New Mexico Testamentary Trust Will Lawyer

A testamentary trust, drafted in your last will and testament, is a way to transfer assets from your estate into a privately managed account for a period of time. This account can hold onto assets until a beneficiary is ready to receive them, or it can provide investment income to beneficiaries for a number of years before finally distributing its contents to the final beneficiaries.

A well-formed testamentary trust can set your loved ones up for a smooth transition, providing them with the security of having a trustee to manage your estate’s most important assets. Your beneficiaries can eventually receive their promised share at a later date or through a series of transfers.

Many testamentary trusts also list a charitable organization as a beneficiary, potentially leading to tax savings for the estate or the other beneficiaries.

Establish your final wishes and take care of the people you care about most by setting up an estate plan with a testamentary trust will lawyer.

The legal council at New Mexico Financial & Family Law is committed to serving the community with diligence and care. We have been representing clients in will creation, trust formation, estate planning, and probate statewide for two decades.

A trusted team member can help you schedule a consultation with an experienced attorney when you call us at 505-503-1637 or contact us online.

Managing Your Estate With a New Mexico Testamentary Trust Attorney

A New Mexico testamentary trust attorney can help you form a more manageable comprehensive plan for the distribution of your final assets. Your lawyer can provide advice and guidance, offering suggestions for effectively structuring a will and testamentary trust with your unique goals in mind.

Some of the key responsibilities that your testamentary trust will attorney in New Mexico can oversee include:

• Reviewing your assets: Before drafting any official estate plan, your attorney will review the assets you plan on putting in a testamentary trust and will walk you through your best options based on your unique situation. Depending on what you want your final wishes to be, the optimal path for estate planning could change from what you originally intended.
• Determining provisions for testamentary trust: Once you and your attorney decide that a testamentary trust is the right option for distributing your assets, they will begin drafting the official documents. This professional care maximizes the chances that your trust can be funded and operate as intended.
• Ensuring legal compliance with state laws: A valid will should express the testator’s wishes in a clear and concise way to avoid multiple interpretations. Ambiguity or confusing instructions could delay probate proceedings and the distribution of assets to the testamentary trust. New Mexico recognizes most wills that are created by adults in a sound state of mind who signed the document with at least two unbiased witnesses present.
• Updating and reviewing the will as needed: Life brings on constant changes. Finances, relationships, and family dynamics can shift over time, affecting the standing estate plan. An attorney will ensure that the testator’s intentions for their estate are clearly defined and updated as they experience major changes during their lifetime.
• Guiding the executor and trustee posthumously: After working together closely to draft a testamentary trust, your attorney can have a record of your goals. Their familiarity with your estate can help your executor and trustee feel confident and well-prepared to guide your estate through probate and beyond.

The Process of Setting Up a Will or Setting Up a Trust

The last will and testament is the primary document that records your final wishes for assets, dependents, and other personal matters.

Drafting a valid will requires particular steps to ensure it is considered valid during probate and can proceed as intended.

Generally, a testamentary trust uses the following structure to make sure that everything is clear and able to be enforced:

• Identifying the testator and declaring intent to will property: The first step to drafting an airtight will is to make sure the will’s creator (called a testator) is clearly identified. The testator should also make it clear that they are creating a will with the intention of describing who inherits what property.
• Declaring the assets to be listed: Next, it is important to take a thorough inventory of all assets to be listed in the estate plan. You will want to consider both tangible and intangible assets such as jewelry and artwork or intellectual property.
• Determine who will inherit your property: You will need to name a beneficiary for every asset listed in your will. For a testamentary trust will, the trust acts as the primary beneficiary, but other beneficiaries can be named. Individuals like family and friends or entities such as charitable foundations can be listed as beneficiaries. If multiple beneficiaries are splitting one asset, it is critical to specify the proportion for each one. Anything not addressed will be distributed as the state sees fit per New Mexico’s intestate succession laws.
• Choose a personal representative to handle your estate: An executor (called a personal representative in New Mexico) is the individual responsible for managing your estate, the probate process, and the distribution of your assets. You should thoroughly discuss these responsibilities with a potential executor to ensure that they understand what they are in charge of. This person should be trustworthy, organized, and reliable. You may also want to name a succession of personal representatives in case your first choice is unable or unwilling to serve in the position.
• Choose a guardian for dependents: One of the main benefits of developing a last will and testament is that you can list who you wish to assume the protection of your dependents. When choosing a potential guardian for any dependents, consider factors like parenting factors, stability, style of living, etc.
• Choose a trustee to manage your dependent’s inheritance: In the event you leave behind dependents who are not prepared for their inheritance, you can appoint a trustee to manage these assets. The assets can be placed in a testamentary trust and used to cover necessary expenses for the dependent. For a trustee, you can choose a loved one or even hire a legal professional like a financial advisor. As the testator, you can decide when — or if — the dependent ultimately receives the assets in their entirety from the trust. You can choose a date, age, or even a life milestone, like their wedding day.
• Sign in front of witnesses: A valid will must be signed in front of two witnesses. These two individuals should be unbiased and have no relation to your will. These witnesses sign the official document to acknowledge that they watched you sign it, that you appeared to be of sound mind, and that you were not under any clear duress from another party.
• Store in a safe place: Keep a copy of your will and attorney’s information in a safe place that is readily accessible. If you choose to lock it away, write down its whereabouts with access instructions.
• Tax planning to protect assets: A testamentary trust is its own financial entity, so the IRS will expect you to file a S. Income Tax Return for Estates & Trusts if it makes over $600 in a given year. Aside from income tax, other implications individuals should consider are estate taxes, property taxes, and Generation-Skipping Transfer (GST) taxes.

