Creating a revocable living trust could be a convenient and beneficial strategy for your household. Once these trusts are funded, they can greatly simplify asset management, especially for complex portfolios involving a business or multiple properties. They can also allow for continuous asset management, making them an excellent option for incapacity planning to accompany a power of attorney and an advance healthcare directive.
Assets held in a revocable living trust can also avoid probate in New Mexico. This capability means that assets can be transferred to heirs more quickly — without being subject to public disclosures or creditor claims.
If you’re considering adding one of these arrangements to your financial portfolio, make sure to get in touch with an experienced Santa Fe revocable living trust attorney. A lawyer can help you review all of your options for estate plan customization and offer personalized recommendations.
Reach out to New Mexico Financial Law to schedule a no-obligation case review and get the conversation started. Schedule your confidential appointment with a knowledgeable attorney today when you call our firm at (505) 503-1637 or contact us online.
A revocable living trust is, at its core, a property ownership arrangement involving three main parties:
Assets placed into a revocable living trust technically leave the grantor’s ownership. The trustee is then responsible for managing them according to rules set by the grantor. These rules also determine who the trust’s beneficiaries are and when they receive distributions.
A grantor can customize the rules of their trust in nearly infinite ways, including how and when beneficiaries receive their distributions. Three optional arrangements you can discuss with your Santa Fe revocable living trust lawyer are described below.
A common arrangement for revocable living trusts is for beneficiaries to divide up the remainder of the trust’s contents after the grantor dies. This strategy allows the trust to act similarly to a will, with the advantage that trust assets don’t have to go through probate before they are transferred.
If you intend to use a trust to distribute assets to your successors, make sure to describe your plans to a Santa Fe revocable living trust lawyer during estate planning. They can recommend strategies to work in your beneficiaries’ favor. For example, your attorney may recommend that you include enough cash in the trust to cover estate administration costs.
A revocable living trust can provide regular payments (commonly called annuities) to beneficiaries during the grantor’s life. These payments typically come from income that was generated using the trust’s principal investments. Distributions could also be made from the principal assets, although this approach gradually depletes the trust’s value and investment growth potential.
Annuity payments can be a great way to support yourself or family members using trust funds, especially during your retirement. However, these trusts must be carefully structured, and the trustee must closely monitor their financial performance.
You can discuss these matters with an attorney from a reputable Santa Fe revocable living trust law firm to build a trust that’s capable of supporting yourself and loved ones for years to come.
If a grantor wishes to keep their revocable living trust intact after they die, they can use a pour-over will provision. This clause transfers the estate’s remaining assets to the trust. The assets can then grow and generate income for surviving loved ones.
Note that New Mexico and Santa Fe estate laws (NM Stat § 45-2-901) do not allow a trust to last more than either:
If you would like your trust to last longer after your death, you can form it in one of the states with more flexible rules against perpetuities. The trust can be formed in your chosen state while you are still alive, or you could decant the living trust into a new testamentary trust after your death.
Speak to a revocable living trust attorney in Santa Fe if your goal is to establish a trust that endures for generations to come.
All revocable living trusts become irrevocable once the grantor dies. At that point, it could be converted to a new type of trust to fulfill a specialized goal.
For example, a revocable living trust could become a charitable trust after the grantor dies. Special rules apply to arrangements like these, however. A reasonable period of settlement to pass before the IRS considers the trust as a tax-advantaged charitable entity, for example.
Such plans can become complicated quickly, and they are only set in motion after your death. Accordingly, you should discuss your plans and goals with a Santa Fe trust lawyer to ensure that you adopt a strategy that will work in the long term. Your lawyer can help you form a strategy to minimize the cost and complexity of converting your trust while fitting the arrangements within your overall estate plan.
Revocable living trusts can be modified or closed down by the grantor at any time. This structure gives the trust flexibility, allowing the grantor to adjust the trust if their situation changes — or if the trust doesn’t work out as planned.
An irrevocable trust, on the other hand, cannot be closed or modified by the grantor once it is created. If the trust doesn’t work out as intended, court action may be needed to modify or decant it.
The tradeoff of this inflexibility is that an irrevocable trust can provide specialized benefits, such as:
The exact benefits provided depend on the structure of the irrevocable trust, so make sure to consult with an attorney to go over your options and decide on the right choice for your situation.
A trustee acts as both the guardian of the trust and its financial manager. They are expected to carry out the grantor’s plans while keeping the trust solvent. Accordingly, they must put effort into promoting the long-term health and growth of the trust. For example, they should actively manage the trust’s investments or hire a financial advisor (or another third-party) to help them achieve the trust’s performance goals.
Other trustee responsibilities worth noting include:
Other duties may be involved that are not listed here. Be sure to refer to an experienced Santa Fe revocable living trust lawyer to verify what duties are required — including ones that would be prudent for the grantor to add in light of any special trust rules they create.
Any competent person who is over the age of 18 can serve as a trustee. Because this person wields considerable power and has authority over the trust’s management, the grantor should take care to select someone they know they can depend upon. For more complicated trust arrangements, the grantor may wish to appoint someone with specialized skills or even a professional trustee.
Since most revocable living trusts follow relatively simple arrangements, the grantor commonly names themself or a close family member as the primary trustee. The grantor can also appoint a co-trustee or successor trustees.
If you aren’t sure what the optimal arrangements would be or who you should select as your trustee(s), you can refer to a law firm that has experience with creating and managing revocable living trusts in Santa Fe.
A co-trustee holds authority at the same time as the primary trustee. They may have the same authority as the primary trustee, or they could be a subordinate who defers to the main trustee in most situations.
The grantor can even appoint multiple co-trustees. When doing so, they should provide guidance on how trustees can come to a decision or delegate responsibilities. Example arrangements can include a majority vote, a superior/subordinate structure, or a co-trustee who is only consulted in situations where the other trustees aren’t sure about what action to take.
The last thing you want, however, is to introduce unnecessary complexity — or even decision paralysis — to what could be a relatively simple arrangement. To give your co-trustees the powers they deserve without risking the trust’s performance, you can refer to a revocable living trust lawyer in Santa Fe for guidance.
A successor trustee does not assume their duties until the primary trustee is incapacitated. This arrangement can provide substantial benefits in situations where the grantor is the primary trustee.
Suppose that the grantor is incapacitated by an accident or a medical condition. Normally, family members would need to rely on a power of attorney, which must have been issued by the grantor before they were incapacitated. Otherwise, the family would have to obtain conservatorship to access the grantor’s accounts and key assets to maintain the family’s finances.
With a successor trustee or co-trustee, the grantor automatically has someone available to manage the trust’s assets. The successor trustee can tap funds to pay medical bills, keep up with mortgage payments, pay for family living expenses, and provide general financial security to the grantor and their loved ones.
If incapacity planning is one of your goals for forming a revocable living trust, you can work with an experienced estate planning attorney in Santa Fe. They can review your options in light of your goals and recommend the right set of strategies to ensure your family is prepared for an emergency.
New Mexico Financial Law can assist you with creating a revocable living trust and incorporating it within your overarching estate plans. A Santa Fe revocable living trust lawyer from our firm can also help you anticipate key responsibilities, such as how your trust might be affected by federal and New Mexico estate tax laws.
Get started with creating your trust so you can enjoy the convenience and peace of mind it offers. Call our firm at (505) 503-1637 or contact us online to schedule an appointment with our revocable living trust law firm today.
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