Estate planning doesn’t have to be a huge undertaking, in most cases. The key is to get started early and to focus on completing seven primary steps, one at a time. So what are the seven steps in the estate planning process? Read on to find out.
An estate planning lawyer in New Mexico can assist with all of the steps outlined below. They can also help you determine if you need to take extra steps, such as when you want to use multiple trusts or subtrusts to accomplish a complex set of goals.
New Mexico Financial Law is ready to help you put your estate planning goals into words and go over your best options for achieving them. After deciding on the approach you want to use, you can work with an attorney from our experienced law firm to create the exact documents and strategies you need.
Whether you’ve started estate planning already, you need to revise your existing plan, or you’re still on square one, we are here to help. Talk to a knowledgeable attorney who’s ready to work with you on building the best estate plan possible by calling (505) 503-1637 or contacting us online to schedule a no-obligation consultation today.
There are many different individual steps involved in estate planning, and no two processes will look alike. That’s because every single person is going to have different circumstances, different goals, and different preferences.
Accordingly, you should seek the help of a qualified New Mexico estate planning lawyer at key stages in your process. They can assist you with building a plan that’s personalized to you.
Your attorney will need a few details to get started, however, so you must first gather information. Then, you put your objectives into words, as best as you can describe them. Bring this information to your first estate planning meeting. Your lawyer can then start to cover your available choices and help you understand what a complete estate plan might look like.
To explain the estate planning process in the most straightforward way possible, we’ve broken it down into seven primary steps:
Note that your personal estate planning journey may not reflect these exact steps in precisely this order. You may want to delay incapacity planning and long-term care planning until a later date, for example, which means you could skip step 5 for the time being.
Alternatively, you may want to use a strategy to include as little as possible in your probated estate. That means that you should primarily focus on arranging your non-probate assets, creating a will afterward once you understand what could remain in your probated estate.
Therefore, consider the steps outlined below as food for thought. Reviewing them can help you decide which aspects of estate planning you want to focus on. You can then create a personalized strategy with the help of a New Mexico estate planning attorney, accordingly.
Include assets, debts, and other key details.
The first step of estate planning is being able to answer the question: “What’s in my estate?”
Your “estate” refers to everything owned in your name (or to which you otherwise have exclusive rights of use). That means both assets and liabilities. There may also be details related to your estate that don’t necessarily fall into either category, such as a judgment that would affect the use of real property.
To record a complete estate inventory, you’ll need to review and account for all of the following.
Start with personal assets, including:
Your estate may also include some atypical assets, such as:
In a separate list, record all of your financial account assets. These include:
The reason to list these financial accounts separately is that they can often be excluded from your probated estate.
It is also critical for your estate’s representative to know what debts you possess. These can include:
List the amount owed for each type of debt, including whether it is secured with collateral.
Your estate’s representative may need to know about other legal or financial matters that could come up after your death, in addition to the items listed above. Some possible examples include:
The goal is to eliminate all surprises for the individuals who end up managing your estate. Ideally, you will take steps to eliminate all sorts of possible claims, disputes, or contests prior to your death. But, realistically, matters you may think were resolved could come up again after you have passed.
To help those with a responsibility towards your estate prepare accordingly, include as much detail as you can in the documents describing your estate.
List your heirs and other priorities, including the risks you hope to avoid.
Every estate plan should be carefully fit to each person’s unique goals. What works perfectly for one person may be completely wrong for someone else.
Your estate planning lawyer in New Mexico also needs to have some context about where your priorities lie. Someone who wants to list a charity as a possible beneficiary of their estate needs a different plan compared to someone who intends to form a trust to substantially support that same charity over the long term.
Some questions to consider as you set your goals include:
Write down any goals you have, and bring this information along with you when you meet with your New Mexico estate planning attorney.
Decide upon the trusts, powers of attorney, and other documents you want to create.
An experienced estate planning lawyer in New Mexico can go over all of the most relevant choices you have at your disposal. They can then create a strategic plan for executing all of the documents and other preparations you need.
Once you’ve reviewed your options, you can then create the documents, strategies, and other preparations that make up your estate plan. Some of the most important estate planning documents and strategies to consider include:
Not everyone will need all of these, but it helps to know what they are and how they have helped other people. Then, you can be certain that you’ve considered all of the commonly recommended options before selecting the right estate plans and strategies for you.
Every estate plan needs a will, at a bare minimum.
