts more now to see how they’re put together and if they are sufficient to utilize. So how I came about this was here not too long ago, I’d always wanted a John Wayne type of short barrel shotgun. I don’t know if you saw El Dorado; I think James Caan was in there.

Jason Hartman: Is that shorter than the… I think the minimum length is 18 inches right?

Michael Margrave: That’s right. Anything under 18 inches falls in a different class called a NFA weapon or a class 3 weapon. Anyhow, I decided to do that. So I started looking around on the internet for a short barrel shotgun and I was talking to up at the gun shop that’s not too far from my office. And the owner said, you know you may just find it easier to make your own short barrel shotgun. And I said, what? And so he gave me a little education and sure enough, it’s possible and legal to do that, provided you follow all of the procedures. So I did indeed and I have a regular Winchester Model 24, 16 gauge shotgun.

So I proceeded down the path of getting the permission of the ATF to what they call, make a fire arm and then to have it registered, which entailed going to the chief local law enforcement officer, which is our famous Sherif Joe Arpaio down here in Maricopa county. We got the finger prints done, filled out a check list sheet. And they took about 48-50 days from the time I submitted everything to the time I got the little letter in the mail saying that I had passed muster. And I don’t think it took that long due to my background. Because I was thinking back, and my last brush-in with the law was probably in 1970 when I made a left turn one minute after four.

Jason Hartman: Okay, good. So we got the idea. So, you’re a law abiding citizen. Jump into the trust though. What does this have to do with it?

Michael Margrave: So, one advantage of a trust is that as provided in the regulations and the ATF manual, if the approval of a chief local law enforcement is not a requisite to obtaining a license or the registration of this gun, and to make a short barrel shotgun. So that is one hurdle that you can avoid by using a gun trust. A second advantage of a gun trust is that you can pass it from generation to generation. And you can do that as long as the state law in your jurisdiction says that you can maintain a trust without having to terminate it. And I won’t bore you about the rule against perpetuity.

Jason Hartman: Okay, got it. So the trust lives beyond the person, the owner. So that’s good. That allows you to pass it down. But what about that… just repeat that first reason again. What was that? We’re not talking about heirs and passing it on, what was that first reason again?

Michael Margrave: Well, the first reason is that you normally have to, if you apply to obtain or register a class 3 or an NFA fire arm, you have to get a sign of from the chief local law enforcement officer that you’ve got basically a clean record. Which can take from jurisdiction to jurisdiction, anywhere up to 60 days. And in some jurisdictions, just arbitrarily some of the chief local law enforcement officers just out of principle refuse to consider or even act upon a request for a clearance.

Jason Hartman: Okay, but they’ll do it for trust, or you don’t need to do this at all?

Michael Margrave: You don’t need to do it for a trust.

Jason Hartman: So, what do you do? You just go in and you buy the gun from a dealer and the trust buys the gun?

Michael Margrave: Yes. It depends on what you’re doing. If you’re going to buy a gun that is all ready, an NFA fire arm, which I’m doing that process as well, there you acquire it and you file the form with the ATF in the name of the trust. And so you fill out the form, you give them a copy of the trust, the ATF looks at the trust, sees that it meets their requirements, and after about 5 or 6 months depending on if you’re making the gun or just transferring title to an existing NFA weapon, hopefully you get back in the mail the form with the ATF stamp on it permitting you to take possession on that gun or to alter it and to make it into a class 3 fire arm.

Jason Hartman: So, easier access to a gun you wouldn’t normally have access to. What does NFA stand for?

Michael Margrave: National Fire Arms act. And so that was an act back in the 30s.

Jason Hartman: Right. So what else is an NFA weapon? Like the short barrel shotgun, but give us another one.

Michael Margrave: Yes. I would recommend that if anybody’s really interested, they go to the ATF handbook which goes into great detail about all types of weapons. But let me give you three examples. If you have, I was describing, if you have a regular shotgun, you want to reduce the length of the barrels under 18 inches or the overall length of the gun to 26 inches or less, you need the permission of the ATF to do that. So that’s that form 1 that you have to submit, they consider it, they look at everything, why are you doing it, and then after about 5 months you will either get back approval or they will reject it and tell you why they are rejecting it.

