“Traps for the Unwary” is a publication of the New Lawyers Committee, which is intended to aid in the practice of law in New Hampshire.
The sixth edition of “Traps”, published in August 2015, identifies some of the traps into which new and experienced lawyers may fall in their everyday practice of law.
View individual chapters below or download a PDF copy of Traps for the Unwary (80 pages).
This publication is intended as an aid to the practice of law in the State of New Hampshire. The material contained in this publication is intended only as a guide and does not purport to provide definitive answers. WE MAKE NO WARRANTY, EXPRESSED OR IMPLIED, as to whether the materials herein are correct, complete, or up-to-date. These materials should be used only as a starting point, not a finished product. Cases, treatises, statutes, court rules, and the like referred to herein should always be checked to determine whether they have been reversed, distinguished or amended. This project was prepared by the New Lawyers Committee of the New Hampshire Bar Association.
This sixth edition of TRAPS FOR THE UNWARY is an attempt by the New Lawyers Committee of the NHBA to identify some of the “traps” into which new and experienced lawyers may fall. The process of putting this publication together is itself a study in trial and error. We believe the publication is valuable, but know that it can be improved. We have been asked to expand upon our first editions with more traps in areas of the law that many new lawyers encounter when beginning the practice of law.
We invite your comments and suggestions as to how this publication can be improved. We also invite readers to submit new traps. We believe that if TRAPS can prevent each New Lawyer from committing a few costly mistakes, our objectives will be met.
Comments and new traps should be submitted in writing to the New Lawyers’ Committee at:
New Hampshire Bar Association
2 Pillsbury Street, Suite 300
Concord, NH 03301
Alcohol, Service Of, Cause of Actions
Attachments with Notice
In civil and equity actions, the plaintiff may “attach” (place a judicial lien on) the defendant’s real estate and personal property in order to provide security for a judgment that plaintiff may obtain. N.H. R.S.A. Ch. 511. In order to get an attachment, “the plaintiff [must] show that there is a reasonable likelihood that the plaintiff will recover judgment including interest and costs on any amount equal to or greater than the amount of the attachment.” N.H. R.S.A. 511-A:3. Generally, a defendant is given notice and an opportunity for a hearing before the Court considers the Petition to Attach. N.H. R.S.A. Ch. 511-A; see N.H. R. Superior Ct. Applicable Civ. Cases 47(a). The defendant may avoid an attachment by establishing that “his assets will be sufficient to satisfy such judgment with interest and costs if the plaintiff recovers same.” N.H. R.S.A. 511-A:3. For a hearing to be scheduled, the plaintiff must serve a Petition to Attach upon defendant (along with the Complaint initiating the action). The defendant must object within the time prescribed in the Petition. If the plaintiff’s Petition to Attach is granted, a Writ of Attachment, prepared and executed by plaintiff’s counsel in accordance with the attachment order, must be recorded where appropriate. Registries require court-attested copies of the granted Petition to be recorded as part of (and attached to) the Writ of Attachment.
Ex Parte Attachments
In certain cases, the plaintiff may obtain an attachment “ex parte” (without providing notice to the defendant). To obtain an ex parte attachment, plaintiff must file a Petition for Ex Parte Attachment and be prepared to meet one of the strict requirements set forth in N.H. R.S.A. 511-A:8. If you are aware that defendant has counsel, plaintiff is well advised to notify defense counsel of his/her intent to seek an ex parte attachment. Some Superior Court Clerks will do this for you, regardless of whether you want them to. If the attachment is granted and defendant objects within the time prescribed, the Court will schedule a hearing to determine the appropriateness of the attachment. See N.H. R. Superior Ct. Applicable Civ. Cases 47(b); N.H. R.S.A. 511-A:3.
Standards for Attachments/Hearings in Federal District Court
Our Federal District Court examined the statutory “reasonable likelihood” standard and held that the plaintiff in an attachment proceeding must make a “strong preliminary showing” with evidence that is “greater than proof by a mere preponderance of the evidence” that he or she will ultimately prevail on the merits of the case and obtain judgment for the requested amount. See Diane Holly Corp. v. Bruno & Stillman Yacht Co., 559 F.Supp. 559, 561 (D.N.H. 1983).
Other Issues with Attachments
Recording of a lis pendens is insufficient on its own to perfect an attachment lien. Topjian Plumbing & Heating, Inc. v. Bruce Topjian, Inc., 129 N.H. 481, 484 (1987). Excessive attachments are subject to limitation, reduction, or invalidation. N.H. R.S.A. 511:53. Certain items are exempt from attachment, such as an automobile up to the value of $4,000.00 and tools of the debtor’s occupation to the value of $5,000.00. N.H. R.S.A. 511:2.
- It is dangerous to file a Complaint for property damage alone where the same plaintiff may have incurred personal injuries arising from the accident. The doctrine of res judicata may bar any cause of action or “right to recover” on the basis that the same factual transaction in question was not plead in the initial suit. Brzica v. Trustees of Dartmouth College, 147 N.H. 443, 454 (2002); Eastern Marine Const. Corp. v. First Southern Leasing, 129 N.H. 270, 274-75 (1987); but see Radkay v. Confalona, 133 N.H. 294, 297-98 (1990).
- The mere occurrence of an auto accident, even a rear end collision, is not itself evidence of negligence. Hackett v. Perron, 119 N.H. 419, 422 (1979). Furthermore, “There is no legal duty to lessen the force of a collision by operation of a car when there is not responsibility for avoiding it.” Cusson, 143 N.H. 410, 411-12 (1999). Therefore, in every motor vehicle case the plaintiff must prove some negligence with respect to the defendant’s operation.
- The statutory rules of the road (N.H. R.S.A. Chapter 265) are important with respect to establishing negligence in automobile accidents. However, “Traffic rules controlling rights of way . . . are designed to prevent accidents . . . [The New Hampshire Supreme Court] (has) held that one should not be relieved from responsibility for injuries resulting from his negligence where such negligence consists of the violation of a statute or ordinance designed to promote safety.” Mullin v. Joy, 145 N.H. 96, 96 (2000) (internal quotation and brackets omitted).
- In cases where the plaintiff has not seen the defendant’s operation or otherwise cannot testify to negligence, it may be necessary for the plaintiff’s attorney to read into evidence the defendant’s interrogatory answers or deposition testimony or have the defendant testify in the plaintiff’s case in chief. If the plaintiff intends to call the defendant at trial, the plaintiff should include the defendant’s name in the plaintiff’s pre-trial statement of witnesses and it may be advisable to subpoena the defendant to assure the defendant’s presence at trial.
- Expert testimony is frequently required to prove medical causation in cases involving claims of physical injury, unless “the cause and effect are so immediate, direct and natural to common experience as to obviate any need for an expert medical opinion.” Reed v. Cnty. of Hillsborough, 148 N.H. 590, 591 (2002).
- In order for a plaintiff to claim a loss of earning capacity as part of damages in a negligence action, “there must be at least some evidence that the physical injury caused or resulted in, diminished earning capacity.” Vachon v. New England Towing, Inc., 148 N.H. 429, 433-34 (2002). The Plaintiff must “present (1) evidence that his earning capacity was reduced as a result of his injury, and (2) evidence of the amount which he was capable of earning before the injury and the amount he is capable of earning thereafter . . . to permit the jury to arrive at a pecuniary value of the loss.” Laramie v. Stone, 160 N.H. 419, 428-29 (2010).
- A jury can apportion fault to a tortfeasor who had settled with the plaintiff and was not present at trial. Nilsson v. Bierman, 150 N.H. 393, 397 (2003); see also DeBenedetto v. CLD Consulting Engineers, Inc., 153 N.H. 793, 804 (2006).
Uninsured/Underinsured Motor Vehicle Insurance Personal Injury Claims
- Notice of Loss/Claim Requirement
Many policies require that the uninsured motorist carrier be notified of a possible claim as “as soon as practicable.” Under New Hampshire Law, an insurer must show prejudice under an occurrence policy to deny coverage based on late notice. “[W]hether there has been a breach of the policy provisions requiring notice to be given ‘as soon as possible’ does not depend on the length of delay alone but also upon the reasons for the delay and whether the delay resulted in prejudice to the insurer. It is a combination of these three factors that determines whether there has been a substantial breach of the notice requirements of the policy.” Dover Mills Partnership v. Commercial Union Ins. Co., 144 N.H. 336, 338 (1999); see also, Krigsman v. Progressive Northern Ins. Co., 151 N.H. 643, 649 (2005).
- Permission to Settle
The standard uninsured motorist policy requires any claimant to obtain written consent from the company before entering into a settlement with “any person or organization who may be legally liable.” Charest v. Union Mutual Ins. Co., 113 N.H. 683, 688 (1973). An insurer need not show prejudice to enforce a consent to settlement provision within its policy. Steven v. Merchants Mutual In. Co., 135 N.H. 26, 28-29 (1991). If a claimant settles with a tortfeasor without written consent of the uninsured motorist carrier, the uninsured motorist benefits will likely be waived. N.H. RSA 264:15, V was amended in 2000 to require all settlement documents for bodily injury which may be the subject of an uninsured motorist claim to include the following language: “Warning-signing this document may affect your right to claim benefits under your uninsured or underinsured motorist coverage. Check with your own automobile insurance company or insurance agent before signing.”An insurer’s consent to settle a claim with the insurer of a third party tortfeasor does not preclude the insurer from contesting its liability to provide underinsured motorist coverage. Estate of Day v. Hanover Ins., Co., 162 N.H. 415, 418 (2011).
- Legally Entitled to Recover Uninsured Motorist Benefits
A claimant is not legally entitled to recover uninsured motorist benefits against his/her insured if the action against the uninsured motorist is barred. Therefore, when a claimant is not able to bring a claim against the tortfeasor because of a statutory bar such as the Fireman’s Rule or because the tortfeasor is a co-employee, the claimant cannot recover uninsured motorist benefits. Matarese v. N.H. Municipal Assoc. Property-Liability Ins. Trust, Inc., 147 N.H. 396, 402 (2002); The Estate of George Libby v. State Farm Mutual Auto. Ins. Co., 147 N.H. 616 (2002).
- Coverage Available
There is no uninsured motorist coverage available when the amount of uninsured motorist coverage under a policy equals the tortfeasor’s amount of liability coverage. Allstate v. Armstrong, 144 N.H. 170, 172 (1999). An injured party is not entitled to the compensation from the liability and underinsured motorist benefits from the same policy. Wyatt v. Maryland Casualty Co., 144 N.H. 234, 240 (1999).Effective January 1, 2015, when the amount of the tortfeasor’s liability insurance is the same or greater than the injured parties uninsured motorist limits, but the available liability insurance is reduced by payments to others injured in the same crash, the injured party is entitled to compensation from the uninsured motorist coverage. N.H. RSA 259:117.
- “Stacking” Policies
In New Hampshire, stacking is generally allowed. State Farm Mut. Auto. Ins. Co. v. Holyoke Mut. Ins. Co., 150 N.H. 527, 529 (2004). However, insurers are free to limit their liability and prevent “stacking” through clear and unambiguous language. U.S. Automobile Ass’n v. Wilkinson, 132 N.H. 439, 445 (1989). A careful review of the actual policy is always necessary.
The New Hampshire Bar Association has published excellent Continuing Legal Education materials regarding uninsured motorist coverage. Contact the Bar Association for the most recent CLE materials list.
Medical Payments Coverage
- Required Coverage
All motor vehicle liability policies for private passenger automobiles in New Hampshire must have medical payments coverage of at least $1,000 per person injured in a crash. N.H. R.S.A 264:16.
- Coordination of Care
The insured, exclusively, shall have the right to choose whether to “submit a claim for medical expenses under either medical payments coverage or a health insurance policy or both, as the insured elects; provided, however, an insured shall not be entitled to duplicate payment from medical payments coverage and a health insurance policy for the same medical expense.” N.H. R.S.A 264:16. This provision allows injured parties, not medical providers, to determine how to pay for the medical treatment; allowing the parties to maximize their medical payments coverage. One way to do this is to use medical payments coverage to cover the cost of co-pays or deductibles.