What Is a Testamentary Trust?

A testamentary trust is a legal entity that assumes control of most — or all — of a decedent’s assets after they die. The decedent leaves instructions in their will for the trust to be formed.

They will also name a trustee and specify the assets that will be transferred into the trust’s ownership. However, all property used to fund a testamentary trust must first pass through probate court.

Once probate has concluded, the trust can be funded and begin operating as intended.

Benefits of Drafting a Testamentary Trust

Having a testamentary trust in place can provide crucial protections for your estate, your beneficiaries, and your peace of mind.

Specifically, arranging for a testamentary trust in your will provides the following advantages.

Control Over Asset Distribution

You call the shots when you make the decision to draft a testamentary trust. Normally, a will requires that beneficiaries receive their inheritance as probate concludes, without any delays or pre-conditions.

A trust can hold onto assets for years, decades, or generations at a time. The assets can appreciate in the trust, and they can be distributed only on certain conditions, like if a beloved nephew graduates college.

You can also specify that the money can only be used for qualified purposes, such as educational expenses or an event like a wedding.

Provisions for Minor Children and Dependents

Any minors or special needs dependents that are left in your care can be provided for through a testamentary trust. The trust effectively sets up a financial plan to provide for their future guardianship.

You can allocate funds and other assets essential to their upbringing. Additionally, you will appoint a trustee to oversee the dependent’s inheritance until a certain age or life milestone.

Tax Deductions

Capital gains deductions may also reduce the tax burden on beneficiaries, as the IRS recognizes the stepped-up basis for inherited assets in a testamentary trust. Any assets received by a beneficiary, including a trust, after processing through probate will have their principal value adjusted to reflect their current value at the time it is received.

For example, a home bought for $100,000 that is now worth $500,000 can negate the capital gains and effectively reset the principal purchase value to $500,000. This means that as the inheritance appreciates in value, the IRS will have the cost basis adjusted, decreasing the overall tax burden if the beneficiary ever decides to sell their inherited asset.

More Cost-effective and Efficient Than Some Other Options

Testamentary trusts can reduce the complexity and expense of probate since most assets will go into the trust. Additionally, the trust will have ample funds to support its management and compensate the trustee fairly.

By comparison, a living trust can cost more money since it must be activated and supported during the trust creator’s lifetime. The expense could eat into their ability to invest or enjoy their retirement savings as they see fit.

On the other hand, living trusts allow assets to bypass probate, so consider all available options when you meet with a New Mexico testamentary trust will attorney.

New Mexico Testamentary Trust Will Frequently Asked Questions (FAQs)

Below are some common challenges or questions a person may face when creating a testamentary trust will or acting as an interested party to one.

What if the Beneficiaries Contest the Terms?

Contesting a will is no easy feat. The state of New Mexico will only allow a will contest for a few reasons: undue influence, lack of sound mind, or technical error within the official trust.

Furthermore, the burden of proof falls on the individual contesting the will, so they must have substantial evidence to support their claim.

If one is successful in contesting a will, the estate becomes intestate unless an earlier valid version of the will is available.

How Long Does a Testamentary Trust Last in New Mexico?

The state of New Mexico allows for a testamentary trust to remain operable for either:

• Twenty-one years after the death of the someone who is alive at the time of the testator’s death; or
• Ninety years after the testator’s death.

This is called the rule against perpetuities, and is intended to prevent people from tying up property indefinitely.  NMSA § 45-2-901.

The trust will remain active until all assets have been fully distributed to beneficiaries.

In estate plans with conditions that require a beneficiary to reach a certain age before they receive their distribution, the process could take years. Some testamentary trusts can last decades if they are arranged to benefit multiple generations or pay out income over an extended period.

Can a Testamentary Trust Be Changed After the Testator’s Death?

Generally speaking, a testamentary trust is finalized once the testator passes away and can not be changed.

An individual can choose to grant the executor or trustee certain powers, such as using their discretion to modify the trust if deemed universally beneficial. The collective group of beneficiaries usually must approve of such changes, and if the court approves, the testamentary trust can be altered or terminated.

In rare cases, the court may intervene with a testator’s wishes or accept minor changes by citing the “Cy Pres Doctrine” which allows modifications that closely align with the testator’s wishes if they are impractical or impossible to carry out.  The New Mexico Trust Code also allows for court modification of a trust in order to “fulfill the purpose of the trust.” NMSA § 46A-4.412.

Start Estate Planning Today With an Experienced New Mexico Testamentary Trust Will Law Firm

Nothing can replace peace of mind. An effectively organized testamentary trust can legally ensure that your final wishes are honored well after you are gone.

Having a say about the future of your minor children, other dependents, and personal assets can help prevent your life’s earnings and treasured possessions from ending up in the wrong hands.

Set your loved ones up for success in your absence and ease the posthumous legal process by drafting a testamentary trust will with the help of our experienced attorneys.

A New Mexico testamentary trust will lawyer can walk you through your responsibilities, provide hands-on management, and help you personalize your estate plan to ensure that your wishes are carried out to the letter. To schedule a consultation with a testamentary trust will lawyer in New Mexico, call us at 505-503-1637 or contact us online.