A second example is a rifle. If you have a rifle and you wish to shorten the barrels to under 16 inches or overall length to under 26 inches, then you also need the approval. Then the third option is I just recently…Around the process of getting approval to take possession of a rather unique weapon. It’s called the Ithaca auto and burglar gun. It’s not a short barrel shotgun. It was made by Ithaca between 1925 and 33 as a short barrel weapon. So, interestingly enough, ATF doesn’t classify it as a shotgun. It’s any other weapon. And so that’s how they classify it, as a smooth barrel rifle.

Jason Hartman: I see it on your website. It’s pretty unique. It’s a double barrel little mini-shotgun looking thing.

Michael Margrave: Yeah, and if anybody wants to see it, it also appears on page 8 of the ATF handbook. It’s right in the middle of the page, the Ithaca Auto Burglar. It is really a cool thing. So those would be three types of weapons that would fit under this category. Then you have knife guns, umbrella guns, pin guns, you’ve got explosive devices, all sorts of things that we won’t get into here but if anyone wants to delve into it in that handbook you’ll certainly see a wide variety of firearms.

Jason Hartman: So, can one do a trust themselves or do they need to go to an attorney, I have a feeling I know your answer on that, but…

Michael Margrave: It sounds self-serving, but here’s what’s happening is, the ATF has been rejecting some of these trusts people will purchase online. The one trust that fits all jurisdiction probably doesn’t have a lot of the language they like to see in a gun trust, regarding restrictions and registrations, transfers and possession. So probably, it’s wise to have an attorney draft it. And I would say, for example, I don’t do trusts for people in other states who have no ties to Arizona. They should find a good attorney in their home state who has at least some familiarity with gun trusts, and go that route. Anybody in Arizona though, I’m fair game.

Jason Hartman: Here’s the question though: how much does it cost and how long does it take to do this?

Michael Margrave: You mean to do the trust or just to get the approval to have the gun?

Jason Hartman: Well I guess both, yeah.

Michael Margrave: Okay. I’ll give you the two examples: if you’re going to make a fire arm, in other words changing a long barrel shotgun to a short barrel shotgun; I was just talking to an ATF specialist last week and the current timeline is in the vicinity of 5 months. The transfer, if you’re seeking to buy a currently registered class 3 or NFA firearm, that’s going to take about a month longer. So that’s currently running about 6 months, and part of that reason is that they only have 11 or 12 examiners, so they have this huge backlog so your application may sit there 4 months before they actually get to it and act upon it. They just hired 6 new examiners, I was told last week and they are in the process of training but will not be fully functional until sometime later this year as they’re broken in and learn the rules and so on and so forth. So that should ease up a little bit. That’s the approval process from that side.

If you want to do a trust, then obviously the attorney you go to probably have varying time schedules. Maybe somebody could do it in a couple of days, maybe somebody is going to tell you, I am so busy that it’s going to take me a month before I get to your file. So you may enquire not only what it costs, but also how long is it going to take you mister or miss attorney to draft my gun trust. And then if you don’t get the right answers, then you’ll probably talk to somebody else.

Jason Hartman: Okay. Do you care to give us any guideline on pricing? Maybe what you charge? You can’t speak for every other attorney.

Michael Margrave: I can give a general… you know, it’s probably going to be in the range of 15 hundred. I’ve seen cases though where somebody has a rather comprehensive drafting provisions that really take a lot of time, it may be easy to verbalize what they want but to put them in the right words and in the right sequence, it could take a lot of work. So there are cases where obviously it’s going to be more than that depending on the requirements of the client and how detailed they want to get and how complex they want to get.

Jason Hartman: And that would be in the case of a person who wants to make a gun, and when you say make a gun you really mean modify it, right?

