Frequently Asked Questions
Estate Planning Questions
1. What is an “Estate Plan”?
An estate plan is a formal legal strategy designed to anticipate and arrange for the care and disposition of a person’s property either at death or because of permanent or temporary incapacitation. Typically, such plans include preparation of necessary legal documents such as wills or trusts, powers of attorney, and medical directives. Estate planning provides clarity regarding how your loved ones will be cared for, and maximizes the value of your estate by minimizing taxes, court costs, and attorneys’ fees associated with administering your estate. Estate planning may also include consideration of life or disability insurance, beneficiary designations, or re-structuring ownership of assets.
2. Do I really need a will?
Generally speaking, most people should have a will or other estate plan in place at their death to assist their loved ones in transferring their property. Having a will allows the person making the will to name the person or entity who will receive their property. Without a will, the distribution of a deceased person’s property and the guardianship of minor children will likely be left for the courts to determine, often in ways that are counter to the deceased person’s prior wishes.
3. I’ve heard I definitely need a trust in order to avoid the probate process. Is that true?
No, not every client needs a trust to best protect their family or implement an estate plan. Each individual and family situation is different, with its own nuances. After a preliminary meeting we can better advise you on what you will need.
4. Can I buy estate planning documents on the internet or at an office supply store?
You can, but you will not get the same result as you would speaking with an experienced estate planning attorney. Our experience allows us to interview you effectively to find out what type of plan will work best for you, and lets us know if and when a “standard” estate planning provision might not suit your needs at all. This gives you the confidence that your
5. What happens if I die without an estate plan?
Consequences of dying without a plan in place may include (i) no control regarding the disposition of your estate (state law will dictate who gets your property); (ii) no say in who cares for your minor children after your passing (again, to be determined by state law);; (iii) lack of control as to who deals with your belongings after your death and in what manner; (iv) potential negative tax implications; and (v) uncertainty by your family and loved ones as to whether they will be provided for in your estate.
Divorce Estate Planning Questions
6. I am getting divorced. Should I do a new will now?
In most cases, the answer is yes. New Mexico law provides that when the divorce is final, your ex spouse will no longer take property under your will. However, that only happens once the divorce is completely finalized. If you unexpectedly die while the divorce is pending, your soon-to-be ex-spouse is still your legal next of kin. At that point, the person you were trying to divorce can still inherit from you, still collect life insurance, and still control the disposition of your remains. In addition, certain documents, such as trusts and powers of attorney, may remain in full force and effect even after the divorce is final. Most people who are divorcing want to remove the soon-to-be ex spouse from their estate plan. Upon the commencement of divorce proceedings, I recommend putting a simple, temporary estate plan in place that will prohibit your spouse from taking your assets upon death, serving as your executor, or controlling your funeral. This plan can be revisited and replaced with comprehensive planning once the divorce is final.
7. I want to name someone other than my ex-spouse as a guardian for my children if I become incapacitated or die. Is this okay?
Technically, you can nominate whomever you would like as a guardian for your minor children if you die. However, ultimately, the court has jurisdiction over guardians and natural or adopted parents are given a priority over other people you may name. While the court will consider your wishes, the court will also consider a number of other factors (including the wishes of the other parent and, ultimately, what is in the child’s best interests).
8. I am getting divorced and previously gave my spouse power of attorney over my affairs. Can I revoke this?
Yes, you can revoke a previously executed power of attorney anytime. It must be done in writing and the best practice involves sending a formal notice to your spouse. We can help you with this.
9. I am getting divorced. My spouse and I previously executed a joint trust. Is this a problem?
While New Mexico law automatically removes an ex-spouse from a ill or life insurance designation upon the finalization of divorce, it does not automatically remove your ex-spouse as a beneficiary of a trust or as your co-trustee. What happens to such a trust upon divorce depends on numerous factors, including the purpose of the trust and whether it was revocable. You should contact a lawyer to discuss this issue.
10. What is a “trust”?
A trust is a legal relationship where one or more persons transfer property to a trustee to hold and administer for the benefit of beneficiaries. The maker of the trust (sometimes known as the “Settlor” or “Grantor”) conveys money or property to a Trustee, who administers the assets of the trust for the benefit of the beneficiaries . Trusts can be created for a number of purposes including tax savings, privacy, creation of unique or special estate plans, holding specific assets (such as real estate, art, or a firearms collection) or simply because they offer the Settlor a level of certainty that other types of estate planning may not.
11. Why is a trust better to have than a will?
For many clients, a revocable living trust offers more value than a will-based estate plan. A revocable living trust allows you more control over what happens after you die, including using funds from life insurance to fund your plan. Other reasons to prefer a revocable living trust include avoiding probate (or more than one probate when property is owned in multiple states), allowing assets to be transferred quickly and privately (probate is a public proceeding that produces public records of how property was transferred), and allowing you to control what happens during temporary or permanent incapacity (a successor trustee is empowered to use your property to Not every client needs a trust for an effective estate plan. If a lawyer recommends that you create a trust, he or she should be able to explain in detail why you would benefit from such a trust.
