Estate Planning with Living Trusts in New Mexico

With numerous people, including living trusts, in their estate plan for managing assets and avoiding probate, it is safe to say it has become a popular tool among them.

However, if you want to create a living trust in New Mexico just because you know it's popular among people, you should take a step back. It is crucial to learn as much as possible and determine if it is right for you before you go forward.

What Is a Living Trust?

A living trust or a revocable living trust (also called an inter-vivos trust) is a written legal document. It lets you place your assets into a trust for your use during your lifetime and then transfer them to your designated beneficiaries after you pass away by your chosen representative, also known as a successor trustee.

Do I Require a Living Trust in New Mexico?

Whether you actually need a living trust depends on your particular situation and goals.

For example, if you want your family to avoid probate court to get access to your assets when you pass away, you can do that by creating a living trust. Since going to probate court is a potentially costly and time-consuming process that can sometimes cause an invasion of privacy, a living trust can be quite helpful in this situation.

If you have a minor in your family to whom you want to leave your property, you can also do it with a living trust. In this case, you leave the property in the trust under the trustee's supervision until the child reaches a certain age.

However, it is not necessary for everyone and every situation. The best thing to do is to speak with an estate planning attorney who can give you proper advice on whether a living trust will be beneficial for you.

Why Are Living Trusts Used?

Living trusts are used for several reasons, including:

• Greater control over assets: Living trusts allow for greater control over how assets are managed and distributed.
• Privacy: A living trust can keep the distribution of assets private, as the trust details do not have to be made public in the probate process.
• Incapacity planning: A living trust allows for easy management of assets in case the grantor becomes incapacitated and unable to manage their own affairs.
• Avoiding court interference: The distribution of these assets will take place in accordance with the terms of your trust agreement, with no need for court intervention.

How Can You Make a Living Trust in New Mexico?

Creating a living trust might seem intimidating, but by knowing the proper steps of doing it and with the help of an expert, it can be done quite easily. Here are steps of making a living trust in New Mexico –

Understand what type of trust would be the best for you

The type of trust you should choose depends on your particular situation. For example, if you are single, an individual living trust is probably what you will need. If you are married, you’ll likely want to go for a joint trust where you and your spouse can place your individually and jointly held assets.

In this case, when one spouse dies, the surviving spouse is typically designated as the sole remaining beneficiary and is typically named the surviving trustee. The property passes to the named heirs upon the surviving spouse's death.

Set terms for the trust

Set instructions for your trust that will outline how you want the assets in your trust to be managed during your lifetime and after you pass away.

Choose a successor trustee and your beneficiaries

Choose a successor trustee who will take over management of your trust and make sure of proper distribution of your assets to your beneficiaries when you are gone. After that, decide who will get the trust property, also known as the trust's beneficiaries.

Create the trust

You can write the trust document online or with the help of an attorney.

Sign the trust

After the trust is prepared, you must sign it in front of a notary public.

Fund the trust

After creating the trust, you will have to transfer the assets you want to it. However, do remember you cannot transfer all your assets to your living trust. For example, you cannot place your individual retirement accounts (IRA) in a trust.

Can I Have Living Trusts in New Mexico Without Using Lawyers?

It is possible to make a living trust in New Mexico without the help of a lawyer. However, it is always recommended to hire one to complete the process.

Estate planning can be complicated without an expert, and its laws vary from state to state. Therefore, consulting with an attorney with experience in estate planning is critical.

In addition, consulting an attorney can help you to avoid mistakes while creating your living trust that can cause problems for your beneficiaries or make it difficult for your wishes to be carried out.

Can a Living Trust Lower Estate Tax in New Mexico?

In New Mexico, setting up a living trust is not a way to avoid paying estate taxes. New Mexico has no inheritance or estate taxes, but estates worth more than $5 million are subject to the federal estate tax.

How Can I Make Changes in My Living Trust in New Mexico?

There are a few ways to change a revocable trust in New Mexico. Some of the common ways include:

Trust Amendment

This is the simplest way to make a change to a living trust. If you have minor changes that you want to make to your living trust, then doing a trust amendment might be the best option for you.

It is critical to be specific about what you are amending so that it is clear when the trust will be executed. Also, ensure you don't make too many amendments to your trust over time, as doing so might confuse the language of the trust.

If you need to make multiple changes to your living trust, then restatement might be a better option for you.

Restating a Trust

When you restate a trust, you redo the entire trust. The living trust remains in effect, but the new document alters its provisions.

This is a good option when you are making many changes to the trust. When you fill out the restatement form, you must indicate the date of the original document, restate the provisions, and incorporate the changes you are making.

Trust Revocation

Trust revocation is an extreme option that should be used as a last resort. A trust revocation does accomplish similar results as a restatement, but there are differences.

With a revocation, all the property that you held in your trust reverts back to the original owner. If you revoke your trust, you will again have to transfer your assets to the new trust. Assets can get forgotten in the process, so be careful about it if you go for this option.

Besides, do consider that legally removing the property from your living trust can also trigger unintended tax consequences.

What Happens If I Die Without a Living Trust in New Mexico?

If you die without a living trust or a Will in New Mexico, your assets will be distributed through the state's probate process. It is the legal process of distributing the assets of a person who has passed away to their beneficiaries.

Bottom Line

New Mexicans who have a complex or large estate, or if they feel the necessity of a living trust, should go for it. If you wish to create a living trust, consult an expert or hire an attorney to complete the process without hassle.