N.H.'s liberalized laws lure trusts in droves

Over $300 billion is held in trusts regulated by New Hampshire

In the last few years, New Hampshire has become a magnet for trusts and the companies that manage them.

While banks in the state have been consolidating, the number of trust companies has nearly doubled, and most of them are growing. There is at least $311 billion held in trusts regulated by New Hampshire — 20 times more than all of the assets, including bank deposits, that the state regulates.

This flow of wealth into the state is no accident. A decade-old effort to liberalize the state’s trust laws has made it easier and more convenient for wealthy families to protect their assets from creditors, taxes and the prying eyes of the public. The idea is that New Hampshire could be to trusts what Delaware has been for corporations.

“We are looking at the biggest transfer of wealth from the greatest generation to the baby boomers,” said Bill Ardinger, an attorney at Concord-based Rath Young and Pignatelli who worked on the state’s laws affecting trusts.

In fact, that wealth transfer has been estimated to range from $11 trillion to $40 trillion.

“That’s a lot of wealth that’s going to change hands through estates and trusts,” said Ardinger, adding that by attracting trust management firms into the state, “New Hampshire will be in a position to grow those jobs. They’re not manufacturing jobs, but high-paying financial service jobs.”

Indeed, in the preamble to the latest tweak in the law, which came in 2011, lawmakers spelled out “New Hampshire’s firm commitment to be the best and most attractive legal environment in the nation for trusts and fiduciary services, an environment that will continue to attract to our state good-paying jobs.”

‘Best jurisdiction’

The change in laws certainly has attracted trust companies. In the last 10 years, the number of trust companies (and banks with trust departments) has grown from 17 in 2002 to 33, but it’s not clear how many jobs that activity has spawned.

First, regulated trust companies don’t encompass all of the trust business in the state. Trusts domiciled in other trust havens – South Dakota, Alaska, Nevada and, yes, Delaware — set up shop in New Hampshire to take advantage of the state’s laws and the New England market. Then there are the trusts handled by law firms or by individual trustees. And then there are family offices, such as Crosby Advisors, which handles the wealth of Ned Johnson, CEO of Fidelity Investments.

When Crosby Advisors moved its offices to Salem, it prompted a 2010 Wall Street Journal article that called the Granite State “a kind of mini-Switzerland for wealthy Northeast families.” And the Boston Herald reported that such family trust companies are “cropping up like tax-free liquor stores in southern New Hampshire.”

Even the assets listed by those trust companies might not capture all of the wealth involved because a chunk of the assets are insurance policies, according to Matthew McKenzie, president of Thomas Brady & Associates, which writes such estate-planning policies.

“They may be worth nothing now, but millions when the person dies,” he said.

But the assets that are listed, after quadrupling to nearly $400 billion in five years by 2007, are beginning to grow again, post-recession.

Assets in New Hampshire stood at $311 billion at the end of 2011, and it’s likely about $350 billion today, estimates state Banking Commissioner Glenn Perlow. And more companies are coming. He just chartered one trust company, is working on another charter and has recently fielded three more “serious inquiries.”

“I only see that it could grow,” Perlow said. Indeed, Perlow, who was just appointed to his post by Gov. Maggie Hassan, told NHBR that getting his department up to speed with the changing business is one of its major challenges.

The department was stung in 2008 when Noble Trust went under as part of a $15 million Ponzi scheme. The department liquidated the trust and is still going after assets, recovering somewhere between $10 million and $14 million, most of which will be distributed to investors.

As a result of the Noble Trust scandal, the department is taking a hard look at trusts that do apply for a charter. They’re also being asked to set aside $1 million to alleviate some of the costs should liquidation be necessary again.

While there is the risk that a Noble Trust could happen again, it’s “a manageable risk — 99.999 percent are good people,” said Perlow.

The state’s Trust Modernization and Competitiveness Act, enacted in 2006, was the first big rewrite of trust laws in years, and lawyers and lawmakers have continued to tinker with it in succeeding legislative sessions, except this current one, because “nothing is really required right now,” said Ardinger. “New Hampshire has arguably the best jurisdiction to establish a trust relationship in any state of the country. What we need to do now is market this industry.”

Here are some of the reasons New Hampshire is so attractive to trust companies, explained to NHBR by Ardinger and Todd Mayo, head of the trust and estates practice group at the Concord-based Cleveland, Waters and Bass law firm:

 • The trusts can last forever. New Hampshire is one of the first states to repeal the rule against perpetuities, an old common law. The 2004 repeal allowed for the creation of “dynasty trusts,” which allow for wealth to pass from generation to generation while minimizing the federal estate tax. The trust does pay taxes on the transfer, usually through the generation-skipping tax, but the savings on large estates could be substantial.

