The Difference Between a New Hampshire and a Florida Living Trust

A living trust is not a substitute for a will.

While a person might find it difficult to confront his own mortality, estate planning is an essential part of responsible planning for the unknown future. A living trust is a common estate planning document that is established during the grantor’s lifetime. Probate and trust laws differ among the states and this variance can be seen between New Hampshire’s living trust laws and Florida’s living trust laws.

Living Will Features

Living trusts are commonly used because they avoid probate proceedings, are relatively easy to establish and provide for efficient transfer of assets in the event of the grantor's incapacity or death. After establishing his living trust, the grantor re-titles his property in the trust’s name. In a living trust, a grantor names himself as the trustee and also designates a successor trustee to manage the trust property in the event of his incapacity or death.

Probate Process

The typical reason a grantor chooses to establish a living trust is to avoid the probate process. This rings especially true in New Hampshire because the state does not follow the Uniform Probate Code, which helps streamline the probate process. The New Hampshire probate process is both time- and cost-inefficient as the probate court requires extensive documentation, and estate assets cannot be given out to beneficiaries for at least six months. As such, the probate-avoidance feature of living wills makes it an especially practical estate planning option for New Hampshire residents. Florida has adopted the Uniform Probate Code and thus has a faster and more cost-effective probate process. While many Florida residents want to establish a living will to skip the probate process, the desire is not as marked as it is for New Hampshire residents.

Homestead Exemption

While the majority of states, including Florida and New Hampshire, offer its residents some creditor protection for personal residences, there is no clear agreement among the states as to whether a grantor who transfers his homestead to his living trust loses the homestead exemption. In 2011, a Florida bankruptcy court held that a Florida residence owned by a living trust was not eligible for the Florida homestead exemption because the living trust is not a person. While the court’s holding is not a legally binding precedent, the uncertain nature of the law in Florida may deter some property owners with precarious financial situations from establishing a living trust. On the other hand, New Hampshire laws clearly provide that a grantor’s personal residence titled in the name of his living trust is still eligible for the homestead exemption.

Ascertainable Beneficiaries

Pursuant to Florida law, private trusts such as living trusts must have an ascertainable beneficiary. The designated beneficiary does not have to be alive at the time the grantor establishes his living trust, but the designated beneficiary needs to be ascertainable at some time in the future, subject to Florida’s Rule of Perpetuities. New Hampshire’s law on ascertainable beneficiaries used to mirror Florida’s law. However, changes to New Hampshire law pursuant to section 409 of the New Hampshire Uniform Trust code, state that “a trust may be created for a non-charitable purpose without a definite or definitely ascertainable beneficiary or for a non-charitable but otherwise valid purpose to be selected by the trustee. The trust may not be enforced for more than 21 years.”

References

• "JK Lasser’s New Rules for Estate and Tax Planning"; Stewart H. Welch, et al.; 2012
• "The Florida Bar Journal"; The New Florida Trust Code, Part 1; David F. Powell; July/August 2006
• "New Hampshire Bar Association Bar Journal"; The Uniform Trust Code – A New Resource for Old (and New!) Trust Law; Michelle M. Arruda; 2006
• Living Trust Network: Transferring Real Property to a Living Trust
• Online Sunshine: The 2011 Florida Statutes
• The American Bar Association; The Uniform Trust Code –- Section 409(1); David M. English; 2000
• NOLO: Making a Living Trust in New Hampshire
• Ransmeier & Spellman P.C.; The Advantages of a Revocable Living Trust; Tina L. Annis; September 2011

Resources

• "The Living Trust Advisor"; Everything You Need to Know About Your Living Trust; Jeffery L. Condon; 2008