Michael Margrave: Yes. There are some people, but they’re licensed. They have all the licenses to do that. I would just buy an existing gun. And what I would do, what I will do then, hopefully in about a month, is when I get that approval is to take the Winchester to a local gun smith I’ve identified who then looks at the form and the stamp and says okay, I’m okay to do this, and does it. And I’ve identified somebody that I think I can work with and will do a good job. So personally, I’m not going to do it myself, but I have the authority to take it to a gun specialist…

Jason Hartman: Right, right. But what about, I think that’s probably fewer of our listeners that would be interested in that. What about someone who just wants to acquire some of these more unique, interesting guns; maybe they’re a collector, maybe they’re doing it for a real defense type purpose, then there’s no drafting or complexity right? Is it less expensive and faster that way?

Michael Margrave: Well not from a trust standpoint. It’s maybe, and from the other form, somebody can go to a gun dealer who is licensed for class 3 or NFA weapons and say I would like to buy that shotgun or I would like to buy this rifle or whatever. And if they have to fill out the form and follow the form, pay the money and submit it, and then wait while they’re waiting to get approval. Like right now, with my Ithaca Auto Burglar I call it as kind of a joke with the gun dealer that I have visitation rights on the weekend. I can go up and look at it, but that’s about all I can do for another 4 months.

Jason Hartman: Yeah, that’s funny. Now is there any other benefit for this trust? You outline two benefits, it sounds like. Because I’ve got to tell you, when I first heard of this, and our mutual acquaintance who booked you on the show here, my mind instantly went to everybody is concerned about these ridiculous shootings and horrific things, that many think, and not nutty people by the way, I don’t know what you think, but legitimate people that are not crazy think that some of these things are staged or the government is almost like complicit in them… something just doesn’t make sense.

And they take it from an example… well the concept of a false flag that’s been around in the military forever I guess, but from a similar type of event that happened in Australia in Tasmania about 12-13 years ago where they were able to enact very restricting gun laws that made the civilian population, the law abiding population, far less safe in Australia. And the government basically found a good excuse to do it. It was a shooting, and now I don’t know where the outrage is from Piers Morgan against drunk drivers or medical malpractice or all the things that kill many more people than a few horrific shootings every year.

But I instantly went to the registration at least historically ultimately leads to confiscation. And that ultimately leads to oppression by governments. At least historically we can say that. And that’s what I was thinking, because the trust is its own entity. Is there a way that the trust is registered owning the fire arms and not the individuals? That’s where my mind kind of went when I heard of this.

Michael Margrave: Well I think that the possible advantage of the trust is, for example, if you create a gun trust, obviously you’re going to deal with any currently classified NFA weapons or class 3, sometimes called, like we’ve discussed like the short barrel shotgun, etc. But another possibility is that to also transfer in so that the trust owns other weapons such as the AR15s which currently do not fall under the category of NFA fire arms.

Jason Hartman: Not if Dianne Feinstein gets her way though.

Michael Margrave: Well, that’s true. So the thought is that it would at least give you a running start to grandfather your firearm into the trust. So that if subsequently they decide that they are going to ban AR15s, it might be that they would only be banned from acquiring them from that point forward. And so that if you had previously titled the AR15 in your gun trust…

Jason Hartman: You could be grandfathered.

Michael Margrave: You could grandfather that in. That’s not to say you might or might not have a fight, but you’d have a good shot at it.

Jason Hartman: Now what about, but usually those laws, they usually can’t get away with making the laws retroactive. If an individual owns those, I met a guy once who owns… I don’t know what kind of gun, I’m not a super knowledgeable guy on these guns, but he owned some type of military gun and he said there’s no way you could… and he was in the socialist republic of California for god’s sake; he said there’s no way you could get this gun today. I can keep it because I already own it, but it’s completely outlawed.

Michael Margrave: And what would happen I suppose is that the ATF would say alright, anyone who has a current AR15 for example, you can register it now and grandfather it in if you’ve got it in a trust or something. So all of that will have to unfold. But like with machine guns, they fit in this category of these NFA weapons but it’s not impossible to acquire a machine gun if it was manufactured I think before 1986 or some date, and if it had been registered back at that time when they made it illegal. So I think having that in the trust gives you a heads up on that, and it probably is not a bad thing to do. Just make sure that you maximize your opportunities for retaining ownership of your guns.

