How to Form a Living Trust in New Hampshire

If you're contemplating your estate planning strategy, you've encountered the concept of establishing a living trust.

This legal arrangement safeguards your assets and simplifies matters for your loved ones after you pass away. For New Hampshire residents, in particular, utilizing a living trust can prove highly advantageous due to the state's unique approach to handling estates.

Whether you're considering setting up a living trust or seeking guidance on financial planning matters, enlisting the assistance of a financial professional might be a wise move.

What is a Living Trust?

A living trust is a legal way to protect and manage assets and property. It involves creating a written document and appointing a trustee to take care of the trust and distribute its assets to chosen beneficiaries as instructed in the trust. The trustee can be the person themselves or someone they choose.

There are two main types of living trusts: irrevocable and revocable trusts.

In an irrevocable trust, once assets are placed in it, the person who created the trust cannot remove them without getting permission from everyone named in the trust. The trust has full control over the property and is responsible for paying taxes separately.

On the other hand, revocable trusts offer more flexibility. They can be changed or modified at any time. The person who created the trust still owns its assets and is responsible for taxes, just like they would be without the trust.

Why Get a Living Trust in New Hampshire?

People create a living trust in New Hampshire to make things easier for their families after they pass away. With a living trust, assets can be transferred smoothly without spending much time inside a probate court, which is the legal process used to verify a will's validity and distribute assets to the right people.

Probate can take a long time, especially for complicated estates. This is particularly true in New Hampshire because the state doesn't use the Uniform Probate Code, which is a system adopted by other states to make probate simpler.

Having a living trust is also beneficial when leaving property or assets to a minor. A trustee can take care of the assets with a living trust until the child becomes an adult.

Additionally, a living trust is helpful if someone cannot decide for themselves. In such cases, the living trust already has a trustee designated, so there's no need for a conservatorship process.

Steps to Make a Living Trust in New Hampshire?

Step 1: List Your Assets

List all your assets, like your house, cars, jewelry, stocks, bonds, and life insurance policies. Knowing what you own helps you identify which assets could go through probate. Including these assets in your living trust gives you the benefits of this legal arrangement.

Step 2: Gather Important Documents

Collect the necessary paperwork, such as property titles, stock certificates, and bank account statements. These documents are essential for transferring ownership to the trust.

Step 3: Decide on Grantors

Decide if you will be the sole grantor or if a shared trust would be better. Shared trusts are helpful for married or domestic partners who own assets together. Having two trusts can also meet specific needs in certain situations.

Step 4: Choose Beneficiaries

Carefully choose who will be the beneficiaries of your living trust. They can be family members, friends, loved ones, or charitable organizations. Your choices determine who receives the trust property when you pass away.

Step 5: Appoint a Successor Trustee

The successor trustee will manage your assets, fulfilling your wishes if you become mentally incapacitated or after your death. Choose someone you trust and discuss your plans with them to confirm their willingness and ability to take on this responsibility. They can also be a beneficiary in the trust.

Step 6: Designate a Property Manager for Minors

Consider naming a property manager if you expect a minor child to inherit assets through the living trust. This person will oversee and protect the inherited property until the child reaches the age specified in the trust.

Step 7: Prepare the Trust Document

You can create your trust document by using an online trust creation service or with the aid of an estate planning attorney.

Step 8: Sign and Notarize the Document

Once the trust document is ready, sign it in the presence of a notary public. This step ensures the document's authenticity and legal validity.

Step 9: Transfer Property to the Trust

Transfer your assets into the trust, following the specific procedures for each property type. Real estate requires changing the title, while intellectual property needs ownership rights to be assigned. Make sure your assets are properly held within the trust.

Step 10: Safely Store the Document

Find a secure place to store your trust document and grant authorized access to a trustworthy person, like the estate plan successor trustee.

Step 11: Regularly Review and Update the Revocable Living Trust

Life events such as births, deaths, marriages, divorces, and property transactions should prompt a thorough review of your living trust to ensure it reflects your current wishes. Even without such events, reviewing the document periodically every few years is wise to ensure it remains relevant.

Who Should Get a Living Trust in New Hampshire?

A living trust can be helpful for different types of estates in New Hampshire because the state doesn't use the Uniform Probate Code.

It's important to note that "small estates" can opt for a simplified probate process in New Hampshire. Instead of considering the estate's value like other states, New Hampshire defines any estate as small if it meets any of these conditions:

• The Will names the surviving spouse as the only beneficiary.
• The Will names the only child as the sole beneficiary, with no surviving spouse.
• The Will names one or both parents as the only beneficiaries, with no surviving spouse or child.
• The Will names a trust as the only beneficiary, and the court appoints the trustee as the administrator or agrees to have someone else serve as the administrator.
• There is no Will, and the surviving spouse is the sole inheritor.
• There is no Will or surviving spouse; the only child is the sole inheritor. Or, there is no Will or surviving spouse or child, and the parent or parents are the sole inheritors.

You may not need a living trust if your estate meets one of these conditions. It's important to know that living trusts also have downsides. They can be complicated and more expensive to set up compared to wills.

Additionally, living trusts provide a more extended time window for families to contest the estate after your death than wills. So, having a living trust isn't always the best option.

Regardless of whether you choose a living trust or not, remember that everyone needs an estate plan.

Is a Living Trust to Lower Estate Tax in the State of New Hampshire possible?

No, it's unlikely that a Living Trust can reduce estate tax in New Hampshire. Most people don't need to worry about federal estate tax unless their estate is valued at around $12 million. New Hampshire doesn't have its own estate tax.

Suppose your estate is valued at around $12 million, or you and your spouse or partner have a combined estate worth close to $24 million. In that case, there is a chance that using a more complicated trust, such as an AB trust, could help you decrease or avoid estate taxes.