• Trust Ownership and Grandfathering

    Don’t forget to check out the  Frequently Asked Questions. 


    Someone recently submitted an interesting question that we’d like to address.

    The person asked:

    “Is yours multi-generational and will its holdings stand, under changes in the political climate, as being grandfathered assets. Meaning in the case of an asset being outlawed at some later date as to ‘individual’ ownership of such asset. Will Trust ownership of same be safe under grandfather law. Please explain.”

    (Don’t forget to check out the  Frequently Asked Questions. )

    This question is interesting and since we feel that many others may have similar concerns, we decided to explain some of the intricacies of it in this internet post. Hopefully by reading the answer to this question, you will learn some things about trusts and their limits generally.

    Lets put aside the “grandfathering” part of the question for a moment.

    Understanding How Trust Fundamentals Effect This Inquiry.

    Unlike corporations or limited liability companies, Trusts are not the same sort of separate entity. Rather, trusts are an arrangement whereby a Trustee holds assets for the benefit of Beneficiaries. Corporations on the other hand, are “legal persons” with some limited rights and duties. (They have to pay their own taxes, they can initiate a lawsuit or be named in a lawsuit, etc.)

    Thus, while the trustee is the holder of the assets, this is not true ownership. This “holding” is not the same sort of ownership that one would have over something they owned outright. The trustee does not have all the same rights over the assets that an individual who owned the same asset outside of a trust would have.

    For an example unrelated to guns, a dying parent sets up his will in a manor whereby a guardian is to raise his minor children, but a separate person (the trustee) is to be in charge of holding the money. This is a fairly common arrangement because it wisely puts a small amount of tension between the person raising the child and the person managing the funds for this endeavor. This makes it so the guardian does not take all the money to build a better house for himself – with a pool and a brand new TV- all under the false guise of being “for the benefit of the child.” An independent trustee likely would not allow the money to be spent in this fashion. Further, when the child turns 18, he/she may request an auditing from the trustee, to ensure the trustee did not waste money.

    Thus, the trustee of an irrevocable Trust cannot simply do whatever he wants with the trust’s money, so while he is “holding” it – he must do so for the benefit of the beneficiaries. (Note: the trust we sell is revocable- granting more control to the trustee/grantor.) Thus, this “holding” is slightly different than ownership.

    Thus, what this question asks is actually extremely difficult to answer – because it really calls for predicting whether a law that outlaws individual ownership of assets would include “holders” of items in trust.

    This really asks for prediction regarding whether some future law would later be interpreted by courts to include trusts as “individual” owners. Most likely this hypothetical future statute would be specific enough to either expressly include or exclude trusts as prohibited owners.

    We can say this: our trust is as solid as a trust can be in this regard. There is no additional language that anyone could put in a trust document that could exclude itself from laws targeting trust ownership.


    This brings us back to grandfathering. The government cannot pass a law that makes past actions criminal. (i.e. If the drinking age is raised to 30, a 32 year-old who drank when she was 29 cannot be found guilty of the new law.) However, this concept is distinct from the concept of grandfathering. Grandfathering is the concept of keeping the status quo for those who are already effected by the law, and only effecting those newcomers. For example, in Atlanta, GA there is an effort to reduce water usage. There is an ordinance where home purchasers must equip their house with low-flow toilets. As you can see, this only effects people who buy houses. You could live in Atlanta for years, without having to replace anything- but when you sell it, the buyers will have to replace your toilets. Thus, existing owners of non-low-flow toilets may keep them legally.

    This is the concept and essence of grandfathering- and it is normally found in the laws themselves. So in the gun trust example the gentleman was asking about- it really depends on what such a future law says. A common grandfathering strategy is to design the law in a way that prohibits buying or selling, but not ownership.  We have no way of knowing what such future law would say in detail.

    Trusts are actually fairly simply legal concepts, and if our form does not withstand such a hypothetical law, – it is very unlikely that any trust would. We encourage you to learn more about gun trusts before purchasing one.

    Please email us with other questions and we’ll write more articles. info@nfafirearmstrust.com


    Ready to go?






    Don’t forget to check out the  Frequently Asked Questions. 

Comments are closed.