The primary benefit of asset protection trusts is the ability to shield assets placed in a qualified asset protection trust from creditors. Transfers made to the trust are irrevocable, but the transferor may retain significant benefits and control, including the right to continue to receive trust income, control over dispositions, and control over investment decisions.
To qualify as an asset protection trust, the trust must comply with several statutory provisions. Here are a few of the key requirements. First, the trust must be controlled by New Hampshire law. Second, the trust must state that assets transferred to a New Hampshire trust cannot be further transferred, assigned, pledged, or mortgaged (whether voluntarily or involuntarily) by the creator before the trustee distributes trust property to beneficiaries. Third, the trust must be irrevocable.
Furthermore, to qualify under the New Hampshire statute, the trust must be administered by a qualified trustee. A qualified trustee can be any natural person, other than the transferor (i.e. the person who transferred the assets to the trust), who is a New Hampshire resident. The qualified trustee can also be a federally chartered bank or trust company having a place of business in New Hampshire that is authorized to do trust business here. Some or all of the trust property must be maintained by the trustee in New Hampshire. The trustee must maintain records in the state, prepare fiduciary income tax returns, or otherwise materially participate in administering the trust in the state.
Although the transferor cannot be a qualified trustee of his or her own asset protection trust, the transferor can be a trust advisor. A trust advisor is granted his or her authority under the terms of the trust instrument and does not have to be a New Hampshire resident. As trust advisor, the transferor’s rights are limited to a veto power over trust distributions and the right to consent to the trustee’s investment decisions. The transferor’s rights as trust advisor are limited to only those powers that are stated in the trust instrument.
NH Asset Protection Trusts can be valuable wealth protection planning option. However, the laws governing them are complex and present many traps for the unwary. Please contact Attorney John S. Polgrean to arrange for an initial consultation if you have questions about whether a New Hampshire Asset Protection Trust is the right choice for you. Attorney Polgrean can be reached at [email protected] or (603) 883-0797.
Though this question was posed by our client in Amherst, NH, our experienced Wills, Trusts & Estate Planning lawyers at Welts, White & Fontaine, P.C. are here to answer all of your estate planning questions. We cover Nashua and most of New Hampshire. Call us today to schedule your free half hour consultation.
This blog is intended for informational use only. The information contained herein should not be construed as offering legal advice or a legal opinion.
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