Why New Hampshire?

New Hampshire is one of most attractive states in which to create and manage trusts. New Hampshire offers a trust- and business-friendly landscape that combines family trust companies, modern trust laws, and a favorable tax environment. That combination facilitates creative trust design and efficient administration, which can more effectively achieve a family’s wealth planning goals.

Modern Trust Laws

New Hampshire has a robust set of modern trust laws, which afford settlors broad flexibility and creativity in designing trusts well suited to their specific needs and wishes. Those laws facilitate the more efficient administration of trusts and importantly provide a high level of 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, and those laws reflect any abiding respect for settlor intent. By statute and judicial practice, settlor intent is deemed paramount. As a notable example, the state has expressly repudiated the benefit-of-the-beneficiary rule, under which the beneficiaries’ interests potentially can override the settlor’s intent. Accordingly, a settlor can create a trust within the state with a high degree of certainty that his or her wishes will be fulfilled.

Second, those laws reflect a commitment to balancing fairly 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 of the notable aspects of New Hampshire’s trust laws are summarized below.

Directed Trusts

Directed trusts have become a staple of modern trust design. In addition to expressly recognizing trust advisors and trust protectors, New Hampshire allows the division of duties among trustees, trust advisors, and trust protectors, while clearly isolating the attendant liabilities. This division can create more effective governance structures within a trust.

Perpetual Trusts

In 2004, New Hampshire repealed the rule against perpetuities. With the rule’s repeal, a trust created in the state need not be subject to any arbitrary limit on its duration. Accordingly, a settlor now 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 also may include charitable purposes or charitable beneficiaries. A purpose trust may be perpetual. In certain 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, which may be a New Hampshire-chartered trust company. For some individuals, a nongrantor self-settled spendthrift trust potentially provides an opportunity for state income tax planning.


New Hampshire has one of the most flexible and versatile decanting statutes. Through decanting, a trustee often can eliminate impediments to sound investment or trust administration, protect better 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.

Tax Laws

New Hampshire offers a favorable tax environment for trusts. The state does not impose any income tax on trusts. The state does not have a tax on earned income or capital gains, but does impose a tax on a resident’s interest and dividends.

Grantor Trusts

In the case of a grantor trust, the grantor must report the trust’s interest and dividends. Thus, like the federal tax law, a grantor trust effectively is disregarded for purposes of the interest and dividends tax (I&D tax). A trust’s status as a grantor trust is determined under federal tax law.

Nongrantor Trusts

A nongrantor trust is exempt from the I&D tax. In addition, the trust is not subject to any I&D tax filing obligations. If a beneficiary of a nongrantor trust is a New Hampshire resident, then the beneficiary must report any interest and dividends that, for federal purposes, the beneficiary must report as received.

Under prior law, a nongrantor trust was subject to the I&D tax under certain circumstances. For any taxable period ending before December 31, 2013, a nongrantor trust with a New Hampshire trustee did not owe any I&D tax unless it had one or more resident beneficiaries. If the trust had a resident beneficiary, then it was taxable to the extent that the trust’s interest and dividends were reasonably allocable to the beneficiary. Whether or not the trust owed any tax, the trustee had an I&D tax filing obligation.

Family Trust Companies

Since 2006, New Hampshire has permitted the formation of family trust companies. A family trust company is a family-owned, non-depository trust company that provides trust, investment, and related services to the 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 heightened privacy. In addition, it provides access to the state’s modern trust laws and favorable tax environment.

In New Hampshire, a family trust company must have at least three directors, the minimum required capital is $250,000, and it must maintain a liquidation bond, which generally is $1.25 million. As a state-chartered trust company, a New Hampshire family trust company is exempt from SEC registration. The family trust company instead is regulated by the New Hampshire Banking Department. Accordingly, a family trust company may be an especially appealing arrangement if the family office does not qualify under the SEC’s family office exemption.


This summary was adapted from a white paper prepared by Perspecta Trust, the founding member of the New Hampshire Trust Council. This adaptation is used with its permission.