Create a Living Trust in New Mexico
Create a Living Trust in New Mexico
A New Mexico living trust protects and maintains your assets for your exclusive use during your life and passes them to your beneficiaries after your death. A revocable living trust (inter vivos trust) can be an important part of your estate planning process.
Living Trusts in New Mexico
When you set up a living trust in New Mexico, you are the settlor of the trust. You place assets into the trust by changing the ownership to the name of the trust. The more assets you place in the trust, the larger the benefit you will have from the trust. Not all assets can be placed in trust. Some such as retirement accounts and life insurance do not qualify. You will select a trustee, the person who will manage the trust. You can select anyone, but most people name themselves trustee so they are in total control. If you choose yourself, you also need to name a successor trustee who will take over after you die. The successor continues to manage the trust and protect its value until distributions are to be made to the beneficiaries. A trust of this kind can be changed you whenever you want; you can even close the trust down. An irrevocable living trust is different; it cannot be changed once it is set up.
When you place assets into a living trust, those assets will not need to go through probate. Probate is required for all assets passing through a will. This court process takes many months and can be pricey – with an executor, attorney, and court fees to pay. Assets in a trust avoid all of this and can also be passed immediately upon your death if you wish – nothing passes via a will until probate concludes. A trust also allows you to avoid probate in other states if you own property there. If you do choose to pass assets through a will, New Mexico has adopted the Uniform Probate Code, so its process is streamlined. If your estate is valued at less than $50,000, there is a small estate probate procedure that only takes 30 days and is less expensive. This may be less costly than a trust.
Do I Need a Living Trust in New Mexico?
Assets in a living trust New Mexico remain under your control during your life. They are owned by the trust, but you can do whatever you wish with them. Nothing changes for your day-to-day life since you remain in your home and continue to spend, invest, or give away your money. After your death, you continue to exert control over your assets as the successor trustee manages the assets and distributes them to your beneficiaries according to the terms of the trust. You can choose to distribute assets immediately, or set up future dates such as important birthdays. A will does not give you this option.
Your revocable living trust protects you should you become mentally incapacitated. All of your assets are already controlled, owned, and managed by the trust and a conservatorship proceeding is likely unnecessary. While a durable power of attorney can be rejected, a trust cannot be. Your financial life is protected by the trust.
Privacy is another important reason living trusts are popular. The trust is not and does not become public record. No one will know the terms of the trust, the names of your beneficiaries, or the assets in the trust. A will becomes public record when it passes through probate. Trusts are very difficult to contest compared with wills, and provide another layer of protection because of this.
A living trust does not protect assets from creditors, but simply because of the speed with which assets can be moved out of a trust and the privacy involved, a creditor may have a very difficult time tracking down an asset to attach.
Living Trusts and Estate Taxes in New Mexico
Creating a living trust in New Mexico is not a way to avoid estate tax. New Mexico has no inheritance or estate tax, but federal estate tax is applied to estates worth more than $5 million. Specially crafted trusts called marital trusts (or AB or QTIP trusts) do avoid estate tax by passing assets from a deceased spouse to the survivor spouse. Living trusts do not protect assets from Medicaid.
How to Create a Living Trust in New Mexico
If you would like to create a living trust in New Mexico, you prepare your trust document and sign it in front of a notary. To complete the process, you transfer ownership of assets to the trust. Living trusts offer many benefits. A trust might be right for you.
Create a living trust online in three simple steps with LegalZoom. Get started by answering a few simple questions. LegalZoom will review your answers, create your living trust package, and send it to you by mail.