Market Street has made several significant decisions in the course of its 100+ year history, one of which was the decision to structure as a trust company in 1987. With that decision came the ongoing consideration of which geographical location for trust administration was best suited to our multigenerational families’ needs. This ultimately resulted in Market Street Trust Company becoming a New Hampshire chartered trust company in 2019.
The question of trust situs is a complex one, especially for a firm like ours with families throughout the country. Trust environments evolve each year, and several states have made huge strides in creating favorable trust environments especially in the past few decades.
Given our focus on both today and the next 100+ years, it is important to us to have headquarters in a state that not only has a favorable trust environment for our families today, but also one that has the supporting structures in place to keep it that way in the long term.
Trust statutes vary broadly from state to state, and can often be complex and difficult to navigate. Families naturally become more and more geographically dispersed with each new generation, and yet we strive to provide clients the flexibility to make the financial choices that make most sense for them, no matter where they physically live. In addition, it is important to provide balance between thinking about solutions that work for families as a whole, and provide flexibility, freedom and independence to the individuals within them. New Hampshire’s modern, flexible environment is extraordinarily beneficial to Market Street families for a variety of reasons.
Non-grantor trusts administered in New Hampshire are not subject to either state income (including interest and dividends, or the “I&D tax”) or state capital gains taxes. These trusts will still be subject to all applicable Federal taxes. While income distributions to a beneficiary of a non-grantor New Hampshire trust will still be subject to the beneficiary’s respective Federal and resident state taxes, this benefit still provides opportunity for tax savings.
New Hampshire statutes utilize open-architecture trust language and modern legal concepts to provide a number of trust solutions for individual needs including:
Directed and Divided Trusts: This structure allows for investment and administrative responsibilities to be clearly divided among trustees, fiduciaries, and/or other advisors.
Purpose Trusts: This is a trust designed to support a specific, non-charitable objective, without a specified beneficiary; such as the management of a family property.
Perpetual or “Dynasty” Trusts: A trust designed to hold assets for multiple generations without predetermined termination.
Quiet Trusts: This allows a grantor the flexibility to override the statutory default obligation of a trustee to inform and report to the beneficiaries of a trust, where the circumstances warrant.
Self Settled Asset Protection Trusts: New Hampshire trust code extends the availability of asset protection to all irrevocable trusts that contain a spendthrift provision.This broad reach allows for trusts from which a settlor may receive benefits while still shielding the trust assets from creditors.
The circumstances within which trusts exist can change dramatically over generations. New Hampshire prioritizes the ability to adapt to meet new circumstances that might not have been considered decades prior when a trust was drafted. Notably, there are multiple ways for these adaptations to be made outside of court.
Non-Judicial Settlement Agreement (NJSA): In many cases, a NJSA can be used to enter into binding settlement regarding trust distributions, resolution of procedural issues, and trust administration decisions without court approval or involvement.
Trustee Modification: Trustees may make certain modifications to existing trusts without the need to decant or create a new trust in certain circumstances. These include clarifying or furthering the settlers intent, preserving favorable tax treatment, and creating efficiencies in trust administration including cost-saving measures. This feature allows trustees to rectify issues which may be preventing a trust from functioning as intended without decanting or further court involvement.
New Hampshire has a framework of governmental and non-governmental support structures that seek continually to improve New Hampshire trust law. As we continually think beyond today on behalf of our Market Street families, we find the New Hampshire approach exceptionally well aligned.
Dedicated Trust Court: In instances where a NJSA or trustee modification cannot be utilized, New Hampshire established a dedicated trust court in 2014, ensuring both a comprehensive understanding of complex trust issues by the court and in many cases, a shorter wait time for cases to be heard.
The New Hampshire Trust Council: The Trust Council and its members work to keep New Hampshire at the forefront of modern and progressive trust administration by improving the statutory, regulatory, and judicial landscape for trusts and trust companies in New Hampshire.
Trust administration plays a key role in supporting families for generations. As a Market Street Trust leader, and a member of the New Hampshire Trust Council, I enjoy taking part in leading the evolution of both our firm and the trust laws in our home state. If this piece has piqued your interest, I am always more than happy to discuss the ins and outs of New Hampshire trust code and how it may contribute to a thriving legacy for you and your family.
This presentation has been prepared by Market Street Trust Company. The views expressed herein represent opinions of Market Street and are presented for informational purposes only. They are not intended to be recommendations or investment advice and do not take into account the individual financial circumstances or objectives of the investor who receives them.
Certain statements included in this presentation constitute forward looking statements. Forward looking statements are not facts but reflect current thinking regarding future events or results. These forward looking statements are subject to risks that may result in actual results being materially different from current expectations.
Past performance (before and after taxes) does not guarantee future performance. There is no assurance that Market Street Trust Company investments will achieve their objectives, or that they will or are likely to achieve results comparable to results shown herein, or will make any profit, or will be able to avoid incurring losses. Exposure to foreign currencies may cause additional fluctuation in the value of any investment. Each investor must assess the suitability of an investment, the investor’s tolerance for risk and the impact on the investor’s diversification strategy. This presentation does not constitute an invitation to buy or an offer to sell securities, or any other products or services.
This is intended as general information only. Investors maybe required to meet certain criteria under the securities laws in order to qualify for certain investments. Any discussion of U.S. tax matters is not intended and cannot be used or relied upon for the purpose of avoiding U.S. tax-related penalties. Please visit our website for additional information concerning Market Street’s investments and investment updates. As always, please feel free to contact us if you would like to learn more about our investment program.
Creating a link between generations that is both personal and lasting--sharing the intangible wealth of your personal legacy.
Tax mitigation, when executed appropriately, allows clients to maximize returns on their investments while minimizing tax liabilities.