With the passage of Senate Bill 289 in the 2014 legislative session, the New Hampshire legislature has taken yet another step to ensure that the granite state continues to serve as one of the best states to create and administer a trust.
The following are just a sample of areas in which the bill favorably enhanced New Hampshire trust laws:
- Trust modification by trustee
- Lifetime approval of wills and trusts
- Addressing creditors’ claims
- Non-judicial dispute resolution
- Enforcement of no contest provisions
Given the multiple areas that were addressed in the bill, this post will only summarize the trustee modification and decanting provisions. We will address the other notable provisions in later posts.
Since 2008, New Hampshire laws have allowed trust decanting, which is a process where a trustee can create a new trust and transfer assets of an existing trust to the new trust. Decanting has proved to be a valuable technique particularly to fix administrative issues in irrevocable trusts. Senate Bill 289 amended the decanting statute to expand the instances in which a trustee may take advantage of the process and to provide clarification that a trustee cannot use the decanting process to create a new trust that would violate a material purpose of the original trust. The revisions to the law will help assure trust creators that their original intent in creating a trust will be preserved, while allowing increased flexibility to revise non-material provisions of a trust to deal with potential unforeseen issues.
While the decanting process has proven to be a beneficial tool, trustees may shy away from the process due to potential adverse effects of transferring property to a new trust, or they simply may not want to go through the sometimes cumbersome process. Senate Bill 289 provides trustees with the authority to modify certain provisions of a trust without going through the process of transferring the assets into a new trust. Trustee modification will provide an additional resource for trustees in New Hampshire to revise outdated or burdensome administrative provisions of an irrevocable trust without court involvement.
Please feel free to contact me if you would like to discuss how either of these techniques may help simplify your irrevocable trusts.