If you’re thinking about your estate planning strategy, odds are you’ve heard about creating a living trust. A living trust can protect your assets and make life easier for your heirs. Residents of New Hampshire may particularly benefit from using a living trust, due to the way the the state handles residents’ estates after they die.
Whether you’re thinking about forming a living trust or you simply have some financial planning questions, it might be worth working with a financial professional. SmartAsset’s free advisor matching tool can help you find an advisor in your area who suits your specific needs.
How to Create a Living Trust in New Hampshire
Here are the steps you’ll need to take to create a living trust in New Hampshire:
- Take stock of your property. It’s important to know exactly what you own and what you want to place into your trust. This could range from investments and bank accounts to artwork, antiques and real estate. You should also gather all relevant paperwork for your property, including deeds and car titles.
- Pick a trustee. You may want to name yourself trustee, but you can also pick someone else. People typically choose one of their children or a trusted relative. If you choose yourself, you must select a successor trustee who will take over management of your estate when you die. This trustee is also responsible for ensuring your property is doled out to your beneficiaries as your trust specifies.
- Create a trust document. You can do this using an online trust creation service or with the aid of an estate planning attorney.
- Sign the trust document in the presence of a notary public.
- Fund your trust by moving your property into it. You can also do this yourself, but it might be beneficial to get the help of an attorney, as this can be rather complicated.
What Is a Living Trust?
A living trust is a legal framework in which assets and property can be stored. The trust is established through a physical document. The trustee is in charge of managing the trust and distributing the property to the trust’s beneficiaries according to its instructions. You can name yourself as trustee or you can give that job to someone else.
There are two types of living trusts: irrevocable and revocable.
An irrevocable trust is permanent, meaning a grantor cannot remove property placed in it unless he or she gets permission from every person named in the trust. The trust assumes control of all property, so the trust pays taxes as its own entity.
By contrast, revocable trusts have some flexibility and can be modified at any time. With this arrangement, you maintain ownership of the assets placed in the trust and pay taxes as usual.
How Much Does It Cost to Create a Living Trust?
How you choose to set up your living trust will have a big impact on the final bill. If you choose to use an online program, it will likely run you around a few hundred dollars, though you’ll have less options for customization. If you enlist an attorney to assist you, the attorney’s fees will determine the price you’ll pay. However, you could end up paying more than $1,000.
Though DIY estate planning is obviously less expensive, there are unavoidable risks to creating a living trust alone. Like any legal document, they can be tricky to set up without legal training. To ensure you’re doing things properly, you’ll likely need to invest a lot of time into research.
Should you go with an attorney, make sure to ask about his or her fees so you aren’t surprised. Another important factor to consider in your search for professional help is whether the attorney is a trust specialist, not merely an estate planner.
Why Get a Living Trust in New Hampshire?
Most individuals who create a living trust in New Hampshire do so to make life easier on their family after they die. In short, a living trust allows the your assets to be passed on without having to go through probate. This is the legal process that every estate utilizes to verify a will’s validity and transfer assets to the proper individuals.
Probate can be a time-consuming process, particularly if an estate is complex. This is especially true in New Hampshire, as the state does not use the Uniform Probate Code (which some other states have adopted to streamline the probate system).
Beyond avoiding probate, using a living trust can also be helpful if you’re leaving property or assets to a minor. With a living trust, a trustee can take ownership of the assets until the child reaches legal age. Additionally, a living trust can be useful in the event you become incapacitated. If this were to happen, your living trust would already designate a trustee rather than go through the conservatorship process.
Who Should Get a Living Trust in New Hampshire?
A living trust can be helpful for all kinds of estates in New Hampshire because the state hasn’t adopted Uniform Probate Code. Note that in the state of New Hampshire, “small estates” can undergo a simplified probate process. While most states use the value of the estate to determine this status, New Hampshire considers any estate to be small if it meets any of the following conditions:
- A will names the surviving spouse as the sole beneficiary.
- The will names an only child as the sole beneficiary and there is no surviving spouse.
- A will names one or both parents as the sole beneficiaries and there is no surviving spouse or child.
- A will names a trust as the sole beneficiary and the court appoints the trustee as the administrator or consents to someone else serving as the administrator.
- There’s no will and the surviving spouse is the sole inheritor.
- There is no will or surviving spouse and an 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.
If your estate meets one of these conditions, a living trust may be unnecessary. Note, too, that there are downsides to living trusts. For instance, trusts are complicated to set up, and they tend to be costlier than wills. They can also cause issues after you’ve died, as living trusts offer families a larger window of time to contest the estate than a will does. So it’s not a slam dunk that you’re better off with a living trust.
Regardless of whether you choose to create a living trust or not, remember that everyone needs an estate plan.
Living Trusts vs. Wills
Even if you get a living trust, you should also make a will. A will can direct the fate of any property that does not end up in the trust. Moreover, a will has some capabilities that a living trust does not, including:
- Establishing guardianship for children who are minors
- Providing instructions on how to pay taxes and debts
- Selecting managers for children’s property
- Naming an executor
Here’s a deeper dive into the legal details of each document:
|Living Trusts vs. Wills|
|Names a property beneficiary||Yes||Yes|
|Allows revisions to be made||Depends on type||Yes|
|Avoids probate court||Yes||No|
|Requires a notary||Yes||No|
|Names guardians for children||No||Yes|
|Names an executor||No||Yes|
Living Trusts and Taxes in New Hampshire
A living trust won’t heavily impact your taxes in New Hampshire. This is because there is no estate tax or inheritance tax in New Hampshire. The federal estate tax only applies to estates worth more than $11.4 million, or $22.8 million for a couple. This tax applies regardless of whether you have a living trust.
Creating a living trust in New Hampshire requires a fair amount of time and planning, but it also can be a significant relief at a time when your family could really use it. It may be particularly helpful in New Hampshire, which does not use the Uniform Probate Code and thus may subject your estate to a length probate process. If you’re considering creating a living trust , consider whether working with an estate planning attorney or using an online program makes the most sense for your life.
Estate Planning Tips
- If you’re planning your estate or are just trying to create a financial plan, it might be a good move to find a financial advisor. Luckily, finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
- With both a living trust and will, it’s crucial to update the document as your life changes. An outdated will or trust can cause quite the headache for an executor or trustee.
Photo credit: ©iStock.com/vorDa, ©iStock.com/skynesher