Pre-Mortem Trust Validation in New Hampshire: Process, Benefits, and Considerations

As the poet Robert Burns once observed, “[t]he best-laid schemes of mice and men go oft awry” – the same may sometimes be said for even the most carefully drafted estate plans and trusts. After a settlor passes, trusts can become the subject of legal challenges. To avoid such post-humous disputes, New Hampshire has enacted a unique mechanism known as pre-mortem validation¹. Through this process, a settlor can establish the legitimacy of a trust while still alive and able to express and support their intent. This powerful tool can preempt future conflicts among heirs and better ensure that a settlor’s plan does not go awry.

How Does It Work?

In New Hampshire, pre-mortem trust validation is a legal proceeding initiated by the trust’s settlor prior to the settlor’s death. The legal proceeding seeks a judicial determination that the trust is valid, which determination will be controlling subject only to the subsequent amendment or revocation of the trust.

In order to qualify for pre-mortem validation, a trust must meet two threshold criteria. The first is that the trust must expressly state that New Hampshire law governs its validity, interpretation and administration. The second is that the trust must have its principal place of administration in New Hampshire.

Assuming the threshold criteria are satisfied, a settlor who seeks pre-mortem validation must initiate the action in the county where the trust has its principal place of administration. The settlor must also provide notice of the action to statutorily defined interested persons. Interested persons include: the settlor’s spouse; the settlor’s heirs at the time of the proceeding; qualified beneficiaries of the trust; trustees, trust advisors and trust protectors; and any others who would have standing in a post-mortem challenge². Following a hearing, the court will declare the trust valid or invalid, and make other findings of fact and law as it deems appropriate.

But Why Do It?

Pre-mortem validation is a useful tool where post-mortem challenges may be anticipated. For instance, if a trust will likely leave some heirs surprised or disgruntled, by treating them unequally or even omitting some heirs entirely, pre-mortem validation may be appropriate. Likewise, if a settlor anticipates a challenge based upon a lack of capacity or undue influence, a pre-mortem proceeding allows the settlor an opportunity to obtain a binding court affirmation of competency and unencumbered decision-making. In all instances, it allows the settlor to speak for themself and express their intentions directly.

Are There Reasons Not to Do It?

There are, of course, reasons not to initiate a pre-mortem validation proceeding. It is a limited use tool and may have very little value where the trust plan is straightforward and uncontroversial. Moreover, it will involve costs, such as attorneys’ fees and other court-related fees, expose sensitive details, and may trigger objections and unwanted family disputes earlier than necessary. Additionally, if there is reason to believe that the trust will be amended or revoked, a pre-mortem validation is likely premature and will possibly be rendered completely moot. Finally, the statute specifically provides that a settlor’s failure to commence a pre-mortem validation proceeding “shall not be construed as evidence or as an admission that the trust is invalid for any reason.”³  In other words, not initiating a pre-mortem validation proceeding does not render a trust any less valid or call into question its legitimacy.

Takeaway

Whether a pre-mortem validation makes sense will depend on the trust’s terms and the circumstances in which those terms will be administered. It can provide certainty concerning a trust’s validity, and preempt potential disputes, but brings with it costs and possible unintended consequences. To determine whether a pre-mortem validation is appropriate, a settlor should consult with a New Hampshire attorney who can help assess the pros and cons.

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¹ See RSA 564-B:4-406(d).

² In certain circumstances, interested persons will also include: the New Hampshire director of charitable trusts (if trust qualifies, even in part, as a charitable trust); those with the power to enforce a trust for the care of an animal (trusts created under RSA564-B:4-408); and those with the power to enforce a purpose trust with no ascertainable beneficiaries (trusts created under RSA 564-B:4-409). The court may also order that the settlor provide notice to others beyond those described in the statute.

³ RSA 564-B:4-406(d)(8).