New Mexico Living Trust Lawyer

A living trust sets assets aside into a separate legal entity to make their management easier. They can also provide continuous management of assets in the event of an unexpected death or medical emergency.

An irrevocable living trust can provide additional benefits, albeit with the drawback that they cannot be modified once they have been created.

Whether choosing an irrevocable or revocable living trust, it is advisable to discuss your plans with a New Mexico living trust lawyer. They can help you sort through your options and make important decisions in light of your goals.

With their help, you can feel more confident in the future that lies ahead, knowing that your most important assets are secured and that your legacy is protected.

Reach out to New Mexico Financial & Family Law today to discuss your options for forming a living trust when you call us at 505-503-1637 or contact us online.

What Does a New Mexico Living Trust Attorney Do?

Whether they are revocable or irrevocable, a living trust is a serious commitment. They require significant time and effort to set up, and they come with their own administrative costs.

Working with a New Mexico living trust lawyer gives you the opportunity to examine all of your options, recognize the most beneficial arrangements, and anticipate challenges that may arise. At New Mexico Financial & Family Law, our sole goal is to give you confidence, knowing that the living trust you create is capable of helping your plans for the future become a reality.

When you work with our New Mexico living trust law firm, we can provide you with an attorney who will perform the following services:

• Advising about trust options: There is more than one type of living trust. Your New Mexico living trust attorney can help you decipher the differences and understand any potential advantages or disadvantages to each. With an attorney, you’ll gain precious advice at this initial stage to shape your future asset protection and management.
• Drafting and personalizing the trust: The beauty of a trust is that it can be completely personalized to your wishes. Your living trust attorney can help you set specific terms like expectations of trustees or special conditions for distributing assets to beneficiaries. Your attorney will craft these official documents and have them notarized for validation.
• Overseeing the funding into the trust: Once a trust has been created, it must be ‘funded’ to take full effect. This process involves transferring the title of assets from the trustor’s name to the name of the active trust. Assets can include real property, bank accounts, possessions, investment portfolios, life insurance policies, and more. To save you time and energy, your estate planning attorney can manage this tedious process.
• Ensuring tax compliance: State-by-state tax regulations can affect how the trust is taxed and other financial implications. One of the main objectives of your New Mexico living trust attorney is to minimize tax liabilities attached to your assets. An attorney will ensure compliance, keep up with any changes to New Mexico or federal trust law, and advise changes if necessary.
• Supporting your trustee: Not only will your living trust attorney build the initial trust with you, but they can also oversee asset distribution when the time comes.

What Is a Living Trust?

A living trust allows a person (known as the grantor) to place assets into a separate legal entity during their lifetime. These assets will be managed by an assigned administrator known as the trustee.

The trustee role can be assigned to a family member, a trusted associate, a professional individual, or an organization.

The grantor names beneficiaries who will eventually receive distributions from the trust. These distributions may happen during the grantor’s lifetime or at the time of their death.

Oftentimes, the grantor will name themselves as the trustee of a living trust so they maintain the power to control their own assets. Especially for a revocable trust, the grantor should consider naming themselves as the trustee and adding a successor trustee who can take over responsibilities if the grantor becomes incapacitated or passes away.

Types of Living Trusts in New Mexico

There is more than one type of living trust. These financial arrangements are designed to protect valuable assets, but that process won’t look the same for everyone.

A New Mexico living trust lawyer will look at your assets and help you determine which option is the best fit in light of your goals. Each type of living trust has its own benefits and advantages, but also stark differences that can impact the future of your estate and the process for beneficiaries later.

Revocable Trusts

This is the most common type of living trust. Drafting a revocable trust essentially means that you can adjust or cancel certain parts — or the entirety of — your living trust after it has already been finalized.

This option provides more flexibility for the grantor, allowing them to make changes to beneficiaries, transfer more assets into the trust, or sell assets in the trust. It is most common in a revocable trust to see the grantor retain control of their assets and name themselves as a trustee, appointing a successor trustee for the future.

Irrevocable Trusts

Once an irrevocable trust has been finalized, it will almost always require a signed agreement between beneficiaries and court approval to be changed or canceled entirely. The grantor will still create the trust by transferring property in the same way they would for a revocable one.

An irrevocable trust offers less flexibility for the grantor, as they technically lose full control of their assets once the trust has been created. However, the grantor can still be named as a primary beneficiary of the trust in some cases.

An irrevocable living trust is advantageous in certain circumstances, as these assets will be better protected from creditors and, in some cases, from certain estate taxes as well. Generally, this is a viable option for those whose estate value is over the federal exemption limit.

Creating and Funding a Living Trust in New Mexico

To create an initial trust, you will sit down with your New Mexico living trust attorney to discuss your financial situation and your goals for the future. Your attorney will review the assets you plan to include, the beneficiaries you wish to name, and any stipulations you wish to have outlined.

They will also consider your goals and offer tailored recommendations on the best type of trust to choose.