Unlicensed Motor Vehicle Operator
At trial, no claim can be made that the operator of a motor vehicle was not properly licensed unless the claim has been made at the pretrial settlement conference, or unless notice of the claim was filed in writing at least seven (7) days prior to the trial. See N.H. Superior Court Rule 37(g)(2).
Who is Your Client?
- Cover this issue at the first client conference. That is when conflicts in representation are most problematic.
- Normally you represent the corporation, not the individual investor(s).
- Advise the investor(s) as to who you are representing. Do it in writing.
- Avoid owning an interest in your client’s business. Such an interest will inevitably create a conflict of interest for you.
- Read Rule 1.7 and the comments to N.H. Rules of Professional Conduct for guidance in this area.
The Decision to Incorporate
The decision to incorporate should not be a “knee jerk” reaction. Discuss the pros and cons of incorporation carefully with your client. Some of the advantages of incorporation are:
- Limited Liability. However, many potential creditors (such as banks and some lessors and vendors) will require personal guarantees. Insurance is often an adequate alternative to incorporation.
- Status. Many people believe a corporation has greater standing and credibility in the business world.
- Transferability. It is generally easier to add to, change or transfer ownership interests in a corporation. Corporations offer considerable flexibility in forms of investment (variability in voting rights, preferences, etc.).
Articles of Incorporation
The Articles of Incorporation must set forth:
- a corporate name for the corporation;
- the number of shares the corporation is authorized to issue;
- the street address of the corporation’s initial registered office and the name of its initial registered agent; and
- the name and address of each incorporator. N.H. R.S.A. 293-A:2.02.
In addition, the articles must also set forth any classes of shares and series of shares within a class, and the number of shares of each class and series, that the corporation is authorized to issue. If more than one class of shares is authorized, the articles must also prescribe a distinguishing designation for each (e.g. “common” and “preferred”). N.H. R.S.A. 293-A:6.01. The articles of incorporation must further authorize:
- one or more classes of shares that together have unlimited voting rights, and
- one or more classes of shares (which may be the same as those with voting rights) that together are entitled to receive the net assets of the corporation upon dissolution. N.H. R.S.A. 293-A:6.01.
Reserve the corporate name when the client first comes in. Precious time can be lost in trying to find a name that the Secretary of State will register. N.H. R.S.A. 293-A:4.02 sets out the procedure for reserving a corporate name. The name will be reserved for 120 days.
The corporate name must contain the word “corporation,” “incorporated,” or “limited” or the abbreviation “corp.,” “inc.,” or “ltd.,” or words or abbreviations of like import in another language. N.H. R.S.A. 293-A:4.01. The name cannot contain language stating or implying that the corporation is organized for a purpose other than permitted by N.H. R.S.A. 293-A:3.01 and its articles of incorporation.
The name cannot be the same as or deceptively similar to the name of other domestic corporations or other names of entities registered in New Hampshire. N.H. R.S.A. 293-A:4.01.
If your client is using any trade names in addition to or with its corporate name, be sure to register those names too. N.H. R.S.A. 349:5.
One or more persons may act as the incorporator(s) of a corporation by delivering articles of incorporation and the certificate to the secretary of state for filing. N.H. R.S.A. 293-A:2.01. The articles must include name and address of each person acting as incorporator. N.H. R.S.A. 293-A:2.02(a)(4).
Lawyers should avoid acting as incorporators for their clients. The risk of liability can be substantial and there is usually no good reason that the client cannot sign instead.
Every corporation has an obligation to maintain a registered agent who is located in New Hampshire. N.H. R.S.A. 293-A:5.01. You will need to provide the N.H. Secretary of State with the agent’s name and street address. N.H. R.S.A. 293-A:5.02.
Corporate counsel generally should act as resident agent. This ensures that he or she will be made aware (by service of process) of any lawsuits.
Optional Provisions to Consider
The New Hampshire Revised Model Business Corporation Act allows tremendous flexibility in the way corporations are run. In order to take advantage of certain aspects of this flexibility, certain optional provisions must be included in the articles. Among others, you should consider and discuss with your client provisions mandating supermajority voting for directors and/or shareholders; provisions allowing the directors to determine the terms of a class or series of shares (“Blank Stock”); provisions limiting director and/or officer liability; and provisions allowing shareholder action by less than unanimous consent.
By-laws may contain any provision for the management of corporate affairs not inconsistent with the law or the Articles of Incorporation. N.H. R.S.A. 293-A:2.06. By-laws are the basic road map for corporate governance. They should be broad in scope and give the corporation the full range of corporate governance procedures allowed by law.
See James R. Burkhard, Proposed Model Bylaws to be Used With the Revised Model Business Corporation Act (1984), 46 BUS. LAW. 189–240 (Nov. 1990) (discussing matters to be covered in the bylaws).
This meeting will often be done in the form of an action by consent.
Agenda for the Meeting
- Elect initial officers.
- Authorize S corporation election, if appropriate.
- Authorize initial bank accounts and borrowing authority.
- Authorize initial stock issuance and identify and value consideration.
- Stock Consideration
Make sure you have some evidence that consideration has been paid for stock before you issue it. Lack of consideration for issuance of stock has been cited as one factor in justifying piercing the corporate veil.
A shareholder’s agreement is arguably the most important corporate document for closely held corporations. The principal function of a shareholder’s agreement is to restrict the transfer of company shares. It assures both the shareholders and the corporation that shares will be repurchased upon death, disability, termination of a shareholder’s employment or the occurrence of other specified events. Provisions governing certain aspects of corporate governance are also often found in the shareholder’s agreement. See N.H. R.S.A. 293-A:7.32 for provisions governing shareholder agreements.
Always be sensitive to the tax implications of a shareholder’s agreement. Make sure that your client has consulted an accountant or tax lawyer to ensure that the agreement is structured properly. In any situation where a shareholder’s ownership interest is or will be a major asset of his or her estate, be sure that you have consulted with an estate planning expert.
The Role of Legal Counsel
- Get an AccountantBusinesses which utilize a professional accountant are usually better organized and prepared to consider financial management and business planning issues.
- Annual MeetingsDocket annual meetings on a corporate tickler and actually hold them. Try to get your client in for a real meeting. Annual meetings are a good time for planning, review pending matters, conclude matters that have been unresolved for a long period of time, get to know your client and impress the client with your own professionalism. It is also a good chance for a legal audit/check-up. At a minimum, if you cannot get the client in, then send out an action by consent and make sure to get it back. N.H. R.S.A. 293-A:7.01.
- Business LawyerBe a business lawyer. Your client wants you to be sensitive to the business issues and impact of the legal advice you give. Clients are rarely interested in legal minutia. They want to know the risks and benefits of a transaction and your recommendation. Remember, in the end, the client should make the decision.
- Avoid Becoming a Corporate DirectorBeing a director may create a conflict of interest. You may incur significant liability by acting as a director. This includes liability for taxes, environmental problems and numerous other matters. Because conflicts of interest between your role as a director and counsel are likely to arise, the end result of your being a director may be that your client has to seek new counsel at some point.
- Maintaining the Corporate Records/EntityMake sure that your client does not ignore the existence of the corporate entity once it is formed. The corporation is a legally distinct person and should be treated as such. Use the corporate name, not individual names on contracts, stationery, bills, invoices, advertisements, etc. Always maintain separate bank accounts and records.
Be Clear on Responsibility
Clarify which issues the attorney and the accountant will be responsible for, such as S formation election, employer ID number, etc. Include the accountant in the annual meeting and keep him or her apprised of all major business decisions and transactions.
- Stock IssuancesRemember to issue stock upon formation of the corporation. Otherwise, your client may risk personal liability. Before the corporation issues shares, the board must determine that the consideration is adequate. Obtain evidence that consideration was in fact paid to the corporation before you issue stock. Stock may be issued for cash, promissory notes, tangible or intangible property, labor or services actually performed, contracts for services to be performed, or other securities of the corporation. Include any stock transfer restriction on the certificate itself.
Changes in Corporate Governance
- Amending the Articles of IncorporationSee N.H. R.S.A. 293-A:10.01- A:10.09. A corporation may amend its Articles of Incorporation at any time to add or change provisions that are permitted or required. Certain amendments may be made by the Board of Directors alone, unless the articles provide otherwise. For example, the Board may change corporate designation (i.e. “Corp.”, to “Limited”) or geographic designation (i.e. “Concord Sporting Goods” to “North American Sporting Goods”). The Board may change authorized capital if the number of shares outstanding are increased proportionately (e.g. corporation with ten (10) authorized shares, nine (9) of which are outstanding may recapitalize with 10,000 shares, 9,000 which are outstanding). If a corporation has not yet issued shares, its board of directors or, if it does not have a board, then incorporators may adopt one or more amendments. N.H. R.S.A. 293-A:10.02. Once the corporation has issued shares, all amendments must be adopted by the board of directors and approved by shareholders. N.H. R.S.A. 293-A:10.03.
- Dissenters’ RightsShareholders have a right to dissent and receive an appraisal and payment for their shares under certain circumstances, as set out in N.H. R.S.A. 293-A:13.02.The statute provides a strict procedure for asserting dissenters’ rights. If the dissenting shareholder does not follow the statutory procedure, the shareholder loses the right to obtain payment under the statute. N.H. R.S.A. 293-A:13.20; N.H. R.S.A. 293-A:13.21. There is no other remedy for a dissenter, unless the transaction can be shown to be unlawful or fraudulent.
- Merger and Share ExchangeA merger is a combination of two corporations, one into the other, with one surviving. A share exchange involves the acquisition of the shares of one or more classes of stock of one corporation by another through exchange of the shares being acquired for shares or other securities or obligations of the acquiring corporation. Mergers and share exchanges are governed by N.H. R.S.A. 293-A:11.01-A:11.07A merger or share exchange must be generally adopted by the board of directors and approved by shareholders, except in a merger where the surviving corporation owns at least 90 percent of the corporation merged into it, in which case only adoption by the board of directors is required. N.H. R.S.A. 293-A:11.04; 293-A:11.05Unless the articles of incorporation provide otherwise, shareholder approval is not required for a corporation that is acquiring the shares of another in a share exchange. N.H. R.S.A. 293-A:11.04, (h).
Electing S Corporation Status
- Benefits of S Corporation StatusOne of the disadvantages of corporate status is that income may be subject to tax at the corporate level and at the shareholder level (double taxation). However, by electing S Corporation status under 26 U.S.C. § 1361, tax at the corporate level can be avoided on most items of corporate income. If an S Corporation election is made, the corporation is treated as a flow through entity for federal tax purposes. Income, losses, deductions and credits of an S Corporation are passed through to its shareholders who report these items on their own income tax returns. (A corporation that has not elected to be taxed as an S Corporation is referred to as a “C Corporation”).
- Eligibility for S Corporation StatusA corporation must meet all the following requirements in order to elect to be taxed as an S Corporation:
- The corporation must be a domestic corporation;
- The corporation cannot have more than one hundred (100) shareholders;
- The shareholders of the corporation must be individuals, estates, or certain trusts, and cannot be nonresident aliens, partnerships, or corporations;
- The corporation cannot have more than one (1) class of stock (see Section C below); and
- The corporation cannot be a member of an affiliated group, an insurance company, a certain type of financial institution, or a domestic international sales corporation (“DISC”).
