1. NH & VT Trust Laws: Differences That May Matter NH &VT Council of Charitable Gift Planners June 1, 2017

2. Michael P. Panebianco, JD, LLM, AEP® Vice President and Trust Officer One Harbour Place, Suite 240 Portsmouth, NH

3. Modifiable and Waivable Duties
New Hampshire RSA 564-B:1-105
Vermont Title 14A, 105
Duty to Inform and Report (Section 813)
Waivable in New Hampshire and Vermont
Definition of “qualified beneficiary” (Section 103)

4. “Benefit-of-the-Beneficiaries Rule”
Vermont
“A trust and its terms must be for the benefit of its beneficiaries.” (Section 404)
New Hampshire
“A trust and its terms must be for the benefit of its beneficiaries, as their interests are defined under the terms of the trust.” (Section 404) emphasis added

5. “Benefit-of-the-Beneficiaries Rule”
Maine and Vermont
“In applying and construing this [law], consideration must be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.” (Maine - Section 1101 and Vermont - Section 1201)
New Hampshire
“In applying and construing this chapter, primary consideration shall be given to the preservation of the settlor’s intent as expressed in the terms of the trust.” (Section 1101) emphasis added
“In interpreting or construing the terms of a trust, the settlor’s intent shall be sovereign…” (Section 112) emphasis added

6. Dynasty (Perpetual) Trusts
New Hampshire (Section 402A)
Trust must expressly state it is exempt from the application of the rule against perpetuities.
Trustee must have power to sell, mortgage, or lease property beyond perpetuities period.
Vermont
Rule against perpetuities applies and cannot be waived.

7. Purpose Trusts New Hampshire
“A trust may be created for a noncharitable purpose without a definite or definitely ascertainable beneficiary or for a noncharitable but otherwise valid purpose.” (Section 409)
Vermont
“A trust may be created for a noncharitable purpose without a definite or definitely ascertainable beneficiary or for a noncharitable but otherwise valid purpose to be selected by the trustee. The trust may not be enforced for more than 21 years.” (Section 409) emphasis added
NH and VT
The trust is enforced by person appointed in trust, or if none, by person appointed by court. (Section 409)

8. Nonjudicial Settlement Agreements
New Hampshire (Section 111)
Interested person, includes a trustee, a person with the power to enforce the trust (per the terms of the trust), the director of charitable trusts if it is a charitable trust, and any other person other than the settlor, whose consent would be required in order to achieve a binding settlement were the settlement to be approved by court.
Cannot violate a “material purpose.”
Vermont (Section 111)
Same except for italicized text

9. Virtual Representation
New Hampshire (Sections 303 and 304)
Representing and binding other person’s interests without a court’s appointment of a guardian-ad-litem.
A parent may generally represent the parent’s minor, incapacitated, or unborn child, unless there is a conflict of interest.
If an individual is not otherwise represented, or their identity or location is unknown, a person with “substantially identical interest” may represent them.
Vermont (Sections 303 and 304)
Essentially identical, but parent not expressly authorized to represent an incapacitated child.

10. Power to Direct Vermont (Section 808)
Trustee who is being directed is still liable if the direction is “manifestly contrary to the terms of the trust or the trustee knows the attempted exercise would constitute a serious breach of a fiduciary duty that the person holding the power owes to the beneficiaries of the trust.”
New Hampshire (Section 711 and 808)
When a trustee must follow the directions of another, that trustee is an “excluded fiduciary” and has no duty to ascertain whether the direction is proper, and has no liability for following the direction.
A power to direct may arise under terms of the trust, by agreement of qualified beneficiaries, or court order.

11. Trust Advisors and Trust Protectors
Vermont
Sections 1101 – 1105
New Hampshire
Sections 1201 – 1206
Section 1206 establishes limitation periods for claims against trust advisors and trust protectors for breach of trust.

12. Self-Settled Trusts: Traditional Rule
Trustee
XYZ Trust
Settlor
Settlor and Other Beneficiaries
Settlor’s Creditors
Traditionally, a settlor’s creditors can reach the settlor’s interest in a trust, even one with a spendthrift provision.

13. Self-Settled Asset Protection Trusts
Trustee
XYZ Trust
Settlor
Settlor’s Creditors
Settlor and Other Beneficiaries
Since 2009, New Hampshire allows settlors to create asset protection trusts, which must meet specific requirements:
A Qualified Trustee
New Hampshire Governing Law
Irrevocable
Spendthrift Provision
The settlor may retain certain rights, powers and interests. Creditors may still reach the trust assets if a fraudulent transfer is proven within time limitations and for certain exceptions such as alimony or child support.

14. NH-Only Provisions Trustee’s Power to Decant
Trustee can decant trust assets to a different trust and can eliminate a beneficiary, but cannot add beneficiaries or reduce or eliminate a vested interest of a beneficiary. (Section 418)
Trustee’s Power to Modify Trust
Trustee can modify administrative provisions of the trust (and dispositive provisions in certain circumstances). (Section 419)
Proof of Trust Validity (Section 406(d))
Settlor may commence a judicial proceeding to determine the validity of a trust he or she created.

15. NH-only provisions
Dispositions of Claims Against the Settlor (Section 508)
No-contest provisions (Section 1014)

16. Bonus: Uniform Principal and Income Act
New Hampshire
No duty to exercise the power of adjustment (RSA 564-C:1-104(g)).
Notice to beneficiaries re: proposed exercise of power of adjustment (RSA 564-C:1-104(h)).
Ordering rule for allocations from principal to income (RSA 564-C:1-104(i))
Unitrust conversions (RSA 564-C:1-106)
Allocation of trustee and other professional fees
No default percentage (RSA 564-C:5-501)