New Hampshire Trust Laws Give New Meaning to ‘Live Free’ for HNW Individuals and Family Offices

Glenn DiBenedetto

The New Hampshire state motto, “Live free or die,” is arguably one of the most memorable in the country with roots in the battleground of the American Revolution. Proudly emblazoned across license plates and memorabilia, the adage is not only championed by state residents, but has now taken on new meaning for the ultra-affluent outside of state limits as well.

Over the past 15 years, New Hampshire has become the premier destination for wealthy residents and non-residents to establish and administer non-grantor (irrevocable) trusts. With over $300 billion in trusts regulated by the state, the favorable trust law changes have created unparalleled opportunity for high-net-worth individuals and family offices. Enacted in 2012, the changes essentially eliminate state income taxes on interest, dividends and capital gains earned by non-grantor trusts. The majority of states tax such income at rates ranging from 5 to 12 percent. In addition, non-grantor trusts are not subject to filing New Hampshire interest and dividends tax returns.

The state’s SALT-free peers, Delaware and South Dakota, offer many of the same tax benefits, however, New Hampshire’s robust and modernized trust laws provide several significant advantages. Below are four important reasons why New Hampshire is one of the most attractive states for the wealthy to create and manage their trusts:

●     Enhanced Asset Protection - New Hampshire allows for the creation of trusts that shield assets from a settlor’s or beneficiary’s creditors. Transfers made to the trust are irrevocable, but the family office or other transferors still retain significant benefits, including control over investment decisions and dispositions.

●     Creation of Dynasty Trusts - Unlike most states, New Hampshire legislation offers the opportunity to create a “dynasty” or perpetual trust - an important consideration for legacy planning. These trusts can continue for an indefinite amount of time, without a termination date mandated by the state.

●     Right to Privacy - Under the New Hampshire trust laws, the settlor can establish when and to whom a trustee must disclose information about the trust to beneficiaries. A luxury not often afforded by other states, this right to privacy is invaluable for settlors who do not want beneficiaries to know that a trust exists or who would prefer to refrain from revealing specific trust information.

●     Settlor’s Intent - Should relatives contest certain aspects of the trust, New Hampshire has strong settlor’s intent laws that fairly balance the interests of beneficiaries and trustees. Under these protective measures, settlors can create a trust in New Hampshire with the reassurance that their wishes will be fulfilled.  

If you are looking to safeguard your family’s assets, New Hampshire may be the best option for establishing an irrevocable trust. From tax savings to asset protection, the state’s advantageous trust laws can enhance the future of your wealth and family legacy.