- Single Class of StockExcept for differences in voting rights, an S Corporation may only have one (1) class of stock outstanding. 26 U.S.C. § 1361 (b)(l)(D).Under certain circumstances a debt instrument may be treated as a second class of stock and thereby cause the termination of the S Corporation election. A debt instrument will cause the termination of an S Corporation election if it is treated as equity (and not debt) under general tax law principles, unless the debt instrument comes within a “straight debt safe harbor.” 26 U.S.C. § 1361(c)(5). To qualify as straight debt, the debt instrument must meet the following requirements:
- It must be a written unconditional promise to pay on demand, or on a specified date, a sum certain in money;
- There must be a stated interest rate and interest payment may not be contingent on profits, the borrower’s discretion, or similar factors;
- The debt instrument may not be convertible into stock; and
- The creditor is an individual (other than a nonresident alien), an estate, a trust (as defined by 26 U.S.C. §1361(c)(2)), or a person who is in the regular business of lending money.
- Making the S Corporation Election.The S Corporation election requires action by both the corporation and the shareholders. The corporation must file a timely election with the IRS on the proper form, and all shareholders must consent in writing to the election. The corporation’s election and the shareholders’ consents are made by the filing of IRS Form 2553. There are strict rules relating to the time period within which the S Corporation election must be filed.An S Corporation election for a taxable year may be filed any time during the preceding taxable year, or any time during the taxable year and on or before the 15th day of the 3rd month of the taxable year. 26 U.S.C. §1362(b).
Because there are no extensions of the time to file the election, the corporation’s attorney should make certain that all parties agree as to who will file the S Corporation election. Failure to file for S Corporation election is one the most common mistakes made in the incorporation process. More often than not, the failure results from miscommunication or lack of communication among the parties. Always send a letter to your client and the accountant confirming who will file the election. Keep a copy of the letter in your file.
Limited Liability Companies
A limited liability company (“LLC”) is a form of business entity that is intended to combine the most favorable characteristics of partnerships and corporations. Like a corporation, a limited liability company is a separate legal entity, distinct from its owners. Therefore, LLC owners (who are called members), are not ordinarily liable for any of the LLC’s debts. N.H. R.S.A. 304-C:23.
There is significant latitude when it comes to the formation and management of an LLC. LLCs are governed by operating agreements. N.H. R.S.A. 304-C:41. However, there is no formal requirement for the form an operating agreement must take. They may be written, oral, and even implied. N.H. R.S.A. 304-C:40. This leeway is consistent with the policy goal of New Hampshire’s LLC act-“to give the maximum effect to the principle of freedom of contract and to the enforceability of operating agreements.” N.H. R.S.A. 304-C:2.
The current version of the New Hampshire Limited Liability Company Act became effective on January 1, 2013 and may be found at N.H. R.S.A. 304-C:1, et seq.
Attorney advertising, client solicitation and communication of services are strictly regulated by Rules 7.1 through 7.5 of New Hampshire’s Rules of Professional Conduct. (“NH Rule”). The New Hampshire rules on advertising differ from the American Bar Association rules to which many practitioners are accustomed in that:
- NH Rule 7.1 discusses the meaning of “false or misleading” communications. Such communications include, without limitation: (a) a material misrepresentation of fact or law, or omission of a fact necessary to make the statement, considered in light of all of the circumstances, not materially misleading; (b) a statement that is likely to create an unjustified expectation about results the lawyer can achieve, or states or implies that the lawyer can achieve results by means that violate the rules of professional conduct or other law; or (c) a statement that compares the lawyer’s services with other lawyers’ services, unless the comparison can be factually substantiated.
- NH Rule 7.2 discusses how attorneys may advertise with specific rules about what is allowed or not allowed within such solicitations. Specifically, attorneys may not give anything of value to someone for a referral of their services, and any advertising shall include the name and office address of at least one lawyer or the law firm responsible for the advertisement’s content.
- NH Rule 7.3 is very restrictive regarding what is allowed in terms of direct contact with a prospective client. This rule is aimed at preventing attorneys from contacting prospective clients who are in the vulnerable position of needing assistance, and may succumb to pressure in retaining an attorney. It prohibits the initiation of contact for the purpose of procuring professional employment with most prospective clients, rather than “solicitation.” It also includes recorded contact as a form of regulated solicitation. The NH Rule also carves out exceptions to permit contact with businesses, individuals who regularly require legal services “in a commercial context”, non-profits and governmental organizations for the purpose of securing legal work, so long as those entities are not known to be in need of legal services in a particular matter. See NH Rule 7.3(a)(3) and NH Rule 7.3(a)(4). In doing so, New Hampshire has recognized that “entities or individuals in a commercial context, will generally hold a more favorable balance of sophistication and leverage relative to the lawyer than will individuals acting outside of a commercial context, and so will generally need less protection against the ‘private importuning of the trained advocate.'”
Attorney Fees and Fee Arrangements
- Amount of FeeA lawyer shall not enter into an agreement for, charge, or collect an unreasonable fee or an unreasonable amount of expenses. NH Rule 1.5 (a). This rule also sets out criteria that should be considered when determining what a reasonable fee is, under the circumstances.It is worth noting that, even if you are charging a contingency fee or a flat fee, the Courts have upheld that contemporaneous time records should be kept in order to justify the expenses in the event that the client challenges the attorney’s fees as unreasonable.
- Contingency Fee AgreementsContingency fee agreements are governed by N. H. Rules of Professional Conduct 1.5(c), (d) and (e). Such agreements must be in writing and state the method by which the fee is to be determined, including: (a) the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial, appeal, or litigation; (b) other expenses to be deducted from the recovery; and (c) whether such expenses are to be deducted before or after the contingent fee is calculated. At the conclusion of the matter, the lawyer shall provide the client with a written statement indicating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination. NH Rule 1.5 (c). Contingency fee arrangements are prohibited in domestic relations matters if the case involves the securing of a divorce or the establishment or modification (but necessarily the enforcement) of a child support order, alimony, property division or other financial order. NH Rule 1.5(d). Contingency fees are also impermissible in criminal cases. NH Rule 1.5(e).
- Other Fee IssuesFor other fee issues such as credit card payment of fees, deducting the proceeds from the settlement of one case for the payment of fees in another case, and attorney liens, see the New Hampshire Bar Association website for opinions and articles. NH Rule 1.8(f) allows a third party to pay the attorney fees for a client if: (a) the client gives informed consent, (b) there is no interference with the lawyer’s professional judgment or the attorney-client relationship, and (c) client information is protected as required by NH Rule 1.6.
- Sharing Fees with the Non-LawyerUnder NH Rule 5.4 (a), a lawyer may share a legal fee with a non-lawyer only under one of the following circumstances:
- a firm may share a fee with the estate of a deceased partner or associate over a reasonable period of time after death provided a written agreement to do so exists;
- a lawyer who purchases the practice of a deceased, disabled or disappeared lawyer may pay the estate or other representative of that lawyer, pursuant to the provisions of NH Rule 1.17;
- with non-lawyer employees under a proper retirement plan or annual compensation plan; and,
- a lawyer may share legal fees with a nonprofit organization that employed, retained or recommended employment of the lawyer in the matter.
- Referral FeesOne may also note NH Rule 1.5(f) which governs referral fees-a form of fee sharing with lawyers who are not part of the same firm. Referral fees are allowed to be paid if the resulting fee division is made either in reasonable proportion to the services performed or responsibility or risks assumed by each, or based on an agreement with the referring lawyer. In either of these instances, the client must agree in writing to the division of fees, the total fee charged by all lawyers must not be increased by the division of fees, and the overall fee must be reasonable. These rules should be followed carefully if an attorney expects that a referral fee arrangement will be honored by the client and enforceable by the court.
Attorney/Client Relationship/Client Funds
- Declining or Terminating RepresentationDeclining or terminating representation of a client is governed strictly by N.H. Rule 1.16. Note the differences in those circumstances in which withdrawal is mandatory (NH Rule 1.16(a)) versus discretionary (NH Rule 1.16(b)). A lawyer must be careful about how and when he or she withdraws from an ongoing case. See NH Rule 1.16 (b). A review of the Court Rules will assist a lawyer in withdrawing for non-payment of fees.
- Client Funds/RetainersSeparate client trust accounts are required and regulated by N.H. Supreme Court Rule 50 and N.H. Rule 1.15. Be extremely careful in noting (1) when deposited funds are able to be disbursed, and (2) when fees are earned, and thus, able to be released from trust and paid to a lawyer’s general account. The New Hampshire comments to NH Rule 1.15(e) and NH Rule 1.15(d) are worth reviewing very carefully.The lawyer shall also maintain records of the handling, maintenance, and disposition of client funds from the time of receipt to the time of final distribution. Such records shall be maintained for a period of six years following final distribution.
- Conflict of InterestThe conflict of interest rules are strict and must be scrupulously followed. Carefully review NH Rules 1.7, 1.8, 1.9 and 1.10 (emphasizing that conflicts can arise based upon attorneys’ relationships with other lawyers or law firms). Review of the New Hampshire comments to NH Rule 1.7– and a description of the so-called “harsh reality test”-are especially worthwhile for any practitioner.
- Communications with PartiesLawyers are prohibited from communicating about the subject of a legal matter with a party the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized by law or court order to do so. NH Rule 4.2.Rules for dealing with unrepresented persons are especially stringent. See NH Rule 4.3.
Frivolous Claims and Good Faith Requirement in Pleading
A lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis for doing so that is not frivolous. NH Rule 3.1.
If you are looking for assistance with an ethical matter, there are several sources available in New Hampshire including:
The New Hampshire Bar Association Ethics Committee:
The ABA/BNA Manual on Professional Responsibility Published by the Bureau of National Affairs
Annotated Model Rules of Professional Conduct
(Published by and available through the American Bar Association)
The Family Division handles the following types of cases: Adoption; Guardianship of Minors; Children in Need of Services (CHINS); Juvenile Delinquency; Abuse/Neglect of Children; Termination of Parental Rights; Domestic Violence Petitions; Divorce/Parenting; Child Support; and Name Change. A helpful guide to where the different types of cases should be filed can be found at www.courts.state.nh.us.
With certain limitations, as found in N.H. R.S.A. 170-B:3 and 170-B:4, any adult may adopt any individual. The persons required to execute a surrender of parental rights are enumerated in N.H. R.S.A. 170-B:5.
Counsel should be able to advise clients, whether adoptees, adopting parents or surrendering parents, as to the consequences of adoption (including the effects on inheritance rights and privileges). In general, the consequences can be found in N.H. R.S.A. 170-B:11 and 170-B:25.
Guardianship of Minors
Guardianships of minors and their estates are governed by N.H. R.S.A. 463. Generally, the Family Division has jurisdiction over guardianship of minors. However, if the case involves guardianship of both the person of a minor and the estate of the minor, jurisdiction is with the Probate Court. Filing requirements and other matters pertaining to the action are governed by Family Court Rule 5.1 through 5.8. The Petition form can be found on www.courts.state.nh.us (NHJB-2024-F). Unlike the termination of parental rights, where the parental ties are permanently severed, guardianship may be ended or modified.
Children in Need of Services (CHINS)
The purpose is to assist children under the age of 18, who suffer from a diagnosis of severe emotional, cognitive, or other mental health issues, and who engage in aggressive, fire setting, or sexualized behavior that pose a danger to the child or others. CHINS (N.H. R.S.A. 169-D) apply to children who are otherwise unable or ineligible to receive services under N.H. R.S.A. 169-B, and N.H. R.S.A. 169-C, which provide protection to abused, neglected and delinquent children.
CHINS proceedings begin with an adjudicatory hearing, in which the court determines whether the child is in need of services. Because the adjudicatory phase is adversarial in nature, the juvenile alleged to be a child in need of services is entitled to appointed defense counsel, is afforded full due process rights, has the right to present evidence and witnesses, and to cross-examine adverse witnesses. The purpose of the defense attorney in this stage of the proceeding is to advocate for the juvenile’s position, and to protect the child’s constitutional rights. The adjudicatory hearing shall be held within 21 days of the initial appearance. N.H. R.S.A. 169-D:13 II.
