Setting up a trust in Santa Fe requires careful planning. You should also ensure that all trustee responsibilities are understood by you and by anyone else who could be serving. Once the trust is created, it should be relatively simple to operate and maintain. An experienced lawyer can assist you with all stages of this process.
Before setting up a trust, you need to know the answers to two main questions: what type of trust do I want, and how should it operate? By consulting with New Mexico Financial & Estate Planning Attorneys, you can examine all of your options, form a strategy, and then decide on the best arrangements for your needs. We can then assist you with all steps of creating and funding the trust. You can also receive guidance for operating the trust, especially if you have questions or encounter challenges in the future.
Get started choosing and setting up the right type of trust for your unique situation. Reach out to schedule a no-obligation consultation at any time when you call us at (505) 503-1637 or contact us online.
Trusts offer significant advantages for certain individuals, households, and families. At the same time, they aren’t without risks and drawbacks. Each type comes with its own possible concerns, which is why it’s so important to understand your options.
Speaking generally, trusts make the most sense for situations involving:
The bottom line is that if you have something you want to protect, for you or your heirs, then a trust might make sense for your situation.
By making an appointment with a Santa Fe setting up a trust lawyer, you can review your situation to determine if a trust could work well for your needs. They can also assist you with other aspects of estate planning and asset management, so there’s never a bad reason to talk to an attorney about your options for the future.
There are dozens of different types of trusts, with unique qualities to each. Nevertheless, they all share a few of the same characteristics.
Foremost, every trust involves at least three parties:
Revocable trusts can be changed or dissolved by the grantor at any time.
An irrevocable trust cannot be modified, except under very specific circumstances. A court order may be needed, and all beneficiaries must consent to the changes made.
Revocable trusts are more straightforward to create and operate. Irrevocable trusts can be more complex, but they offer additional capabilities, such as possible tax savings, asset protection, or protection for beneficiaries who need to qualify for disability benefits.
Living trusts are started while the grantor is still alive.
A testamentary trust, on the other hand, is created after the grantor’s death. To create the trust, the grantor’s personal representative (AKA their executor) must transfer estate assets into the trust’s ownership. The will should also assign a trustee to manage them.
One of the most straightforward examples of how a trust might function, a revocable living trust is a popular choice for families and individuals. They can simplify asset management, reduce the probated size of an estate, and ensure continuous asset access through a successor trustee, even after an unexpected death or medical crisis.
To form a revocable living trust, one or more grantors name a trustee and then transfer property into the trust. The trustee is responsible for managing the assets until they are completely distributed to beneficiaries.
To illustrate how this might work for a typical household, let’s consider a married couple named Dana and Alex. They want to ensure that their children can inherit assets with minimal complication, even if both parents happen to die at the same time. They also want to ensure that they have equal access to all trust assets, even if one of them is medically incapacitated.
Dana and Alex will both fund the revocable trust, making them co-grantors. They also act as co-trustees. To be safe, they name Dana’s uncle Albert as a contingent trustee — someone who can step in if all the other trustees are incapacitated.
Dana and Alex then list their children as beneficiaries. The children won’t receive any assets until Dana and Alex have both passed on. If the children are minors, the trust acts similarly to a custodial account for the children, paying for their necessary expenses before it passes on the remaining assets when they turn 21.
In this way, a revocable living trust acts similarly to a will, except it’s created in advance. In addition, it allows for another trustee to step in when Dana and/or Alex are incapacitated.
Per state law (NM Stat § 46A-4-402), a trust is only properly created when:
The trustee, beneficiaries, rules for distribution, and any other special rules must be written down in a trust instrument. A Santa Fe setting up a trust lawyer can help you with creating this document, including all of the necessary language to achieve your goals while guiding the trustee.
After the trust instrument is completed, the grantor (or grantors) must then sign the document in front of a notary public and have it notarized.
Even after signing the trust instrument, the trust is not active until it has assets transferred to it.
Funding a trust can be one of the most complicated aspects of starting one.
Unfortunately, most types of valuable property must be added to the trust individually using a title transfer.
In some cases, such as an everyday checking account, it may make more sense to keep an asset in the grantor’s name and instead list the trust as a transfer-on-death beneficiary. Reach out to a Santa Fe estate planning lawyer to determine when it might be best to go ahead and change the owners of an account or asset, versus having it later transferred into the trust.
