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.