The mandatory time limits on juvenile adjudicatory hearings under N.H. R.S.A. 169-D constitute a legislative pronouncement of a child’s right to the expeditious resolution of his/her alleged “need for services” rooted in his/her right to due process, and are analogous to an adult offender’s right to a speedy trial. In re Russell C., 120 N.H. 260, 266 (1980).
The court forfeits its jurisdiction if it does not comply with the above time limits, unless the non-compliance is the result of a delay caused or requested by the juvenile, in which case the juvenile will be deemed to have waived the time limits. Id.
If the court finds that the child is, in fact, in need of services, the court determines the most appropriate and least restrictive disposition for the child considering the of the facts, the investigation report made by the appropriate agency, and the recommendations of the parties and counsel. N.H. R.S.A. 169-D:17.
The juvenile’s statutory right to counsel is not predicated upon the assumption that the juvenile is competent to stand trial. Rather, if a juvenile is incompetent, the court has the inherent authority to appoint a guardian ad litem (GAL) to act as a substitute decision-maker for the juvenile and as a substitute client for the attorney.
Juvenile proceedings may be filed in the Family Division in the judicial district in which the minor is found or resides or where the offense is alleged to have occurred. N.H. R.S.A. 169-B:5.
Any person may file a petition alleging the delinquency of a minor. N.H. R.S.A. 169-B:6. The purpose is to give the juvenile and his/her parents adequate notice of the substance of the proceedings. In re Russell C., 120 N.H. at 266. The petition must be signed under oath, and must state with particularity the date, time, manner, and place of the conduct alleged, and shall state the statutory provision alleged to have been violated. The petition shall also be entitled “In the interest of ________, a minor.” N.H. R.S.A. 169-B:6. The court will serve a copy of the petition to the Department of Health and Human Services, who also becomes a party. N.H. R.S.A. 169-B:6-a.
Purpose of proceeding
The purpose of the proceeding is not to punish the child for breach of a law or regulation, but to give him/her a better chance to become a better and worthy citizen. In re Kevin E., 143 N.H. 417, 418 (1999). As a result, the juvenile proceedings are designed to be more curative, non-penal, and more protective of minors than the adult criminal justice system. Id. In the juvenile system, the juvenile is not tried for a crime, not convicted of a crime, and not deemed to be a criminal. Id. Further, no public record is made of his/her alleged offense. Id. The determination is not that of criminal guilt, but of delinquency. Id.
All case records relative to delinquency are confidential. N.H. R.S.A. 169-B:35.
Appointment of Counsel
The court appoints counsel at the time of arraignment of an indigent minor, unless the right to a counsel has been validly waived. N.H. R.S.A. 169-B:12. The court may also require the minor to consult with counsel, if the court believes the minor has a cognitive, emotional, learning or sensory disability. Id.
The hearing shall be held within 21 days of arraignment for minors detained pending such hearing, and within 30 days of arraignment for minors not detained. N.H. R.S.A. 169-B:14.
Like with CHINS, the mandatory time limits on juvenile adjudicatory hearings under N.H. R.S.A. 169-B constitute a legislative pronouncement of a child’s right to the expeditious resolution of his/her alleged “delinquency” rooted in his/her right to due process, and are analogous to an adult offender’s right to a speedy trial. In re Russell C., 120 N.H. at 266.
The court forfeits its jurisdiction if it doesn’t comply with the above time limits, unless the non-compliance is the result of a delay caused or requested by the juvenile, in which case the juvenile will be deemed to have waived the time limits. Id.
Abuse/Neglect of Children
The purpose of N.H. R.S.A. 169-C is to provide protection to children whose life, health or welfare is endangered, and to establish a judicial framework to protect the rights of all parties involved in the adjudication of child abuse or neglect cases.
Because the right of parents to raise and care for their children is a fundamental liberty interest protected by the New Hampshire Constitution, all biological and adoptive parents are presumed to be fit unless and until they are found to be unfit, in either an abuse/neglect proceeding or a termination of parental rights proceeding.
Unlike CHINS or juvenile delinquency cases, in which the juvenile’s liberty interest triggers the need for due process safeguards, a juvenile alleged to be abused or neglected under N.H. R.S.A. 169-C is neither subject to a deprivation of his liberty in such a manner, nor to a proceeding akin to a criminal trial.
Burden of Proof
The petitioner must prove the allegations by a preponderance of evidence. N.H. R.S.A. 169-C:13.
Effect of Consent Order
Like the criminal defendant who enters a guilty plea, the parent in an abuse and neglect proceeding who enters into a consent order is waiving important constitutional rights, which include the right to a hearing in which the Petitioner must prove by a preponderance of the evidence that the child has been abused or neglected, N.H. R.S.A. 169-C:13, and the right to cross-examine those who testify against the parent. N.H. R.S.A. 169-C:18.
Termination of Parental Rights
Grounds for termination of the parental rights are governed by N.H. R.S.A. 170-C:5.
The Family Division handles matters involving termination of parental rights pursuant to N.H. R.S.A. 170-C, previously handled exclusively by the probate court.
Once a petition has been filed, notice must be given by personal service to the parent whose parental rights may be terminated. N.H. R.S.A. 170-C:7. If it appears impractical to personally serve the parent, the court may permit service by certified mail to the parent’s last known address, or publication once a week for two successive weeks in a newspaper of general circulation in the area where that person was last domiciled. Id.
The filing of a termination petition triggers the appointment of a guardian ad litem to represent the interests of the child. N.H. R.S.A. 170-C:8. When a termination proceeding is filed alleging the mental incompetency of the parent, the court also appoints a GAL for the parent. Id. The GAL interviews all parties, reviews pertinent records, and makes recommendations which are taken into consideration by the court, but are not binding.
The Right to Counsel
The court shall notify the parents of their right to counsel, and if they request and are financially unable to pay, the court shall provide counsel. N.H. R.S.A. 170-C:10. If the termination is based on a child abuse or neglect allegation, the court must appoint an attorney to represent the child, and to represent indigent parents. N.H. R.S.A. 169-C:10. Compensation shall be borne by the town in which the child resided at the time the petition was filed. In re Heather D., 121 N.H. 547, 551 (1981).
Upon filing of a petition, the court shall direct that a social study be made by the DHHS or other authorized agency and that a written report be submitted to the court prior to the dispositional hearing. N.H. R.S.A. 170-C:9. The study shall include the circumstances of the petition, the social history, the present condition of the child and parents, proposed plans for the child and other facts as may be pertinent to the parent-child relationship. The purpose of the study is to aid the court in making its disposition of the petition. If the petition is filed by one parent with respect to the other parent, the court may waive or limit the extent of the social study.
Mental Health Evaluation
At any time prior to the final decree, the court may order that the child or the parents, or both, undergo a mental health evaluation at a mental health center, by one or more psychiatrists or clinical psychologists, who shall provide a written assessment. N.H. R.S.A. 170-C:9-a.
Burden of Proof
Because of the significance of the parent’s interest at stake, the Petitioner must prove a statutory ground for termination beyond a reasonable doubt. In re Adam R., 159 N.H. 788, 792 (2010). Once that is established, the court then considers whether termination is in the child’s best interest. Id. The calculation of a child’s best interest is not, however, an evidentiary fact, and need not be established “beyond a reasonable doubt.” Id.
The final hearing is confidential and not open to the public or the press, and the Court must issue a decision not later than sixty days after the date of the final hearing.
An order terminating the parent-child relationship divests the parent and the child of all legal rights, privileges, duties, and obligations. N.H. R.S.A. 170-C:12. A GAL appointed under N.H. R.S.A. 170-C may give his or her consent to the adoption of the child in lieu of the parents whose parent-child relationship has been terminated. Id. The rights of inheritance of both the parent and the child are not divested until the adoption of the child. Id.
Termination decisions can be appealed pursuant to N.H. R.S.A. 170-C:15. The pendency of the appeal does not suspend the order of the court regarding the child. Id. The decision may only be appealed to the NH Supreme Court for errors of law. Appeals must be taken within thirty days of the entry of the court decree. All proceedings in pursuance of the decision appealed from shall be stayed pending determination of the appeal by the NH Supreme Court. A decision of the trial court judge, so far as it is affirmed or unaltered on appeal, is considered to have been in force from the time it was made by the judge.
The GAL may also initiate an appeal on behalf of the minor if the GAL determines that issues exist which are adverse to and substantially affect the minor’s interest. If other parties appeal, it is suggested that the GAL examine the Notice of Appeal and notify the NH Supreme Court whether issues exists which will require that a brief be filed by the GAL. System-wide Guardian Ad Litem Application, Certification, & Practice Rules.
Domestic Violence Petitions/Orders of Protection
Domestic violence petitions and orders are governed by N.H. R.S.A. 173-B. The petition shall be filed in the court in the county where the plaintiff or defendant resides. It should be noted that a person filing false allegations of abuse can be subject to criminal penalties.
Notice of the petition shall be given to the defendant either personally or through sheriff’s department. There is no filing fee. If the filing is outside of court hours, the petition is filed with the on-call clerk listed with the police department. Upon issuance of a protective order, the clerk of the court makes immediate arrangements for service of the order by a police officer. The clerk further gives a copy of the order to the local police department charged with the enforcement of the order.
After filing a domestic violence petition, the clerk schedules a hearing, which must be held within thirty days of filing or within ten days of service of process upon the defendant, whichever occurs later.
Civil Protective Orders v. Criminal Process
Civil protection orders grant more extensive relief and make practical arrangements for eviction, child custody, visitation, and child and spousal support, and can order restraint on actions against property, family, and other household members. They cannot, however, always offer immediate relief. Civil orders have a lower standard of proof and require only a preponderance of the evidence.
Criminal process, on the other hand, may provide more immediate, but less complete, protection.
A law enforcement officer may make an arrest without a warrant if he/she has probable cause to believe that the person to be arrested has within the past 12 hours committed abuse as defined in N.H. R.S.A. 173-B:1, I against a person eligible for protection from domestic violence as defined in N.H. R.S.A. 173-B:1. N.H. R.S.A. 594:10. The warrantless arrest may be made whether or not the abuse was committed in the presence of the officer. N.H. R.S.A. 173-B:10 II.
Burden of Proof
The court grants relief necessary to cease the abuse only upon plaintiff’s showing of abuse by a preponderance of the evidence. To prove the abuse, the plaintiff must have more than a generalized fear for personal safety to support a finding that a credible threat to his/her safety exists. Walker v. Walker, 158 N.H. 602, 608 (2009). Relief that may be granted is listed in N.H. R.S.A. 173-B:5, I.
Once a restraining order is issued, it is unlawful for the defendant to possess any firearm or ammunition. Id.
Temporary reconciliation by the parties does not revoke the order, and an order restraining the defendant from entering the plaintiff’s premises does not lose its validity merely because the parties resume living together. The parties can modify a restraining order only with the court’s approval. N.H. R.S.A. 173-B:5, VIII.
A DVP order is for a fixed period of time not to exceed one year, but may be extended upon motion of the plaintiff showing good cause, with notice to the defendant. The Defendant has the right to have a hearing on the extension within thirty days of the extension. N.H. R.S.A. 173-B:5, VI.
Temporary relief and emergency (temporary) protective orders differ slightly from permanent relief. A petition for temporary relief requires an immediate and present danger of abuse. Ex Parte restraining orders may be filed 24/7, without actual notice to the defendant, who then, may file a written request for hearing, and such hearing has to be held not more than five business days after the clerk receives the request. N.H. R.S.A. 173-B:4.
Temporary relief that may be granted as listed in N.H. R.S.A. 173-B:4, I. Although the court may make orders related to custody, or impose conditions on visitation rights in order to assure the safety of the plaintiff and children, the court generally does not make orders for financial support or monetary compensation.
It should be noted that if there are custody orders that were previously judicially determined in any of the N.H. R.S.A. 173-B:5 enumerated proceedings, the ex parte orders cannot supersede those prior court orders. Fichtner v. Pittsley, 146 N.H. 512, 515 (2001). The court in which the ex parte was filed, however, may transfer the petition to such court and enable it to modify it.
