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New 2014 legislation affecting estate planning in New Hampshire

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New 2014 Legislature Impacts Estate Planning In New Hampshire

New Hampshire’s laws regarding trusts and estate planning are among some of the most progressive in the nation. Recently, lawmakers in New Hampshire passed Senate Bill 289, a sweeping piece of legislation whose objectives include:

§  Clarifying the extent to which creditors can legally assert valid claims against a deceased individual’s revocable trust.

§  Reducing post-mortem litigation regarding the validity of a deceased person’s estate planning documents.

§  Modification of New Hampshire’s Uniform Trust Code.

A Deceased Individual’s Creditors

Our state’s probate statutes offer the executor of one’s estate a robust variety of procedures for handling the claims of creditors against a deceased person’s estate. In general, a creditor must file notice of a legal claim against an NH probate estate in the six month period following an executor’s appointment by a New Hampshire probate court. This notice must then be followed by the filing of a formal lawsuit against the estate’s executor within one year of their appointment. This statute of limitations was intentionally designed to be short to enable executors to deal with creditors’ claims in a timely manner. In turn, this enables an executor to make the necessary distributions to a will’s beneficiaries rather quickly.

The increasing number of New Hampshire citizens who have opted to utilize revocable trusts in order to avoid the involvement of a probate court when it comes to the distribution of a decedent’s estate has caused the process for handling a creditor’s legal claim rather ambiguous. New Hampshire’s Uniform Trust Code includes provisions that specifically subject the assets of a deceased individual’s revocable trust to the creditors of the decedent; however, the Uniform Trust Code did not offer procedural mechanisms for validating these claims. This left the trustees of a revocable trust vulnerable because the legal protections offered by robust statutes of limitations for executors were not present.

Bill 289 seeks to remedy this situation by addressing this procedural gap by offering the trustee of a revocable trust with a notice procedure that limits to one year the statute of limitations in which a deceased individual’s creditors can file a claim against the trustee. The bill also includes certain similar provisions to legally protect the trustees of specific irrevocable trusts.

Post-Mortem Litigation

In accordance with the goal of reducing litigation related to estates, Senate Bill 289 has established new judicial procedures for verifying the validity of an individual’s will while he or she is still alive. If the will’s creator anticipates that a family member or beneficiary of the will challenge the validity of their will upon their passing, the testator now has the legal ability to petition the probate division of a New Hampshire Circuit Court to request that the court determine that their will is valid. In doing so while the testator is still alive, he or she can testify as to what their intentions are, as well as offer evidence that their will was created while they were of sound mental capacity. Bill 289 also reinforces the enforceability of the no contest clauses found in trusts and wills.

New Hampshire’s Uniform Trust Code

The majority of the 40 odd sections contain within Senate Bill 289 are geared towards technical revisions of the NH Uniform Trust Code. Among the most prominent of these revisions are the reinforcement of the NH statutory scheme towards trusts that transfer to New Hampshire from other states, the broadening of a trustee’s legal powers to enact modifications of an irrevocable trust via decanting and other various options, and clarification of the responsibilities and roles that trust advisors, trust protectors, and trustees have.

The primary reason behind the modification of New Hampshire’s Uniform Trust Code is to enhance its attractiveness as a location to administer trusts.

To learn more about Senate Bill 289 or to learn more about establishing your own trust or estate plan, please contact one of our experienced NH estate planning attorneys today.