New Hampshire’s trust laws afford settlors broad flexibility to design trusts suited to their specific needs and wishes. These laws facilitate efficient trust administration and provide certainty concerning the rights, duties, and powers of settlors, beneficiaries, trustees, trust advisors, and trust protectors.

Two important themes run through New Hampshire’s trust laws. First, New Hampshire has a strong tradition of upholding settlor intent, both by statute and judicial practice. As a notable example, the state has expressly repudiated the benefit-of-the-beneficiary rule, under which the beneficiaries’ interests can override the settlor’s intent. This allows settlors to create trusts in New Hampshire with confidence that their wishes will be fulfilled.

Second, those laws reflect a commitment to balancing the interests of beneficiaries and trustees. Under its default rules, New Hampshire does not create “invincible trustees,” who are nearly immune from any fiduciary liability. A settlor may choose to design a trust that includes limits on trustee liability and incorporates exoneration provisions; however, the default statutory regime aims to strike a measured balance between the protection of the beneficiaries’ interests and the trustee’s wish for protection against a beneficiary’s claims.

Some notable aspects of New Hampshire’s trust laws include:

• Directed Trusts and Divided Trusts. Directed trusts and divided trusts have become a staple of modern trust design. The directed trust and the divided trust are two multi-party models for governing and administering a trust. In addition to expressly recognizing trust advisors and trust protectors­­—who can play roles in a trust’s governance structure—New Hampshire allows a trustee to act at the direction of another person (such as a trust advisor or trust protector), and it allows the division of duties among trustees, trust advisors, and trust protectors. Importantly, New Hampshire’s laws limit liabilities, so that a trustee, trust advisor, or trust protector is liable only for matters within their powers.
• Modification and Waiver of the Duty to Diversify. New Hampshire allows a settlor to modify or waive the trustee’s duty to diversify. In contrast, many states preclude a trustee from holding a concentrated position—such as an interest in a privately-held business—even if the trust document seems to allow the trustee to do so.
• Perpetual Trusts. In 2004, New Hampshire repealed the rule against perpetuities. Now, a trust created in the state need not be subject to any arbitrary limit on its duration. Accordingly, a settlor may create a trust that will last forever.
• Purpose Trusts. In New Hampshire, a settlor can create a purpose trust, which is a trust for a specific non-charitable purpose or a trust that does not have any specific beneficiaries. A purpose trust may be perpetual. In some cases, a purpose trust can be a particularly useful structure for managing certain assets, such as a privately-held business or a family compound.
• Self-Settled Spendthrift Trusts. In New Hampshire, a self-settled spendthrift trust generally is not subject to the claims of the settlor’s creditors. Thus, a settlor may create an irrevocable trust in which he or she retains an interest and a certain degree of control (e.g., managing the trust’s investments), and the settlor’s creditors generally cannot reach the trust assets. The trust must have a qualified trustee, such as a New Hampshire-chartered trust company. For some individuals, a nongrantor self-settled spendthrift trust  may provide an opportunity for state income tax planning.
• Decanting. New Hampshire has one of the most flexible and versatile decanting statutes. By decanting, a trustee often can eliminate impediments to sound investment or trust administration, better protect the trust assets for the family’s benefit, resolve ambiguities and potential disputes, and generally improve administrative efficiencies.
• No-Contest Provisions. In New Hampshire, a no-contest provision is enforceable even if a beneficiary may have acted in good faith or with reasonable cause in contesting the trust. Thus, a settlor has broad latitude to craft a no-contest provision that suits his or her wishes.
• Nonjudicial Settlement Agreements. In New Hampshire, the trustee and beneficiaries can often use a nonjudicial settlement agreement to resolve certain issues that arise in the administration of the trust, such as fixing an ambiguity in the terms of the trust. Subject to important limitations designed to protect settlor intent, the trustee and beneficiaries  can also use a nonjudicial settlement agreement to modify the terms of the trust.
• Privacy and Notices to Beneficiaries. In most states, a trustee must provide certain information to beneficiaries, even if the settlor would prefer that the trustee refrain from making such disclosures. Under the New Hampshire Trust Code, the settlor can establish when, what, and to whom a trustee must provide information concerning the trust.  This provision is especially helpful to those settlors who do not want beneficiaries to know that a particular trust exists or be aware of its detailed provisions. In addition, New Hampshire law allows a trustee to require that the beneficiaries maintain the confidentiality of certain information that the trustee discloses to them.

Since 2006, New Hampshire has permitted the formation of family trust companies (also known as private trust companies). A family trust company is a family-owned, non-depository trust company that provides trust, investment, and related services to a family, their trusts, and their businesses. A family trust company can provide an advantageous structure for administering a family’s trusts and wealth. As an institutional trustee, a family trust company provides continuity of trusteeship, helps to manage fiduciary liability, and can provide privacy. In addition, establishing a private trust company in New Hampshire provides access to the state’s modern trust laws and favorable tax environment.

In New Hampshire, a family trust company is exempt from state regulation so long as it offers its trust services only to family clients, as defined by statute, and not to the general public. It may also be exempt from regulation by the SEC if it meets strict requirements for a ‘family office’ exemption under federal law.

Alternatively, a family trust company may choose to be chartered and regulated by the New Hampshire Banking Department, in which case it is deemed a ‘state bank,’ and will be fully exempt from SEC regulation, even if it provides investment advice services to its clients. In addition to being restricted to serving only family clients, a New Hampshire chartered family trust company must maintain a minimum of $200,000 in capital, have no fewer than three directors, and is subject to regular examination by the Banking Department. It is worth noting that none of the directors need be a resident of New Hampshire, or even a U.S. citizen, unless specifically required by the Bank Commissioner to ensure safety and soundness.

New Hampshire offers a favorable tax environment for trusts. The state does not impose income tax on nongrantor trusts.

New Hampshire has a specialty court dedicated to handling complex trust and estate litigation. The trust court helps facilitate the effective and efficient resolution of complex trust disputes. This court, formally the trust docket of the probate division, began handling cases on January 1, 2014, and is the first specialty court of its kind in the nation.

Founded in 2010, the New Hampshire Trust Council is a nonprofit association that promotes New Hampshire’s trust services industry. The Trust Council’s members include trust companies, trusts and estates attorneys, and other industry leaders.

The Trust Council and its members help to develop new laws, refine existing laws, and comment on related regulatory initiatives.

Perspecta Trust is a founding member of the Trust Council. For more information, visit:
New Hampshire Trust Council