Violation of Orders
Violations of domestic violence protective orders provide for both civil and criminal penalties.
Regardless of any contempt action, a defendant who willfully violates a temporary or permanent protective order will be arrested, detained and referred for prosecution. The arrest may be made without a warrant upon probable cause, whether or not the violations were committed in the presence of the officer. N.H. R.S.A. 173-B:9. If the defendant knowingly violates the order, he/she will be guilty of a class A misdemeanor.
Additionally, the defendant may have to appear for a hearing on civil or criminal contempt, and the plaintiff may seek relief from both, mandatory arrest/prosecution provisions and the contempt provisions of the statute. A hearing on criminal contempt charges does not invoke double jeopardy or preclude hearing on other criminal charges underlying the contempt, or vice versa.
Separate Suits for Battering
Case law gives battered spouses the right to join a tort action with a divorce proceeding. As a consequence, it allows for a separate cause of action for compensatory and punitive damages, in addition to a divorce fault ground which may be a factor in awarding alimony.
The New Hampshire Supreme Court has further held that for collateral estoppel and res judicata purposes, a divorce action does not preclude a subsequent tort action under circumstances where the spouse based the tort action upon the same act alleged and actually litigated in the divorce. Aubert v. Aubert, 129 N.H. 422, 425-26 (1987). Moreover, if the defendant spouse was previously criminally convicted for the act which is subject to tort action, the defendant is collaterally estopped from re-litigating the issues of liability and causation, if the issues are based upon the same wrong that was fully addressed in the criminal conviction. Id.
The jurisdictional requirements for bringing an action for divorce in New Hampshire, N.H. R.S.A. 458:5 should be carefully reviewed.
Counsel may wish to familiarize themselves with Family Division Rule 1.19, Limited Representation by Attorneys, as limited representation may be an attractive option to potential clients.
Fault grounds are enumerated in N.H. R.S.A. 458:7. Fault grounds cannot be considered for property settlement purposes in a no fault divorce. You should have a discussion with your client about the additional costs involved in litigating the fault ground as well as the potential increased hostility between the parties that may continue long after the divorce is concluded, especially where there are children. Remember to also plead irreconcilable differences in the event that the Court does not find a fault ground, otherwise the Divorce may be granted on your opponent’s Cross Petition for Divorce.
Service of Process
Review the Orders of Notice as soon as you receive them to ensure that you will forward them to the appropriate Sheriff’s Office for Service. If you are filing a Petition for Divorce against an out of state resident, you may wish to inform the Court of that fact when filing your Petition for Divorce so that the Court will allot additional time for service. As soon as you receive your Orders of Notice, contact any out of state sheriff’s department and ascertain their address and fees so that you may forward your Orders of Notice as soon as possible. Service on any non-party accused of adultery is governed by N.H. R.S.A. 458:11. A non-party accused of adultery has a right to appear and be heard.
The Family Division will allow the non-filing party the opportunity to pick up his or her service copy of the Petition for Divorce at the Court before it is sent to the Petitioner’s attorney to have service made by the appropriate Sheriff’s Department. The opposing party’s counsel may also pick up service at the Court on behalf of his or her client but should be prepared to file an Appearance in case there is any question about the formal representation of the client. If the copies of the Petition for Divorce are not picked up, the Orders of Notice are sent back to Petitioner’s counsel who then makes arrangements for service by the Sheriff’s Department.
Cross Petition for Divorce
If the respondent chooses to file a response, with or without a cross-petition, it shall be filed in the timeframes set forth in the Clerk’s notice. It is a good idea to file a Cross Petition where there is some likelihood that the Petitioner may choose not to go forward, as in that event, if a Cross Petition has been filed, the Respondent may maintain the action without initiating a new action for Divorce.
Child Impact Seminar
In any divorce in which minor children are involved (and in Parenting Petition cases), both parties are required to attend a child impact seminar. Both parties must provide the Court with a certificate of attendance. Counsel should have his or her client register for the seminar as soon as possible, as it is expected that both parties will either have registered or completed the seminar prior to their First Appearance.
Case Manager Conference
A Case Manager Conference may be scheduled where one party is represented by counsel and the other is not. The Case Manager will bring the parties into a Conference Room and informally discuss the divorce process. The Case Manager may urge the parties to discuss the divorce action and ascertain whether a Stipulation on all or some issues may be achieved. If the Case Manager Conference is not successful, a Temporary Hearing is normally held. Counsel may be somewhat uncomfortable in the Case Manager Conference, especially in vigorously contested cases, as it is designed for the parties to communicate directly and has a mediation-like approach.
In divorce actions and legal separation actions in which there are minor children, and in parenting petition cases, parties shall be ordered to participate in mediation unless the Court finds that mediation would not be appropriate due to factor(s) listed in N.H. R.S.A. 461-A:7. For more information about mediation, please see Family Division Rule 2.13.
A Temporary Hearing should be requested as soon as possible when there is, or is likely to be, any dispute between the parties over parenting responsibilities, child support, alimony, the use of property or the payment of any bills. Remember that, in general, there are no binding obligations if there is no Order. The Temporary Hearing is a very important hearing, as it often creates an informal precedent that may very well carry over into the Final Decree. Most Temporary Hearings are conducted by means of Offers of Proof. Counsel should interview his or her client thoroughly to be able to explain to the Court each party’s respective family role, employment and work history, and the circumstances leading to the Divorce. Counsel should be very careful in his or her representations to the Court, and all representations should be based upon the client interview and testimony that the client would give if called to testify. Counsel should bring a Proposed Temporary Order, the client’s Financial Affidavit, and if minor children are involved, a child support guidelines worksheet, Uniform Support Order (USO), and Proposed Temporary Parenting Plan. A USO may also be brought if alimony is being requested.
For every hearing involving support, each party must submit a current Financial Affidavit. If an uncontested divorce hearing is scheduled, new Financial Affidavits must be filed if the current affidavits on file are more than thirty (30) days old. It is good practice to bring a current Financial Affidavit to every Court appearance.
Discovery is governed by Family Division Rule 1.25. The Family Division has a Mandatory Initial Self Disclosure rule, Rule 1.25-A. This rule should be reviewed closely as, in the event of noncompliance, the Court may impose serious sanctions.
Guardian Ad Litems
If the Court appoints a Guardian Ad Litem, the Court will issue an Order specifying the subject matters of the Guardian’s Investigation and the payment of the Guardian Ad Litem. The Guardian Ad Litem will likely send each client an identical fee agreement, Guardian Ad Litem Stipulations and questionnaire, which will need to be completed before the Guardian will begin his or her investigation.
Contact with Opposing Counsel/Pro Se
Divorce Litigation often involves significant emotions and intensity. Whenever reasonably possible, an attempt should first be made to resolve problems between the parties informally with opposing counsel. Counsel will encounter many pro se opponents in divorce litigation. Counsel should always be careful to make it clear that you only represent the client and not both parties. Counsel should be prepared to accept a certain degree of leniency that the Court will afford pro se litigants in meeting deadlines and in filing pleadings. Counsel should reserve his or her objections to serious non-compliance of pro se litigants.
Counsel should keep in mind that “no exhibits shall be attached” to motions filed with the Family Division, unless those exhibits are “necessary to support an affidavit.” Further, an affidavit must be filed if the counsel includes in the motion facts not already part of the record.
Ex parte motions must be accompanied by an affidavit, verifying the notice provided (or the attempt to notify) to the other party. Additionally both counsel and the client must be physically present at Court in order for an ex parte motion to be heard/ruled upon.
Counsel should be familiar with the statutes governing property settlement (N.H. R.S.A. 458:16-a) and alimony (N.H. R.S.A. 458:19). Counsel should err on the side of asking the judge or marital master for specific findings of fact and/or rulings of law. Additionally, although the rules of evidence are not directly applicable in Divorce hearings in the Family Division, counsel should still make appropriate objections in order to preserve issues for appeal.
A petition to change name can be filed in the Family Division if the petition relates to an open or closed case within the jurisdiction of the Family Court, even if not originally filed or heard there. Family Court Rule 9.3. All other name change actions must be filed in the probate court. Family Court Rule 9.1. A separate petition is required, unless the petitioner seeks to restore his/her former name prior to the issuance of a final divorce decree, or seeks to change a child’s name as part of an adoption.
The petitioner shall provide notice to all parties involved in the case. In closed cases, the petitioner shall do so via certified mail, return receipt requested. In open cases, regular U.S. mail is sufficient.
If the request pertains to a minor child, notice is not required, if the non-petitioning party/guardian consents to the change under oath, or if the parent’s rights have been terminated.
The court, in its discretion, can decide the matter without a hearing if no objections have been filed and if criminal record check results report no finding.
The hearing must be held if the request pertains to a child fourteen years or older. The child must attend the hearing.
If the court grants the petition, a certificate of change of name will be issued to the petitioner for filing with appropriate agencies.
Complex Family Law Docket
A Family Division Complex Case Docket has been established in the Family Division of the New Hampshire Circuit Court. The Family Division Complex Case Docket is an administrative reassignment, pursuant to RSA 490-F:2 and Supreme Court Rule 54(4)(h), of certain marital or parenting cases to advanced dispute resolution, and then, if unsuccessful, to a judge specially assigned to manage this docket of cases. For more information, please see: www.courts.state.nh.us.
Landlord and Tenant
Perfection of Lien
Mechanic’s liens are perfected by obtaining and perfecting an Ex Parte attachment. Mechanic’s liens are limited to the specific real property to which the labor and/or materials were furnished. Plaintiff’s Petition for Ex Parte Attachment and Writ of Attachment must adequately describe the property at issue to avoid wrongfully attaching other real estate belonging to the defendant. The petition must affirmatively set forth plaintiff’s compliance with N.H. R.S.A. chapter 447 (specifically the 120-day perfection deadline). After the Ex Parte Attachment is granted, a Writ of Attachment is completed and recorded in the Registry of Deeds in the county where the property is located. The Writ of Summons and the Writ of Attachment must be served upon the defendant. The Court typically gives the plaintiff 20 to 30 days to accomplish service. Once perfected, the lien is entitled to priority over certain mortgages, attachments and liens. See N.H. R.S.A. 447:11, 12-a; Lewis v. Shawmut Bank, 139 N.H. 50, 52 (1994). (Note: A Writ of Attachment always includes a clerk attested copy of the Petition for Ex Parte Attachment signed by the Court.) The Writ of Attachment must strictly conform to the statutory requirements and case law that has developed. Gothic Metal Lathing v. FDIC, 135 N.H. 262, 263 (1992). The Writ of Attachment must satisfy the three prong test established by Gothic Metal Lathing. The writ must state the purpose for which the attachment is brought, describe the property to be attached with reasonable accuracy and specificity, and direct the officer to attach that specific property. Id. In determining whether the above requirements are met, the Court considers both the petition for attachment and the Writ of Attachment as an integrated whole. Alex Builders & Sons, Inc. v. Danley, 161 N.H. 19, 24-25 (2010). Although the Writ of Attachment must clearly identify the real estate to be attached, over inclusion of property to be attached does not void a mechanic’s lien on the property validly subject to it. Id. at 27.