Your will should do all of the following:
Using your asset list and the outline of your estate plan, you can decide which assets should be transferred through your will versus those that should transfer outside of probate.
You must then execute your will in accordance with state law. That means signing it, having it witnessed, and (preferably) having it notarized (NM Stat § 45-2-502).
Part of managing your will also includes an obligation to fully and explicitly revoke any previous copies.
You can go over any other requirements or special steps that could benefit your estate plans further by meeting with an experienced attorney.
Plan for your possible incapacitation or long-term care.
Some aspects of estate planning involve making preparations for events that could come to pass while you are still alive.
Many times, especially at an older age, individuals find that their mental faculties aren’t what they used to be. In more serious cases, the person may be afflicted with confusion, dementia, delirium, or an extremely debilitating condition. They may even lose basic mental functions or fall unconscious for an indeterminate amount of time.
These conditions are collectively referred to as “incapacitation.” When this happens, your loved ones may be understandably worried about their ability to manage your finances. You could end up missing bills, falling victim to a scam, or spending your money in self-destructive ways.
Often, a person in this position quickly loses the ability to care for themself and their loved ones. They may also be unable to coherently understand their medical condition and make appropriate care choices, accordingly.
Your loved ones may need to receive a court order for guardianship or conservatorship to be able to take care of you under these circumstances. However, these processes can be long, expensive, and very involved.
To avoid such a situation, you can execute the following documents:
In addition to planning for incapacitation, you may also wish to make preparations for a situation where you or your spouse needs help managing basic activities of daily living.
Your options for this include:
Make an appointment with an estate planning law firm in New Mexico to understand what options you have.
If you think that Medicaid support could be the best option, make sure to start considering whether you want to create an asset protection trust. Taking this action reduces your countable resources, making it easier for you to potentially qualify. It may also avoid estate recovery — a situation where the state of New Mexico places a claim on your home or other property after your death to repay the cost of your care.
Form a trust and/or make other arrangements to avoid probate, resolve tax obligations, pay off debts, and handle other key affairs.
All assets described in your will have to go through probate before they can be transferred to your heirs. Before they can be transferred, though, they must be used to pay estate expenses and creditor claims. This can severely diminish the value of your estate.
As an alternative to probate, you can set up certain assets to transfer to heirs automatically. These include:
The more property you leave to loved ones using these arrangements, the less time, expense, and claims your estate could be subject to during probate.
Since changes were introduced in 2001, the exemption amount for estate taxes has grown substantially. The exemption amount effectively doubled in 2017, following changes introduced by the Tax Cuts and Jobs Act (TCJA).
Now, the IRS does not require taxes on estates valued up to $14 million. You’re also allowed to give a gift of up to $19,000 per individual per year without deducting from this lifetime exemption amount.
Even still, you may want to explore strategies to reduce your exposure to estate taxes. You can speak with a New Mexico estate planning attorney and a qualified financial planner for advice.
Every estate has to file a final individual income tax return for the decedent. This return declares the income (or losses) from their last year.
The decedent may also owe back taxes or other obligations. Their personal representative has a duty to investigate their finances, determine any amount owed, and pay it along with other estate debts.
To prepare for this final year of taxes — along with claims for other debts — many estate planners recommend setting aside enough money to pay for these costs in cash. You can also reserve specific assets that your personal representative could sell to generate cash without hurting your ability to transfer treasured assets, like your primary residence, intact.
You may have a desire to create a trust for various reasons, including estate tax reduction, legacy planning, or to provide support to a loved one with special needs. Refer to a New Mexico estate planning lawyer for guidance on what trusts can best fit your unique goals.
Review and update your estate plan often.
Once your estate plan is written, you should periodically ensure that it is still optimized to your asset portfolio, your heirs, and your other specific needs.
You should review your estate plan often, at least once every 3–4 years. In addition, you may want to update it after a significant life event, such as:
Keep in touch with your New Mexico estate planning lawyer, and don’t hesitate to ask them for advice or answers to any pressing questions. Your goal should be to have an estate plan that leaves you feeling prepared and relatively secure at all times.
New Mexico Financial Law is available to assist you with all of the steps outlined above — and more. Get started with a confidential, no-obligation consultation appointment. There, you can discuss your goals and go over the details of your estate with an experienced and knowledgeable professional.
Schedule your appointment and estate plan review today by calling our law firm at (505) 503-1637 or contacting us online.
CallCall now to schedule your consultation 505.503.1637
Office