Jason Hartman: Good points. Sounds interesting. Give out your website if you would and tell people where they can find out more.

Michael Margrave: Yes, it’s www.mclawfirm.com and we do blogs periodically, so some people could sign up for that. And I’ll be doing more on the gun trusts in some of the blogs and so forth, so it’s quite an interesting area, and probably a couple years ago one that I wasn’t contemplating I would be gravitating towards at the time. But I guess that’s what makes the practice of law, as they call it, interesting because you’re always practicing. There’s always something new to get into and so I’ve found this a really fascinating area.

Jason Hartman: It is. It’s interesting. And Michael, just before you go here, you’re a business attorney and you do state planning. I just want to ask you about trusts for a moment. Because I think a lot of people get confused about this. My layman’s understanding is that there are two types of basic trusts: Revocable and irrevocable. But then there are a whole bunch of different names that you hear people give trusts, I guess especially in the irrevocable category, you hear about the spendthrift trust and then you hear about this trust and that trust. How many different types of trusts are there?

Michael Margrave: You could probably run through a good 10 or 15 without much trouble. They’re charitable remainder trusts, charitable annuity trusts, granter annuity trusts of various types, you’ve got all basically under a form of the irrevocable trust. The typical one that most average folks do for either a state planning or…

Jason Hartman: They do a living trust.

Michael Margrave: State taxes… you’re exactly right. The living trust.

Jason Hartman: But the living trust doesn’t provide any asset protection benefit. That’s just to avoid probate, right?

Michael Margrave: It does a little bit when the first spouse dies, because the way these irrevocable family trusts are set up, usually they split into two parts when the first spouse dies. So the assets allocated to the diseased trust, the first to die, would be a bit of asset protection. Any assets allocated to the survivor’s trusts, you’re absolutely correct, would not have any creditor protection there.

Jason Hartman: Yeah, interesting stuff. Boy, the law is one complicated animal. It sure is. Well, hey we’re going to have you back on to talk about another one of your interesting areas of expertise and that is private rail cars. Do you want to tell us anything about that just real quickly before we go?

Michael Margrave: Well, sure. We get involved in the acquisition, restoration and operation of these vintage railcars. There’s a website: www.aaprcr.com. In fact we’ve got a trip coming up from Omaha to Cheyanne and back to Kansas City in May. So if somebody wants to look that up, they’ll have a head start when we get together again and talk about private rail cars.

Jason Hartman: How interesting. Boy, I tell you, that is a bygone era that needs to come back. If we could get the governments struggle hold on Amtrak and railways in the US lifted, it seems like private enterprise could do some real cool creative stuff. But that remains to be seen if the government will get out of the way.

Michael Margrave: Maybe some time, you’ll do one of your shows right on a railcar as we’re traveling down the track.

Jason Hartman: That sounds good to me. Well, hey thanks for joining us Michael. We appreciate it.

Michael Margrave: It’s a real pleasure. I’ve enjoyed it and thank you for inviting me and I look forward to talking to you soon on that railcar subject Jason.

Jason Hartman: Thanks so much. Bye.

Michael Margrave: Okay, Bye now.

Narrator: Thank you for joining us today for the Holistic Survival Show. Protecting the people, places and profits you care about in uncertain times. Be sure to listen to our Creating Wealth Show, which focuses on exploiting the financial and wealth creation opportunities in today’s economy. Learn more at www.JasonHartman.com or search “Jason Hartman” on iTunes. This show is produced by the Hartman Media Company, offering very general guidelines and information. Opinions of guests are their own, and none of the content should be considered individual advice. If you require personalized advice, please consult an appropriate professional. Information deemed reliable, but not guaranteed.

Transcribed by Ralph

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Episode: 141

Guest: Michael Margrave

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