 • The trusts don’t pay income taxes. Generally, income from trusts isn’t taxed at the state level. And while New Hampshire doesn’t have an income or capital gains tax, it does have an interest and dividends tax, but last year the Legislature eliminated that tax for non-grantor trusts. New Hampshire beneficiaries still have to pay the tax, but only on what is distributed to them. Those wealthy families parking their money in New Hampshire don’t have to pay a penny.

• Thanks to various tools like non-judicial settlement agreements, parties in a trust can often work things out without court involvement or approval.

• Trusts can transfer assets to another trust. This can be used to improve an older trust with restrictive or ambiguous provisions by just moving it to a new one.

 • Trustee duties can be split up. Under traditional trust law, the trustee is responsible for everything. Under “directed” trusts, an investment manager can invest, while someone else can prepare tax returns and be responsible for recordkeeping.

Job creators?

But it’s hard to say whether the billions the new laws attract have resulted in the creation of many high-paying jobs. Many of the larger trust companies are actually tied in to investment and financial advisory firms based outside the state, such as Mercer Trust, State Street Bank and Trust and DWS (Deutsche Bank) Trust. So while the trust company might be officially domiciled in New Hampshire, the contact person’s phone number rarely has a 603 area code.

And many companies that set up shop here only employ a few people. Whether they hire local attorneys and accountants, or use people out of state is anybody’s guess.

Fidelity’s Pyramis Global Advisors Trust Company in Merrimack happens to be biggest trust company regulated by the state in terms of assets, with some $85 billion held in trust in 2011. (Those are institutional assets as opposed to personal ones.) Fidelity has been in the state for a long time, and was already “committed to the state” when it first starting setting up Pyramis in 2004, said Fidelity spokeswoman Jennifer Engle.

“There is no connection,” to the change in the trust laws in setting up Pyramis, she said.

Fidelity employs over 5,000 people in the state, but Engle would only say a “significant number of employees” work with the trust.

The law change did motivate Hemenway & Barnes, one of the oldest law firms in Boston, to set up an office in Salem three years ago.

But, said Stephen Kidder, president of Hemenway Trust Companies in Salem — which had $587 million in assets in 2011 — only a few people work out of that office.

And more money doesn’t necessarily translate into jobs.

Exeter Trust Company — which has been in New Hampshire since 1994 — now has $10 billion in assets, held for individuals, institutions, charities and employee benefits plans — almost all managed by the affiliated Manning & Napier Advisors, a publicly traded financial services firm. But Exeter Trust only employs two people at its Portsmouth office, which it mainly uses for board meetings and “meetings with New England clients when we are not meeting them in their home,” said Megan Henry, executive vice president, who works out of Manning & Napier Advisors’ Rochester, N.Y., office.

But Henry emphasized that many of the trust’s board members are well known locally, such as Bonnie Newman, who served in the administration of Presidents Reagan and George H.W. Bush, and Ross Gittell, an economist who now heads the state’s community college system.

And while the trust law changes didn’t bring Exeter Trust to New Hampshire or create many jobs here, it is involved in the community, contributing to such organizations as Strawbery Banke, Henry said.

In New Hampshire they trust

N.H.-based trust companies





Pyramis Global Advisors Trust Company




Mercer Trust Company




VantageTrust Company, LLC




Putnam Fiduciary Trust Company




Fiduciary Trust Company of New Hampshire

Overland Park



DWS Trust Company




State Street Bank and Trust Company of New Hampshire




Exeter Trust Company




MFS Heritage Trust Company




AllianceBernstein Trust Company, LLC

New York



Loomis Sayles Trust Company, LLC




PENSCO Trust Company LLC




Loring, Wolcott & Coolidge Trust, LLC




Verisight Trust Company




Perspecta Trust LLC




Charter Trust Company




Manulife Asset Management Trust Company LLC




1911 Trust Company, LLC




Hemenway Trust Company LLC




Laconia Savings Bank – Trust Dept




Robeco Trust Company




Family Capital Trust Company




Piscataqua Savings Bank — Trust Dept.




New Hampshire Trust Company, The




Merrimack County Savings Bank – Trust Dept




Cambridge Trust Company of New Hampshire, Inc.








Trust companies ranked by total assets held in trust in 2011, the latest figures available.

Source: The New Hampshire Banking Department

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