## Facts

- In 2004, David A. Hodges, Sr. created two irrevocable trusts holding, as their principal asset, non-voting stock of a family real-estate development company.
- Beneficiaries included the settlor’s spouse, biological children (including David A. Hodges, Jr.), stepchildren (including Barry Sanborn and Patricia Sanborn Hodges), and descendants.
- The trusts were found to have primary purposes of preserving continued operation of the family business (including avoiding forced liquidation to pay estate taxes) and providing discretionary support for beneficiaries.
- Between 2010 and 2013, an estate-planning attorney served as “decanting trustee” and executed three decantings transferring assets into new trusts, progressively eliminating beneficiaries:
  - 2010: removed the stepchildren as beneficiaries.
  - 2012: after employment disputes in the family business, removed David Jr. as a beneficiary.
  - 2013: during marital breakdown and divorce proceedings, removed the settlor’s spouse as a beneficiary.
- At trial, the decanting trustee testified he did not consider the plaintiffs’ financial interests when executing the decantings.
- The probate court held the decantings void ab initio for failure to consider the eliminated beneficiaries’ interests and removed two co-trustees who facilitated the decantings.
- The trustees appealed to the Supreme Court of New Hampshire.

## Issues

1. Whether trustees breached the statutory duty of impartiality and related fiduciary obligations by decanting without due regard for the interests of beneficiaries whose interests were eliminated.
2. Whether New Hampshire’s decanting statute authorizes a trustee to remove beneficiaries entirely, and, if so, what fiduciary limits apply to that authority.
3. Whether the probate court properly declared the decantings void ab initio and removed the co-trustees.

## Decision

- The Supreme Court of New Hampshire affirmed the probate court.
- The Court upheld the ruling that the decantings were void ab initio because the trustees failed to give due regard to the plaintiffs’ beneficial interests and thus abused their discretion.
- The Court upheld removal of the two co-trustees as a proper exercise of discretion based on their role in the improper decantings and the breakdown of trust and hostility among the parties.
- The Court did not adopt a categorical rule that decanting can never be used to remove beneficiaries; it held the decantings invalid on these facts due to fiduciary breaches.

## Legal Principles

- A trustee must act impartially in managing and distributing trust property, giving due regard to the beneficiaries’ respective interests, including future or contingent interests.
- Statutory authority to decant does not displace fiduciary duties; discretionary powers must be exercised in good faith, consistent with trust purposes, and with proper consideration of affected beneficiaries.
- A decanting that is executed without consideration of eliminated beneficiaries’ interests may constitute an abuse of discretion and be treated as void ab initio.
- Trustee removal is an available remedy where the court finds removal best serves beneficiaries’ interests, including where trustees participated in improper exercises of power and the administration has become unworkable due to conflict.

## Conclusion

The court held that although decanting may be authorized by statute, trustees must still comply with fiduciary duties—especially impartiality and adherence to trust purposes—and decantings that eliminate beneficiaries without due consideration of their interests can be voided and support removal of trustees.


Hodges v. Johnson, 170 N.H. 470 (2017)