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Revocable Living Trusts in New Mexico

How can you be sure that your assets will be distributed to your family and other beneficiaries as you wish when you are no longer here to distribute them? You can give effect to your wishes in your will and/or by beneficiary designation, but if you want to avoid probate and keep your private matters private, a revocable living trust may be a more effective planning tool. 

Protect Your Assets From the Probate Process 

There are several ways to make sure that your assets are distributed appropriately without going through the probate process. For example, real property like a house or land can be left to a named beneficiary under a Transfer On Death Deed (TODD). Financial accounts often allow you to name a beneficiary who assumes ownership seamlessly after you die. Beneficiary designation is also common for life insurance policies and retirement accounts. All of these methods are inexpensive or free, do not require a lot of legal intervention, and are typically sufficient to keep the assets out of probate, but they do have downsides.   

Similarly, any assets that are owned by your revocable living trust at the time of your death do not need to go through probate. Distribution of these assets will follow the terms of your trust agreement without the necessity of court intervention. Also, the terms of the trust agreement will not be a matter of public record, unlike the terms of your will. This means that if you have disinherited someone, they will not be given notice and an opportunity to object via the probate process.  

How Revocable Living Trusts Work in New Mexico 

Upon creation, the revocable living trust is its own entity, which means that the funds you transfer to it are no longer legally “owned” by you. At the same time, the revocable nature of the trust means that you can make changes and add or remove assets as desired. So while the law may see the assets as belonging to the trust, while you are alive, there is absolutely no practical difference between assets you own and assets the trust owns.  

The trust agreement lays out how assets will be managed both during your lifetime (even if you become disabled) and after your death. Your beneficiaries may receive their shares outright after your death, in trust over several years, or even in trust for a lifetime. You can specify different arrangements for different beneficiaries and can provide long-term asset protection for them if you wish. This tool is extremely flexible and can be closely tailored to suit your circumstances. Keep in mind, however, that a revocable living trust does not provide relief from estate or income tax.  

Since revocable living trusts are so versatile, it’s important to make sure that your trust addresses all of your concerns and is a good fit with your circumstances. For expert legal advice specific to your situation, contact us today to schedule a consultation. 

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Frequently Asked Questions

How does a revocable trust work?

A revocable trust is essentially a legally enforceable agreement between the trust’s grantor (creator) and the trustee. The grantor can change the provisions of the trust agreement, move property into or out of the trust at will, or even revoke the agreement entirely at any time prior to death.

The trust agreement lays out how trust property will be used during the grantor’s lifetime and how it will be distributed after the grantor’s death. Distribution terms typically include dividing the trust property among the grantor’s beneficiaries, retaining a beneficiary’s share in trust until they reach certain ages or milestones, specifying how the beneficiary’s trust fund can be used and not used while the trust is in place, and what happens to the trust fund when a beneficiary dies.

When the grantor transfers property into the trust, the trust becomes the owner of the property, so property already owned by the trust at the grantor’s death does not need to go through probate. However, since the grantor retains the right to move property in and out of the trust and change the terms of the trust at any time, a revocable trust does notshelter property from estate tax and does not provide asset protection.

How do you amend a revocable trust agreement?

To amend a revocable trust, you need to follow the directions outlined in the trust agreement. This usually consists of signing a written amendment and delivering it to the currently acting trustee, but the provisions of the specific trust agreement will control whether an amendment is effective.

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Need Legal Assistance From a New Mexico Revocable Living Trust Attorney?

Call New Mexico Legal Group at 575.339.2100 or get started with a free case evaluation.

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