Public Works Projects
Publicly owned property is not subject to liens. Thus, if a construction job is done for state, county, or municipal public works project, the liens given by N.H. R.S.A. 447:5-14 attach to money due to be paid by the state or political subdivision. Any such lien must be filed within ninety (90) days after the completion and acceptance of the project by the contracting party. N.H. R.S.A. 447:15. If the public project contract is for an amount of $35,000 or more, the general contractor is required to provide a payment bond to protect materialmen and subcontractors. N.H. R.S.A. 447:16. In order to recover against the bond, the subcontractor or supplier must file a statement of claim within ninety (90) days after the completion and acceptance of the project by the contracting party. Fastrack Crushing Servs., Inc. v. Abatement Int’l/Advatex Assocs., 149 N.H. 661, 664-67 (2003). The notice must be filed in the office of the Secretary of State if the state is the contracting party. The notice must be filed with the Public Works and Highways Department if the state is a party to the contract by or through the Department. If a political subdivision of the state is a contracting party, the notice must be filed in the Superior Court for the county in which the contract was principally performed. Additionally, a copy of the notice must be sent to the principal and surety (bond company). N.H. R.S.A. 447:17. Plaintiff’s counsel should obtain a copy of the payment bond because it may expand (but not restrict) the right to recover upon the bond. Petition of Leon Keyser, Inc., 97 N.H. 404, 407-09 (1952). In order to enforce the claim against the bond, the claimant must file a Petition in the Superior Court within one (1) year after filing the notice of claim. N.H. R.S.A. 447:18.
Anyone who performs labor or furnishes materials to real estate in an amount over $15.00 (i.e., construction projects, improvements, etc.) automatically has a lien (commonly called a “mechanic’s lien”) on the real estate and improvements which secure his or her right to payment. N.H. R.S.A. 447:2-4; see N.H. R.S.A. chapter 453. This automatic lien is a “creature of statute” and can be lost if the specific procedural requirements of N.H. R.S.A. chapter 447 for “perfecting” or “securing” the lien are not satisfied.
Contractors and subcontractors are entitled to the same lien. N.H. R.S.A. 447:5. However, in order to be entitled to the full amount of the lien against the owner, a subcontractor must provide written notice to the owner and the construction mortgagee of the subcontractor’s intent to claim mechanic’s lien prior to providing the labor or materials. See N.H. R.S.A. 447:5, 6, & 12(b). The specific requirements of the notice are set forth in N.H. R.S.A. 447:5 and 447:12-b, II. If the required notice is not given until after the labor or material is provided, the lien is valid only to the extent of the amount which is due the party with whom the subcontractor contracts. N.H. R.S.A. 447:6; Westinghouse Elec. Supply Co. v. Electromech, Inc., 119 N.H. 833, 835 (1979); Russell v. Woodbury, 135 N.H. 432, 435 (1992). The person giving such notice must furnish the owner or controller of the property subject to the lien with an accounting per R.S.A. 447:8. Mechanics liens are subject to reduction for set off, recoupment and counterclaims. Westinghouse, 119 N.H. at 837.
Mechanic’s liens must be perfected within one hundred twenty (120) days from the last date the labor is performed or the materials furnished. N.H. R.S.A. 447:9. The lien must be perfected within this period or it is lost. N.H. R.S.A. 447:9, 10. There is also case law that suggests that the one hundred twenty (120) day time limit begins to run when the job is substantially completed. See Bader Co. v. Concord Electric Co., 109 N.H. 487, 489 (1969); Tolles-Bickford Lumber Co. v. Tilton School, 98 N.H. 55, 58 (1953). In Tolles-Bickford, the New Hampshire Supreme Court opined that the subsequent provision of some molding that had been previously omitted by a materialman did not serve to extend the materialman’s lien deadline because the Court treated it as a substitution. Id.
Assets/Probate and Non-Probate
- A probate asset is property owned by the decedent (titled in the decedent’s name alone), including real estate, personal tangible and intangible property, such as household furniture, automobiles, rings, jewelry, tools, bank deposits, securities, contract rights, etc.
- A non-probate asset is property which passes automatically to persons or beneficiaries without the supervision of the Probate Court. Examples of non-probate assets are jointly-held property passing to a surviving joint tenant; life insurance proceeds payable to a designated beneficiary and not to the decedent’s estate; property passing by way of an inter-vivos or irrevocable trust to the beneficiaries named in the trust; and retirement plans and IRA accounts that are payable to the designated beneficiaries and not to the decedent’s estate. Many brokerages and banks allow for beneficiary designations, variously called Pay-on-Death (POD), Transfer-on-Death (TOD), or In-Trust-For (ITF) (sometimes called a “Totten” Trust). Note that the ITF designation is not really a Trust.
- For federal estate tax purposes, all assets owned by the decedent upon death are included in the total gross estate. This includes both probate and non-probate assets. Both of which should be included in the calculation to determine the decedent’s potential estate tax liability.
A disclaimer is a written statement declining to accept an inheritance, property passing automatically by operation of law, or other gift. In 1996, NH adopted the Uniform Disclaimer of Property Interests Act, N.H. R.S.A. 563-B. N.H. R.S.A. 563-B:3 describes the “form” of the disclaimer and N.H. R.S.A. 563-B:5 describes when the right to disclaim will be barred. The potential recipient must make no use or control over the disclaimed property prior to the disclaimer. Further, the potential recipient must not accept the property or any interest or benefit of the property to be disclaimed. N.H. R.S.A. 563-B:2 requires that a copy of the disclaimer be filed with the probate court of the county in which the probate proceeding is pending. There are also delivery requirements set forth under N.H. R.S.A. 563-B:2 that are important to review. If the disclaimer involves real property, a copy of the disclaimer must also be recorded in the appropriate Registry of Deeds.
To achieve the transfer without federal gift tax consequences, a disclaimer will normally have to be a “qualified” disclaimer pursuant to the Internal Revenue Code Section 2518, as amended. A qualified disclaimer must be written and executed within nine (9) months of the decedent’s death and is irrevocable once made. If the disclaimer does not meet the requirements of a qualified disclaimer, the disclaimed property may be deemed to pass from the disclaiming party and not the decedent, and therefore, have gift tax consequences. See I.R.C. § 2518 and 7 C. DEGRANDPRE, N.H. PRACTICE: WILLS, TRUSTS & GIFTS at 20 (4th ed. 2003).
It should be determined as soon as possible whether it is beneficial for a beneficiary to disclaim his or her interest in property passing as a result of a decedent’s death with the nine (9) month deadline, execution, delivery, court filing and recording requirements in mind.
Federal Estate Tax Return (Form 706)
To determine whether to prepare and file a U.S. Federal Estate Tax Return, Form 706, for a decedent, it is important to check the federal annual exclusion amount in effect at the time of the decedent’s death to determine whether there is any federal estate tax liability for the estate, as the applicable federal exclusion amounts vary depending on the date of death of the decedent. Following the passage of the American Taxpayer Relief Act of 2012 (Pub.L. 112-240, H.R. 8, 126 Stat. 2313, enacted January 2, 2013), Congress made permanent the $5,000,000 exemption for gift, estate and generation-skipping transfer taxes. The $5,000,000 exemption amount is indexed for inflation after 2011.
As a result of the American Taxpayer Relief Act of 2012, the concept of portability of the gift and estate tax exemption was also made permanent. Under this law, if a spouse dies without fully utilizing his or her estate tax exemption, the estate of the second spouse to die may use whatever portion of the exemption was not used by the first spouse. In order to preserve a deceased spouse unused exemption for use by the surviving spouse, a timely U.S. Federal Estate Tax Return, Form 706 must be filed. Therefore, the U.S. Federal Estate Tax Return may need to be filed for a decedent, even if there is no federal estate tax due.
It is important to plan ahead for the preparation and filing of a U.S. Federal Estate Tax Return, Form 706. The due date is nine (9) months after the date of the decedent’s death. The IRS will allow an extension to file and or pay the federal estate tax due; however, the estimated federal estate tax must be paid with the filing of the extension request to avoid late fees and penalties. A Form 712 will need to be completed by all insurance companies for life insurance policies of which the decedent was the owner and or insured, and for policies that designate the estate as the beneficiary. The values of all of the decedent’s assets must be determined as of the decedent’s date of death, and all interest and dividends earned through the decedent’s date of death. Household and personal property and real estate may need to be appraised. A closely held business interest, limited liability corporation, partnership interest or family business may also need to be formally appraised, and appropriate discounts factored in. It is important to review the decedent’s assets upon death and to order the appraisals early in the estate administration process. The right to make certain elections may be lost if the Form 706 is filed late without an approved extension; although extensions are not difficult to obtain. If the estate is a taxable estate, assets should be revalued six (6) months after death (known as the alternate valuation date) and compared to the date of death values to determine if the alternate valuation date values are lower (resulting in a lower federal estate tax).
Legacy and Succession Tax
The New Hampshire Legacy and Succession Tax (previously 18 percent) applied to non-lineal descendants. It was repealed in 2001 with an effective date for the repeal for deaths occurring after January 1, 2003. If the date of death is before that date, you may have to file a Legacy and Succession Tax return.
Filing Requirements and Other Important Dates
When administering an estate, set up a checklist for the probate administration, court filing due dates and the federal and state tax deadlines to avoid missing an important deadline or filing. Implement a tickler or reminder system.
Late filings can be expensive, may be grounds for a malpractice suit, and result in the loss of client confidence.
For administration, with or without a Will, prepare the following probate forms, to be filed with the original Will (if testate) and a certified copy of the Death Certificate. The forms are conveniently available on the Probate Court’s website. The Probate Court Rules, Administrative Orders and Procedural Bulletins are also available on the court’s website.
- Petition for Estate Administration (form NHJB-2145-P), (N.H. R.S.A. 550:1 and 553);
- Legatees and Devisees – Estate with Will (form NHJB-2150-P) or Heirs at Law without a Will (form NHJB-2151-P).
- For all documents and correspondence filed with the Court send copies to all Interested Parties and file a Certification of Copies to Parties (form NHJB-2148-P).
- Bond with Sureties is usually required by the Court in an amount set by the Judge. The Surety Bond can be obtained and filed within thirty (30) days of the Petition approval and setting of the bond. The Surety Company will prepare the proper form to be filed with the Court. You should become familiar with a Surety Bond agent and may obtain forms or applications ahead of time, or submit an online bond application. Under N.H. R.S.A. 553:13 (II) if the estate has a gross value of $25,000 or less only a Personal Surety Bond should be required.
- Waiver of Administration is available if the surviving spouse or only child is the sole heir and that individual is the administrator. Waiver of Administration is also available if a parent is the sole beneficiary and administrator, or when both parents are the only beneficiaries and co-administrators, provided there are no surviving children or spouse. Additionally, Waiver of Administration is available if a trust created by the decedent is named as the sole beneficiary of an estate and the trustee of that trust or any “appropriate person” is appointed as the administrator. If the administrator is not the trustee, then the appointment of an “appropriate person” must be made with the assent of the trustee. In order to comply with these requirement disclaimers, ademption of legacies, or declination to serve as executor may be used. N.H. R.S.A. 553:32. File form NHJP-2144-P, Waiver of Full Administration Affidavit, between 6 to 12 months after the appointment of the executor.
- Summary Administration is available for most estates. N.H. R.S.A. 553:33. After six months, if the requirements are met, file a (form NHJB-2149-P) with the Assents for Summary Administration for all Interested Parties (form NHJB-2122-P). If allowed, the Probate is closed and no final accounting is required.
- Filing Fees are required for all petitions. Check Probate Court Rule 169, the Probate Court website at or call the clerk for current fees.
- If appropriate, file:
- Appointment of Resident Agent, if fiduciary is a non-resident (form NHJB-2120-P) (N.H. R.S.A. 553:25)
- Declination (form NHJB-2123-P), if the executor named under the Will declines to serve.
- Affidavit of Counsel as to Propriety of a Foreign Will/Codicil to be Admitted into Probate (form NHJB-2146-P), if the Will was written in another state or country.
