House OKs trust bill
The New Hampshire House passed the Trust Modernization and Competitiveness Act in a unanimous voice vote Wednesday, approving a measure that supporters say will make New Hampshire the best regulatory environment for wealthy retirees who want to leave flexible nest eggs for their heirs.
The legislation allows people to create a new trust vehicle with three competing fiduciaries — the traditional trustee, a trust adviser and a trust protector – an arrangement designed to protect the intent of the gift.
At the urging of the secretary of state’s office, the House version of the bill ensures that the regulatory process involve that office’s Bureau of Securities Regulation.
The bill next goes to a committee of conference to work out differences in the House and Senate versions.
The prime sponsor of Senate Bill 394, Sen. Lou D’Alessandro, D-Manchester, said the measure might create up to 4,000 high-paying jobs for bankers, investment advisers, lawyers and other financial pros.
In testimony at a previous public hearing, Senior Assistant Attorney General Michael DeLucia, who heads the AG’s charitable trusts unit, said he’d welcome the 4,000 new jobs, if they come.
“I have children in college who would have an interest in that,” he said. “But the best legislation occurs when we look under the hood and kick the tires and ask ourselves if it triggers any unintended consequences.”
In the worst-case scenario, he warned, an out-of-state trust advisor bank could veto a series of financial decisions by the trustee bank, without giving reasons.
“You’re giving extraordinary powers to the adviser,” he said. “The trust protector has even more powers.”
At the same hearing, Rep. Neal Kurk, R-Weare, initially thought a trust might have too much secrecy to misuse the assets and avoid taxes.
“This bill is spearheaded by the rich and their supporters,” he testified. “Just make sure it creates jobs.”
Attorney Susan Leahy suggested letting the Bar Association and the judicial branch vet the bill in depth over the summer to prevent the “willy-nilly” creation of “self-settlement, spendthrift trusts.”
Richard Gsottschneider, an economist with RKG Associates in Durham, submitted a study showing the bill would help the state compete with tax havens like South Dakota that have laws like SB 394 and also lack an income tax.
“Delaware went to a similar law in 1989,” he said. “It’s now the leading state for money management.” He said South Dakota passed its law five years ago and its financial services industry is already growing faster than New Hampshire’s.
Rep. Sheila Francoeur, R-Hampton, co-sponsored the bill and chaired the House Commerce Committee that farmed the 50-page proposal to three subcommittees. She said the alleged flaws were more apparent than real, and all the stakeholders came aboard in the end.
The full committee endorsed the legislation 20-0 after important compromises, she said.
Attorney John Duncan, a Chicago trust lawyer with a national practice, has helped several states craft such trust legislation. He said the New Hampshire bill uses the best ideas from several good laws. In particular, he said, it clarifies the difference between income and principle, a vague area in current law.
“This bill will give you the best law in the country for fiduciary services, trust institutions and trusts,” he testified. “You’re already attractive with your low taxes. And the Eastern Seaboard has 50 percent of the country’s wealth.” – CHRIS DORNIN/GOLDEN DOME NEWS
