Section 564-D:2 Trust Instrument Defined. - New Hampshire Statutes

   I. For the purposes of this chapter, a trust instrument is a trust instrument (within the meaning of RSA 564-B:1-103(20)) that appoints a qualified trustee for the property that is the subject of a disposition and meets the following requirements:
      (a) The trust instrument expressly incorporates the law of this state to govern the validity, construction, and administration of the trust;
      (b) The trust instrument is irrevocable; and
      (c) The trust instrument provides that the interest of the transferor or other beneficiary in the trust property or the income therefrom may not be transferred, assigned, pledged, or mortgaged, whether voluntarily or involuntarily, before the qualified trustee or qualified trustees actually distribute the property or income therefrom to the beneficiary, and such provision of the trust instrument shall be deemed to be a restriction on the transfer, assignment, pledge, or mortgage of the transferor's beneficial interest in the trust that is enforceable under applicable nonbankruptcy law within the meaning of section 541(c)(2) of the Bankruptcy Code (11 U.S.C. section 541(c)(2)) as it exists as of the time such restriction is established.
   II. For purposes of subparagraph I(b), a trust instrument shall not be deemed revocable on account of the inclusion of any one or more of the following rights, powers, and interests:
      (a) A transferor's power to veto a distribution from the trust;
      (b) A power of appointment, other than a power to appoint to the transferor, the transferor's creditors, the transferor's estate, or the creditors of the transferor's estate, exercisable by will or other written instrument of the transferor effective only upon the transferor's death;
      (c) The transferor's potential or actual receipt of income, including rights to such income retained in the trust instrument;
      (d) The transferor's potential or actual receipt of income or principal from a charitable remainder unitrust or charitable remainder annuity trust (each within the meaning of section 664(d) of the Internal Revenue Code) and the transferor's right, at any time, and from time to time, to release, in writing delivered to the qualified trustee, all or any part of the transferor's retained interest in such trust, in favor of one or more charitable organizations that have a remainder interest in such trust at the time of such release;
      (e) The transferor's receipt each year of a percentage, not to exceed 5 percent, specified in the trust instrument of the initial value of the trust assets or their value determined from time to time pursuant to the trust instrument;
      (f) The transferor's potential or actual receipt or use of principal if such potential or actual receipt or use of principal would be the result of a qualified trustee or qualified trustees, including a qualified trustee or qualified trustees acting at the direction of a trust advisor described in RSA 564-D:4, acting either in such qualified trustee's or qualified trustees' sole discretion or pursuant to an ascertainable standard contained in the trust instrument;
      (g) The transferor's right to remove a trustee or trust advisor and to appoint a new trustee or trust advisor, other than a person who is a related or subordinate party with respect to the transferor (within the meaning of section 672(c) of the Internal Revenue Code);
      (h) The transferor's potential or actual use of real property held under a personal residence trust (within the meaning of such term as described in section 2702(c) of the Internal Revenue Code);
      (i) The transferor's potential or actual receipt or use of a qualified annuity interest (within the meaning of such term described in section 2702 of the Internal Revenue Code); and
      (j) The ability, whether pursuant to discretion or direction, of a qualified trustee to pay, after the transferor's death, all or any part of the transferor's debts outstanding at the time of the transferor's death, the expenses of administering the transferor's estate, or any estate inheritance tax imposed on or with respect to the transferor's estate.
   III. For purposes of subparagraph I(b), a trust instrument shall not be deemed revocable on account of the transferor's potential or actual receipt of income or principal to pay, in whole or in part, income taxes due on trust income if such receipt of income or principal is pursuant to a provision in the trust instrument that expressly provides for the payment of such taxes and such receipt of income or principal results from (i) the qualified trustee's acting in such qualified trustee's discretion or (ii) the qualified trustee acting at the direction of a trust advisor who is acting in such trust advisor's discretion. Any distribution to pay income taxes made under discretion included in a trust instrument pursuant to subparagraphs II(c), (f), and (i) may be made by direct payment to the taxing authorities.
   IV. A disposition by a trustee that is not a qualified trustee to a trustee that is a qualified trustee may not be treated as other than a qualified disposition solely because the trust instrument fails to meet the requirements of subparagraph I(a).

Source. 2008, 374:27, eff. Sept. 9, 2008.