- Certification of Trust (form NHJB-2634-P), which reports the name and address of all Trustees when a trust is referenced in a Will.
|Date||Filing Required||NH DSA Reference|
|Within 30 days after death||File Will with the Probate Court in the county in which the decedent was domiciled at the time of death.||552:2|
|Within 30 days after appointment||File Bond with the Probate Court||553:13|
|Within 60 days of appointment||Notice to Surviving Spouse, Legatees and Heirs at Law (sent to all interested parties)||552:15|
|File with the Petition for Estate Administration||Legatees and Devisees and Heirs at Law forms|
|Within 90 days of appointment (120 days with the 30 day grace period)||Inventory of Fiduciary||554:1|
|Within 6 months of appointment||Last date for creditors to file claims||556:1-5|
|6 months after appointment||Earliest date to bring suit against Estate||556:1-5|
|6 months after appointment||Earliest date to close Estate (six month claim period ends) via Motion for Summary Administration with Assents||556:1-5|
|6 months after date of death||Alternative valuation date for Fed. Est. Tax Return. (Form 706).||I.R.C. §2032|
|9 months after death||Due date to file Fed. Est. Tax Form 706 and to pay tax if gross estate exceeds exemption amount||Form 706|
|9 months after death||Disclaimers must be executed, filed with court and or recorded with Registry of Deeds||563-B, I.R.C §2518|
|12 months after appointment||First Account Due||554:26|
|12 months after appointment||Due date for payment of pecuniary legacies, with interest to accrue thereafter (See RSA 336:1, II for rate of interest)||564:C:2-201(3)|
|12 months after appointment||Last date to bring suit against Executor/Administrator on claim against decedent||556:5|
|Two (2) years after death||Last date for creditor to bring action against real estate of decedent if no administration||556:29|
Obtain a Tax Identification Number (TIN – also called Employer Identification Number – EIN)
You will need a federal tax identification number for the estate before you can open an account in the name of the Executor of the Estate and to close out bank accounts, sell securities, and transfer or retitle estate assets, for income tax purposes. A federal tax identification number can be obtained immediately online after completing the IRS application. Apply for an Employer Identification Number (EIN) Online. The Executor or Administrator must sign an SS-4 form prior to a third party applying for the tax identification number for authorization. The original SS-4 form should be retained by the authorized third party. Alternately, Form SS-4 can be filed manually, by mail or fax.
First and Final Accounts
- All assets, including those not inventoried, shall be accounted for, and the Administrator charged therewith in the account of administration. N.H. R.S.A. 554:6.
- Every Administrator must file an account annually, unless excused by the Judge of Probate, but accounts may not be excused for more than three (3) years. N.H. R.S.A. 554:26.
- Executor/Administrator’s Accounting, Form NHJB-2117-P, must be used for accounts.
Income Tax Considerations
When administering an estate, consider whether the decedent needs to file a final tax return, Form 1040. The decedent’s final Form 1040 will include the decedent’s income earned and deductible expenses paid by the decedent from January 1st, through the decedent’s date of death, and will be due to be filed with the IRS by April 15th in the year following the decedent’s death. A final New Hampshire Interest and Dividends Tax Return may also be required.
Estates which earn taxable income greater than $600, must file Form 1041 on the 15th of the fourth month after the close of the first tax year of the estate or April 15th when a calendar year end is elected by the estate. Estates may use a fiscal year end in the first two years the Estate is open. The New Hampshire Interest and Dividends Tax Return may also be required.
If there is a Revocable Trust, an IRS Form 8855 can be filed to make a 645 election to treat a qualified revocable trust as part of the estate 1041 federal income tax return. This will allow a combined 1041 tax return for the estate and trust during the estate’s election period. The due date for the 645 election is the 15th of the 4th month after the close of the first tax year of the estate, or the estate’s 1041 extension due date, even if there is not sufficient income to file the Form 1041 at that time.
Sale of Real Estate
N.H. R.S.A. 559:18 permits the sale of real estate by the executor “with the written consent of the widow or widower and the heirs at law or devisees” unless the Will provides otherwise. Beware of merely obtaining the beneficiaries’ signatures on the consent form. The consent should be “informed” and provide information including the proposed selling price, the terms of the sale and any terms bearing on the beneficiaries’ interests. Consent to the sale does not relieve the fiduciary of his/her duty to obtain a fair price.
Suits By and Against Administrators
- The statutory provisions governing suits or claims against an estate are set forth in N.H. R.S.A. 556. An action against an administrator for a cause of action against the deceased must be initiated within one (1) year of the grant of administration, N.H. R.S.A. 556:5, but not sooner than six (6) months after such appointment nor unless a demand is made to the administrator. N.H. R.S.A. 556:1; but see N.H. R.S.A. 556:28 (noting that if suit is not brought within the allotted time, an extension may be granted by the court under certain circumstances).
- N.H. R.S.A. 556 establishes deadlines for creditors to file notice of a claim with the personal representative of the Estate within six (6) months of the original grant of administration. N.H. R.S.A. 556:2-3; but see Tulsa Prof. Collection Servs., Inc. v. Pope, 485 U.S. 478, 487-88 (1988); Stewart v. Farrel, 131 N.H. 458, 461 (1989).
- Do not rely on publication to notify creditors if you have actual knowledge of a claim. The U.S. Supreme Court, in Tulsa Prof. Collection Servs., Inc. v. Pope, 485 U.S. 478, 491 (1988), held that due process requires the personal representative to make a reasonable effort to notify all creditors, of whom he has knowledge of the debtor’s death. Thus, the executor should send any known or potential creditor written notice of the administration of the estate and appointment of the executor within the six (6) month creditor period, by certified mail, return receipt, or upon knowledge of the potential claim or creditor of the estate.
Telephonic appearances are allowed in matters in the Probate Court, except trials, evidentiary
hearings and other matters requiring a personal appearance by the court, through an independent
conference call company called CourtCall®. This allows attorneys and interested parties to
participate in a hearing via a telephone conference without the delays and time associated with
transportation to and from the Probate Court. Information regarding how to participate in court
hearings through CourtCall® is found directly on the Probate Court’s website.
- Execution of Will
- The testator must be eighteen years old or older or be married. Additionally, the testator must be of “sane mind.” N.H. R.S.A. 551:1. The Will must be signed by the testator, or by some person at the express direction and in the presence of the testator. The Will must be signed by two or more credible witnesses who shall, at the testator’s request and in the testator’s presence, attest to the testator’s signature. N.H. R.S.A. 551:2.
- Establish a set routine for the execution of Wills. Only a single original Will should be executed. The testator has the right to revoke a Will by destroying the original, and the potential for confusion in the case of multiple originals is great. The lawyer should advise the client to keep the original Will in a safe place; if the client chooses to leave the original with the lawyer, a note indicating the location of the original Will should be attached to the copy given to the client.
- Always incorporate a self-proving affidavit into the Will. The affidavit eliminates the necessity of producing a witness to the execution of the Will in order to prove a Will. N.H. R.S.A. 551:2-a, 552:5-b and 551-A. If a self-proving affidavit was not signed N.H. R.S.A. 552:6 allows for proof of a Will in common form without the testimony of a subscribing witness with the assent of the surviving spouse, legatees, devisees, heirs at law and for an unnamed charitable interest the director of charitable trusts.
- Proof of a Will During Life of Testator – N.H. R.S.A. 552:18 provides for a process for proving a Will during the lifetime of an individual. In order to be eligible to initiate the proceeding to prove a Will, the individual must be either a New Hampshire resident or own real estate in New Hampshire. Notice must be provided to the “interested” parties of the proceedings listed in the statute. The Will must then be proved “in solemn form.” After going through this process, upon the death of the testator, the Will can be admitted to probate and conclusively deemed proved.
- Filing the Will – Anyone who has physical custody of a Will must deliver it to the Probate Court in the county in which the testator was domiciled, or to the person nominated in the Will as executor, within thirty (30) days after the custodian has knowledge of the death of the testator. N.H. R.S.A. 552:2.
Even if a decedent seemingly leaves no assets subject to probate, the original Will should be placed in the custody of the Probate Registry. N.H. R.S.A. 552. Absent sufficient cause for noncompliance in filing the Will with the court, the penalty for failure is $20 per month, to be recovered by any person having an interest in the Will. N.H. R.S.A. 552:4.
The New Hampshire Bar Association Real Property, Probate and Trust Law Section has adopted 2016 Title Standards which, in and of themselves, are an excellent guide to traps for the unwary.
Most of the various Registries of Deeds have made their indexes available on line. Currently, Carroll County does not provide records online for security reasons. Be aware that index listings referring to towns or property information are for reference only and may be incomplete; viewing the complete document is the only way to know what is contained in any recorded document. A link to each Registry’s website can be found at www.nhdeeds.com.
Each of the Registry websites include the detailed recording requirements (paper size, ink color, type fonts, use of copies and faxes, requirements for recording plans, etc), which are no longer optional, meaning that failure to obey will leave you unable to record your documents. Note that Carroll County has posted this information under ‘Uniform Standards;’ the requirements for recording are posted under ‘Recording Requirements’ on each of the other Registries’ websites.
Priority: Mortgages take priority only to the maximum dollar amount stated in the mortgage; a mortgage which fails to state a dollar amount takes no priority over subsequently recorded liens. N.H. R.S.A. 479:3. Mortgages which fail to include the statutory language set forth in N.H. R.S.A. 477:29 may lose the protections set forth in the statutes. Failure to include statutory power of sale language may disqualify the mortgage from the expedited foreclosure provisions of N.H. R.S.A. 479:25, 26 and 27; the alternatives are at best cumbersome, expensive, and of uncertain effect.
Mortgage Discharges: Discharges must be executed by the record holder of the mortgage (not necessarily the holder of the loan) to be effective. Discharges may be either witnessed or acknowledged, and will be considered sufficient when substantially in the form as provided by N.H. R.S.A. 479:7. Mortgages may also be discharged by affidavit if the mortgagee does not discharge the mortgage and record such discharge within 60 days of satisfaction of the mortgage. N.H. R.S.A. 479:7-a. However, the provisions of the statute are not easily satisfied.
Foreclosures: Foreclosures must strictly follow the requirements of N.H. R.S.A. 479:25 and 26. If the forecloser neglects to timely provide the statutory notice to a junior lienholder, the foreclosure will not be defective if the lienholder releases its lien or, better yet, records an affidavit indicating that it had actual knowledge of the foreclosure.
“Due on sale” Clauses: Before transferring a property subject to a mortgage, check to see if the mortgage is “due on sale.” If it is, obtain the lender’s consent before transferring the property.
Real estate documents executed outside the United States will generally require acknowledgment at an embassy or consulate of the United States. See N.H. R.S.A. 477:4.
- Title insurance insures only the property as described (Schedule A) subject to the stated exceptions (Schedule B-1), and with priority over other stated exceptions (Schedule B-2).
- Policy jackets contain important information as to the extent of insurance and the requirements for claims.
- It is better to file a claim too early than too late.
- Issuers should draft the description and schedules to reflect that which is to be insured based on the current state of the property and its title, rather than to automatically accept descriptions and exceptions handed down from prior drafters. Insureds should review the description and schedules to make sure they are receiving the insurance they are paying for; vague descriptions (east by Smith, west by the creek . . .) or descriptions containing exceptions (“except for property conveyed to Jones . . .”) may indicate that a new survey should be required, and generic exceptions (“subject to all matters of record;” “subject to all matters as shown on Plan #___;” “subject to items referred to in deeds at Book ____ Page ____”) may gut the coverage.
- Title insurance continues to provide coverage even after the insured has conveyed out or released its interest in the property. For example, title warranty claims may be made against prior owners of a property.
- Condominiums derive their legal standing solely from N.H. RSA Chapter 356-B, which is one of New Hampshire’s longest and most complex statutes. In turn, individual condominiums, their units and owners’ associations draw their attributes solely from their condominium declaration, bylaws, site and floor plans as recorded, which documents are void to the extent that they fail to comply with the letter of the statute.
- A condo unit lacking a recorded certification of completion pursuant to N.H. R.S.A. 356-B:20 may lack marketable title.
- A condo unit must be described by its identifying number, name of condominium, town and county of location, and book and first page number of the declaration. Any further data is unnecessary, per N.H. R.S.A. 356-B:9.