To help you get a clearer idea of how each type of asset might be transferred into a trust in Santa Fe, we have broken down a few major categories below.
A home or property title can be transferred to a trustee, in care of the trust. This can be done using a “Real Property Transfer Declaration Affidavit” document. This transfer must be recorded with the Santa Fe County Clerk to be official.
Fortunately, all transfers done in this manner should not activate any sort of tax or fee beyond the filing fee. New Mexico has no transfer tax, and sales tax would not apply.
The transfer to the trust should also not count as a gift for federal tax assessment purposes (although it may count as a gift for the purposes of determining eligibility for Medicaid and other programs). Refer to a Santa Fe setting up a trust lawyer to verify if this might be the case, especially if you encounter problems during this step.
Another major snag to be aware of is that some mortgage lenders may try to activate a “due on sale” clause after such a transfer. While there are laws in place to prevent this from happening, early notice can help you avoid any drama.
Therefore, be sure to notify your lender of your intent to transfer your property interest into the trust. They will likely want to review the trust agreement to determine if your relationship with the trustee and the guidelines you set are capable of satisfying the promissory note agreement. In most cases, your transfer will not be a problem — and you likely have the legal right to make it — but advance discussion is almost always recommended.
Also, be sure to transfer ownership of the property’s insurance policy to the trust, as well. This can be done using a simple form provided by your carrier, in most cases.
A trustee can take over banking accounts on behalf of the trust. Banks are usually willing to transfer ownership upon presentation of a certified letter and documentation of the trust agreement.
The trustee, if someone other than the original account owner, is likely required to create a new signature card and sign an agreement with the bank.
Be sure to verify any possible successor trustees with the bank, as well. This diligence ensures that they won’t have difficulty accessing the accounts if the main trustee becomes incapacitated.
Also, make sure to indicate to each bank if all co-trustees are supposed to have equal access as sole signers. Otherwise, a bank might expect all co-trustees to be able to sign at the same time for access to an account to be granted.
“Everyday” accounts for checking or bill payment may not be appropriate for a transfer into a trust. Refer to your Santa Fe trusts attorney or a financial planner for more guidance.
Property without a formal title can be transferred into the trust using an Assignment of Untitled Tangible Personal Property document. Be sure to specify each group or category of item.
For items of significant financial or personal value, such as signed sports memorabilia, be sure to also highlight them and their value within the transfer document.
Vehicles can be retitled through a title transfer document to the trustee, noting that they will be held in care of the trust.
Transferring business ownership shares (equity or debt) into a trust can be relatively simple. The recommended procedures may change, though, based on whether the business is a partnership, sole proprietorship, corporation, LLC, or S corporation.
Refer to a Santa Fe setting up a trust lawyer and any partnership or business charter agreements to determine the best protocol.
Common investments can be retitled into the name of the trust using the following methods:
You may want to revise these policies and accounts to list the trust as the beneficiary. This arrangement ensures minimal confusion. It also gives the trustee full authority to facilitate their transfer or payment into the trust. The trustee can then use the funds to issue distributions to your beneficiaries, or re-invest them and allow them to grow.
Generally, this is not a good idea. 401(k) accounts, IRAs, and other similar retirement plans are tax-deferred. Transferring ownership to someone other than a spouse could trigger penalties or convert the account into a regular brokerage account.
Refer to a trusts attorney in Santa Fe for assistance with setting up a trust to identify which accounts may be appropriate for such a transfer.
A will can direct your estate’s personal representative to create a trust. This would occur as part of the asset distribution process towards the end of probate. Include clear instructions and the appropriate testamentary language in your will to ensure that this process is carried out as you intend.
You may be able to include the trust agreement in a separate document to keep its details out of the public record. Be sure to refer clearly to its location so your personal representative can locate it. You may also need to sign this agreement and have it notarized for it to become effective and usable by your personal representative when it comes time to fund the trust with estate assets.
New Mexico Financial & Estate Planning Attorneys can assist you with all aspects of selecting a trust structure, setting it up, funding it, and ensuring that it will operate smoothly. Our experienced attorney team can also review other parts of your estate plan, confirming that they incorporate the trust to maximize the advantages it might offer.
Get started by calling (505) 503-1637 or contacting us online to schedule a no-obligation appointment today.
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