Addressing New Mexico Estate Planning

Estate planning in New Mexico involves the management and distribution of your real and personal property upon your death or if you should become mentally incapacitated.

Creating a Will

A will states your intent on how you wish your property to be distributed on your passing and can also minimize tax consequences. You can revoke or modify your will during your lifetime. If you die intestate, or without a will, the state of New Mexico will appoint an administrator and distribute your assets according to the state's succession laws that may not be as you intended.

A will should include the following:

  • Property distribution
  • Provisions for children
  • Executor, and alternative, to administer the estate
  • Funeral arrangements
  • Simple trusts

Avoiding Probate

Probate is the legal process that determines the validity of your will, assesses the taxes and claims on your estate, and distributes the remainder of your estate's assets to your heirs. Even with a will and other planning tools, probate may not be avoided completely, especially in large estates, but there are ways to dispose of assets during your lifetime to avoid probate.

Living trusts

Also known as inter vivos trusts, these documents transfer assets and title to property into a trust while allowing you as the trustee to continue to control your assets. Your successor trustee manages the trust and distributes your assets when you die.

Joint ownership

Joint ownership of real or personal property with a right of survivorship allows title of your assets to automatically pass to the surviving joint owner on your death. Joint bank accounts are a common example of assets that are held in joint ownership.

Payable or transfer-on-death designations

A bank account may have a POD, or payable-on-death designation, as may stocks and bonds, which are called TOD or transfer-on-death designations. These designated assets transfer rights to these accounts on your death. New Mexico real estate laws also permit a transfer-on-death deed or beneficiary deed for real property.

Irrevocable life insurance trust

Transferring ownership of a life insurance policy to an irrevocable life insurance trust will minimize the value of your estate, but you do lose control of it and cannot change the beneficiary.

Small estate exemption

New Mexico has a small estate procedure for estates valued at $50,000 or less where the estate, other than any real property, may be distributed by filing an affidavit 30 days after the decedent's death.

Financial Power of Attorney

You can legally appoint someone to handle your affairs. A durable power of attorney takes effect immediately and continues in full force and effect if you become incapacitated. You can also limit your agent's power and make it effective only upon a physician's certification of your mental incapacity.

Health Care and End-of-Life Decisions

A living will or power of attorney for health care is also known as an advance health care directive. This document states your intentions regarding end-of-life health measures and can be combined with a Power of Attorney for Health Care in which you appoint someone to make critical decisions about your health care. Forms for New Mexico advance directives are available online or may be obtained at hospitals or health care facilities. You can modify these instructions by destroying the old directive and creating a new one. If you do not have one, a family member may make health care decisions for you contrary to your wishes.

Additional Planning Considerations

Most individuals should have some of the above-mentioned estate plans for distributing their assets, but there are other considerations:

  • Estate taxes: Only very large estates valued at $5.25 million for 2013 are subject to federal estate taxes. New Mexico imposes no state estate tax.
  • Life insurance: Life insurance can provide a valuable financial cushion if your children, spouse or other dependents need support in the long term. But if you have other sources of benefits like a pension, group life insurance or large IRA, it may be an unneeded expense.
  • Business succession: You should have a prearranged method of distributing your business interests on your death or retirement such as a buy-sell agreement, a trust, or a family limited partnership structure.

Consider a New Mexico Estate Planning Attorney

State and federal estate laws are constantly changing. Consult a New Mexico estate planning attorney to ensure your financial and medical affairs are managed according to your intentions.

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