- Condominium endorsements raise a significant risk for the issuing agent if the documents do not fully comply, or if a unit as it exists differs from the unit described on the plans.
- Condominium association liens are governed by N.H. R.S.A. 356-B:46, which, provides that perfected condo liens take priority over all liens except property taxes, prior recorded liens and encumbrances, and first mortgages to institutional lenders.
- Local ordinances vary as to whether a condominium constitutes a sub-division requiring planning board approval.
Purchase and Sale Agreements
While New Hampshire is a “caveat emptor” jurisdiction, sellers must make some disclosures. See N.H. R.S.A. 477:4-a for requirements for radon gas and lead paint disclosures, 477:4-c for requirements for water supply and sewage disposal, 477:4-d for insulation disclosure in residential purchases, and 477:4-f and 356-B:58 for requirements in condominium sales. Water front property is subject to additional disclosure requirements. See N.H. R.S.A. 485-A:39.
Real property transfer tax is assessed on any transfer of ownership of real property, N.H. R.S.A. 78-B:1, and is to be paid in equal parts by both the seller (or grantor, assignor, or transferor) and purchaser (or grantee, assignee, or transferee) at time of recordation, N.H. R.S.A. 78-B:4, I and II. N.H. R.S.A. 78-B:2 lists the exceptions to the transfer tax (i.e. mortgages are exempt, but transfers pursuant to foreclosure are not). A Declaration of Consideration form must be filed by the purchaser (or grantee, assignee or transferee) with the Department of Revenue Administration within 30 days of transfer or recording, whichever is later. See N.H. R.S.A. 78-B:10.
The current tax rate is “$.75 per $100, or fractional part thereof, of the price or consideration for such sale, grant, or transfer . . . computed to the nearest whole dollar.” However, for transfers under $4,000, a minimum payment of $40 is due ($20 from each party). N.H. R.S.A. 78-B:1(b).
Transfer tax is assessed based on fair market value of the property being transferred, not necessarily the stated value at closing, so that the taxable value of a property sold subject to a mortgage and unpaid real property taxes will likely include the sum of both.
Transfer of an interest in an entity owning real estate may trigger transfer tax liability, even if no deed is recorded (e.g. transfer of a membership in an LLC). See N.H. R.S.A. 78-B and related administrative rules.
Properties subject to current use taxation are subject to a change tax when the use of the property changes or the property otherwise becomes ineligible. N.H. R.S.A. 79-A:7. The assessing municipality should be consulted as to whether the change tax lien has been satisfied if the lien has not been released of record. See N.H. R.S.A. 79-A and administrative rules.
Trusts do not own property, trustees do, and only they can buy, sell or mortgage property. Trustees do not necessarily have power to buy, sell or mortgage property; the trust instrument must be examined. Third parties are entitled to rely on a trustee certificate substantially in the form set forth in N.H. R.S.A. 564-A:7; second parties (such as buyers or lenders) would be foolish to rely entirely on a certificate.
An entity’s Organizing documents (with all amendments) and, if applicable, authorizing resolutions, must be examined to determine the entity’s power to buy, sell or mortgage property. Similarly, certificates from Secretaries of State should not be relied on for accurate spelling or punctuation of entity names; the organizational documents should be examined. Charities, non- profit entities, religious organizations, et al (aka voluntary corporations) do not necessarily have authority to materially change their “trust” (i.e. mission), so that purchases of property or secured loans should be examined to verify compliance with New Hampshire charitable trust law, failing which the transaction may be undone later by the State. See, e.g. www.doj.nh.gov/charitable-trusts.
Joint tenancy can exist only where expressly created (e.g. “Mr. and Mrs. A as joint tenants with rights of survivorship”), and can only exist if the “four unities” are present: possession, time, title and interest. See N.H. R.S.A. 477:18. If any of the four are broken, the parties revert to tenancy in common. Only natural persons can be joint tenants (e.g. each joint tenant must be able to acquire the property upon the death of the other joint tenant).
A spouse has homestead rights in the domiciliary property, but in no other property. Purchase money mortgages are exempt from homestead rights. N.H. R.S.A. 480:5-a. Deeds from individuals not including the spouse as a grantor should either recite that the property is not homestead property or include the spouse’s release of homestead rights.
- See Ethics Committee opinions, and the New Hampshire version of the Rules of Professional Conduct.
- Real estate closings are governed by the trust accounting rules. If you do not have cleared funds in your trust account, you cannot issue any checks on a closing. See Supreme Court Rule 50 and 50-A.
- A lawyer cannot “represent a transaction,” but is bound by the Rules of Professional Conduct in recognizing conflicts of interest between clients and non-clients. See Conflict of Interest In A Real Estate Transaction.
- Settlement agents should not charge closing costs (e.g. for obtaining a mortgage discharge, for overnight mail, for document preparation) in excess of out of pocket expenditures against any party to a closing without the prior written consent of the party being charged. See Fees Charged by Attorney Settlement Agents.
- New Hampshire has a unique Rule of Professional Conduct Rule 1.11A which regulates conflicts of interest of lawyers representing clients (e.g. before a town land use board) when the lawyer or a member of the lawyer’s firm sits on a town board. See Lawyer-Official: “General Counsel” to Real Estate Development Partnership Serving as Member of Municipal Governing Body
Buildings may be conveyed separately from land. Manufactured housing (“mobile homes” or “trailers”) are subject to special rules under N.H. R.S.A. 477:44.
Real property can be, and often is, transferred through probate process. A title search must include a check of the applicable probate indices in order to be complete. See 2016 Title Standards, Article VII.
Standing trees may be conveyed separate from the land, and will be considered real, rather than personal, property until harvested. N.H. R.S.A. 477:35. Commercial cutting of timber must be preceded by a filing with the applicable municipality and payment of the timber yield tax. N.H. R.S.A. 79:10.
A Form 1099-S report must be filed in many cases by the settlement agent for a closing. See www.irs.gov/instructions
There are a few areas in District Court practice which may cause new lawyers to stumble. The small claims process is governed by RSA Chapter 503.
A small claim is any right of action not involving the title to real estate in which the debt or damages, exclusive of interest and costs, do not exceed $10,000. N.H. R.S.A. 503:1, I. If the damages exceed that amount, the plaintiff must waive the right to recover the amount over $10,000 in order to continue in small claims Dist. Ct. R. 4.1(a)(4)(b). In any case where the debts or damages exceed $1,500 and the defendant requests a jury trial, the case shall be transferred to the superior court. N.H. R.S.A. 503:1, II, III; see Dist. Ct. R. 4.3(a)(3)(b). Also, upon the request of any party and the agreement of the remaining parties, the matter may be referred to small claims mediation. Dist. Ct. R. 4.12(a). In small claims cases where the jurisdictional amount is over $5,000, mediation is mandatory and shall be scheduled in advance of, or on, the hearing date. Dist. Ct. R. 4.12(b). Mediation, however, is non-binding, and does not impair the right to demand a trial.
Pre-judgment attachments are not available in small claims actions.
At District Court hearings, the technical rules of evidence shall not apply but the judge may admit any evidence he or she deems material and proper. N.H. R.S.A. 503:7. Similarly, District Court Rule 4.6(a) states that hearings will be informal. All parties shall be required to take an oath or affirmation but may be permitted to testify informally. The court may hear the case by offers from each of the parties as to what their evidence would prove if the court were to hear all witnesses and documents submitted. However, either party has the right to object to this procedure. The findings of fact by the justice hearing the claim shall be final, but questions of law may be transferred to the Supreme Court in the same manner as from the superior court. N.H. R.S.A. 503:9.
Interrogatories and depositions shall not apply to small claims actions. Dist. Ct. R. 4.5. Electronic Filing Electronic filing of small claims is mandatory at all District Court locations.
The rules, as presently published, are subject to revisions promulgated from time to time by the New Hampshire Supreme Court and published in the New Hampshire Bar News.
Standard for Workers’ Compensation Benefits
To seek protection under the Workers’ Compensation law, an injury must occur in the course and scope of employment, and arise out of the employment. The workers must be an employee as that is defined in N.H. R.S.A. 281-A:2. There are four general types of benefits: medical treatment, weekly disability benefits (indemnity benefits,) vocational assistance, and permanent impairment compensation.
Disputes about the compensability of a claim, the eligibility of the worker for weekly benefits, or payment of medical bills (or any other matter under N.H. R.S.A. 281-A) are resolved through administrative hearings at the Department of Labor. A hearing request may be made in writing to the Director, and should specify the pertinent legal issues.
Appeal from Decision of Hearings Officer
An appeal of a decision of a hearings officer must be filed with the Workers’ Compensation Appeal Board within thirty (30) days of the decision. N.H. R.S.A. 281-A:43 I(b). There is a mechanism to seek reconsideration under Lab Rule 204.09 within 10 days of the decision. Best practice is that appeals should be filed inside of 30 days regardless of seeking reconsideration.
Appeal from Appeals Board
As a prerequisite to appealing a decision form the Workers’ Compensation Appeals Board to the New Hampshire Supreme Court, a motion for rehearing must be filed within thirty (30) days of the Appeals Board decision. N.H. R.S.A. 541:3.
N.H. R.S.A. 281-A:44 governs attorney’s fees, and mandates approval by the Department of Labor all fees charged by attorneys in workers’ compensation matters. The statute does not mandate approval of costs and expenses. For claimant attorneys, any disputes resulting in a payment of retroactive benefits after a hearing, the Department typically approves 20 percent of that amount for fees. 20 percent is also standard fees in a lump sum settlement. Claimants attorneys may also be entitled to payment of their fees if they win in an action seeking payment for medical bills, pursuant to N.H. R.S.A. 281-A:44.
Independent Medical Examination
An injured employee must, from time to time and up to twice per calendar year and within a fifty (50) mile radius of their residence, submit to a medical examination requested by the insurer or employer. Failure to do so may result in suspension or forfeiture of medical benefits and compensation. N.H. R.S.A. 281-A:38 & 39.
Medical Records Submissions
All medical records and reports must be submitted to the Labor Department and the opposing party within fifteen (15) days of receipt of same. Any report not previously filed with the Labor Department must be provided to opposing counsel at least five (5) business days prior to any contested hearing in order to be received into evidence at the hearing. All other evidence must simply be “disclosed” to all sides at least two (2) business days prior to any hearing. Lab Rule 204.07(b).
The New Hampshire Bar Association has published excellent Continuing Legal Education materials regarding Workers’ Compensation in New Hampshire. Perhaps the most comprehensive research material is the New Hampshire Workers’ Compensation Manual, available from LexisNexis.
Lump Sum Settlements
In certain situations, workers’ compensation claimants may negotiate a settlement of their claim with the carrier. A settlement is effectively the waiver of possible future workers’ compensation benefits in exchange for a lump sum from the carrier. All settlements must be on standard Department of Labor forms, and must be reviewed by the Department at a hearing. For claimants, best practices require all lump sum settlements to include Social Security offset language.
Liens Against Third Party Settlements
As a general rule, the workers’ compensation carrier may assert a lien against all third party settlements. All third party settlements must be approved by the Labor Commissioner (or if a court action has been brought, by the court). If the settlement includes a lump sum settlement of the workers’ compensation claim, only the Labor Commissioner may approve it. N.H. R.S.A. 281-A:13 III; See Superior Court Rule 167. Also note that the workers’ compensation carrier is not entitled to interest on the amount of any lien from a third-party action. Lakin v. Daniel Marr & Son, Co., 126 N.H. 730, 733 (1985).
Workers’ Compensation Lien Does Not Include Vocational Rehabilitation Expenses
The insurer does not have a statutory lien against a third party settlement for monies spent on vocational rehabilitation. Chambers v. Geiger, 133 N.H. 149, 152 (1990). The statute provides for a lien only on “compensation, medical, hospital, or remedial care” paid by the insurer or employer. N.H. R.S.A. 281-A:13 I (b).
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