When you are ready, your lawyer will draft the official documents for you to review and sign before having them notarized, ultimately finalizing the paperwork.

Creating the trust documentation is only the first step. Once the official documentation has been executed, you can begin the process of transferring assets from your name (the grantor) into the name of the trust.

For real estate, this transfer process would include changing the name on the title that is recorded with the county clerk’s office. There may be other documentation to prepare depending on the asset type and your situation, so talk with your lawyer about any possible complications.

You can contact your financial institutions directly to inquire about their individual policies on transferring accounts and portfolios into a trust. These transfers will require certain paperwork to retitle the accounts.

Personal possessions that the grantor wants control over distributing, like heirlooms and prized family artifacts, can be transferred into a trust, too. An attorney can help draft documents to transfer these possessions so nothing is left out.

If you have business accounts to consider, your attorney can offer advice about your different options and even interpret operating agreements, partnership agreements, or corporate bylaws around transfers.

What Are The Benefits of Having a Living Trust

After creating a living trust in New Mexico, the grantor and their family may be able to enjoy the following benefits:

1. Avoid probate: Most notably, an important benefit of a living trust is that your assets can avoid the lengthy probate process. Probate is a legal procedure that validates the will and handles any claims from creditors or disgruntled heirs. Probate can last anywhere from several months to years, delaying your beneficiaries from receiving their inheritance while adding to the cost of estate administration.
2. Maintain privacy: A traditional will becomes a matter of public record during probate, but a living trust is a private document. The terms and assets specified within the document are confidential, so your beneficiaries’ information remains protected.
3. Customizable instructions for distribution: Without an outlined arrangement, the state can decide how and when to distribute your possessions and accounts. Living trusts are the most personalizable form of asset disposition, as details can be tailored to fit your personal wishes for your assets. You can decide on when each beneficiary receives their inheritance, set expectations and conditions for distribution, and create provisions for special circumstances like caring for dependents or taking on other personal responsibilities. By comparison, distributions from a will happen automatically after probate has ended.
4. Reduce the likelihood of disputes: When you outline your wishes ahead of time, it gives your beneficiaries time to get used to the hand they’ve been dealt. It is possible to contest a living trust, the same way you would a will, but typically only for fraud or technical errors. You make the rules for your assets when you establish a living trust, so beneficiaries can’t contest simply because they don’t like your decision. Working with an attorney can help you ensure that all documents are organized and accurate to prevent the possibility of delays later.
5. Continuity after death or incapacity: There isn’t much we can control after we pass on or become medically incapacitated, but a New Mexico living trust lawyer can help you prepare for a trustee to step in and manage the trust without any delay. Having a living trust can prevent the need for a conservatorship or powers of attorney when you are medically incapacitated, ensuring that important assets like investment accounts or closely held businesses can be managed without complications.

Taxes and New Mexico Living Trusts

There are many federal and state tax laws that can impact the assets and income generated within your living trust. To fully understand how taxation may affect your living trust, talk with your New Mexico living trust lawyer.

Below is a simplified breakdown of different tax considerations in New Mexico:

• Income tax: A revocable trust is considered a “pass-through” entity by the IRS because the grantor retains control over their assets. The trust’s income is reported on your personal return, and you can pay income tax as usual. For an irrevocable trust, the trust is treated as a separate entity and will require its own tax ID for all income that is not automatically distributed to beneficiaries.
• Estate tax: As previously mentioned, an irrevocable trust can potentially protect a grantor’s assets if they exceed the federal estate tax exemption.
• Capital gains tax: When assets from a revocable living trust are transferred to a beneficiary after the grantor’s death, they typically receive a “step-up” in basis, which means the value of said asset is increased to the current fair market value on the date of death. This quality can reduce capital gains tax if the asset is ever resold.
• Generation-skipping Transfer (GST) tax: The GST tax is designed to prevent individuals from bypassing estate tax that would normally be paid during a generational transfer. For example, this tax would be applied in a situation where a grandfather sets up a trust with inheritance to be distributed to his grandchild, skipping over his immediate child’s generation. Even though the tax is named after a familial relationship, the tax can be imposed on non-family members who are at least 37.5 years younger than the transferer.

Call a New Mexico Living Trust Law Firm to Start Planning for Your Future

Forming a trust and having an estate plan in place is crucial to protect important assets: accounts, property, heirlooms, and even pets! A living trust is a customizable and private arrangement made between a grantor, a trustee, and beneficiaries.

Instead of leaving the future of your most prized possessions to chance, call a living trust law firm in New Mexico to start weighing your options for smart financial and estate planning.

The team at New Mexico Financial & Family Law has practiced estate planning for over 25 years, helping countless individuals like yourself set up a plan for the future of their hard-earned assets. A skilled New Mexico trust planning lawyer is just a call or click away.

To begin planning your living trust, reach out to the team at New Mexico Financial & Family Law and schedule a consultation by calling us at 505-503-1637 or contacting us online.