12. Can I amend or revoke a trust once it is created?
This depends on whether the trust is “revocable” or “irrevocable.” Most of our clients use revocable living trusts for their estate plans, which can be amended or revoked by the client after being created.
13. Why would I consider make an “irrevocable” trust?
Irrevocable trusts are useful tools for several aspects of estate planning. Commonly, they are used as a means of minimizing estate taxes for large estates. Because the trust funded prior to death, the funds are not part of the estate for tax purposes. Another use for such trusts is in planning for people with special needs. Many valuable forms of federal and state aid not available to individuals with assets or income above a certain threshold. Careful trust planning can maximize those benefits while still allowing you to provide support and maintenance for your loved ones. Finally, irrevocable trusts can be useful for protecting assets that would otherwise be available to the trust’s beneficiaries.
14. Should I consider a professional trust company to serve as my trustee or successor trustee?
In many cases, professional trust companies (such as bank trust departments or investment institutions) offer unique benefits that a friend, family member, or other advisor just cannot offer. Such benefits include professional management of assets, resources and advice, and institutional competence. In most instances, professional management is more suited to larger estates or estates with unique assets. Many smaller estates see greater benefit from the less expensive, personal management of a family member, friend, or trusted advisor.
15. I am the beneficiary of a trust and want information from the trustee. Do I have any rights?
Yes. The law provides trust beneficiaries with certain rights to information about the trust and the trustee’s management of the assets. If the trustee fails or refuses to provide the information as required by law, it may be possible to bring a legal action against them to compel the information or to remove them as trustee.
16. Can I compel a trustee to make a distribution of trust assets to me?
Sometimes. The trust document provides the trustee with guidelines they must follow in determining whether to make a distribution. If the trust gives the trustee the discretion to make or not make a distribution, then you most likely must abide by their decision. If the trustee is required to make certain distributions by the terms of the trust, then they cannot choose not to make that distribution and may be compelled to do so.
17. Does a trust need to file an income tax return?
It depends. Just as an individual who receives income must file an income tax return a trust may need to as well. Sometimes the Settlor (or “Grantor”) of the Trust may include trust income on his/her income tax return. You should consult a licensed and qualified attorney or Certified Public Accountant regarding specific tax questions.
18. What is “probate”?
In most contexts the word “probate” refers to the legal process of having a Last Will and Testament given legal effect by a court and the process of administering the assets of the person who has died.
19. I believe my loved one has stored his/her will in a safe deposit box. Is there a process to obtain entry into it?
Yes but certain restrictions apply to the bank. It is typically recommended that you consult a lawyer beforehand who can guide you through the process and assist you in dealing with the bank.
20. I have been named as personal representative of an estate. What are my duties?
In all likelihood you already have an attorney. You should speak to that person for detailed instructions. If, however, for some reason you do not the very first thing you should do is consult a qualified attorney about the legal duties imposed upon you. While many duties are the same in every case, some cases require additional levels of court supervision or involvement that will expand your duties.
21. What is a “bond” and will it be required?
A probate bond is a bond issued to secure the performance of a personal representative of an estate, and its purpose is to protect heirs and creditors from being harmed by the negligence or malfeasance of the administrator or executor. While most wills that provide for “independent” administration of an estate (i.e., non-supervised) waive the requirement of a personal representative posting a bond, a court may always require any personal representative to post one. If a bond is required, you will fill out an application with a company authorized by law to issue such bonds and, if approved for the bond, be required to pay a premium.
22. I had a power of attorney over the deceased person. Can I just use that to deal with the estate?
No. Every Power of Attorney terminates upon the death of the principal who made it.
23. Is the personal representative required to pay the debts of the deceased person?
The law generally requires that debts be paid before the rest of the estate is distributed to beneficiaries. There are certain exceptions (especially related to the deceased’s homestead and close family) but you should generally assume that the debts of the deceased will be paid from their estate prior to distribution to beneficiaries.
24. How expensive is probate or trust litigation? How long does it last?
These are the two most commonly asked questions when clients first speak to a lawyer about their case. Unfortunately, the answer is “it depends.” Numerous factors can affect both the cost and duration of litigation. Some of those factors are the complexity of the issues involved, the manner in which the other party or parties litigate the case, and the and when the court is available to hear the case.
25. What is “adult guardianship”?
Adult guardianship is a legal process designed to protect vulnerable persons from abuse, neglect (including self-neglect), and exploitation through a court-supervised administration. Adult guardianship provides for the person’s care and management of his or her money while preserving, to the largest extent possible, that person’s independence and right to make decisions affecting his or her life.
26. Why may adult guardianship be necessary?
Adult guardianship is necessary when an adult is no longer able to physically care for themselves and/or no longer able to manage their financial affairs.
28. How is an adult guardianship created?
The creation of an adult guardianship is a very specific legal process that should be undertaken with the help of a qualified attorney. Generally, a person who wishes to apply for guardianship over another person files an application in a court that hears guardianship cases. The application cites the necessity for the guardianship, explains to the court the nature and degree of the proposed ward’s incapacity, the qualifications of the proposed guardian, and other pertinent information. After the application is filed, a court investigator investigates whether a less restrictive alternative is available which would allow the ward to keep his/her liberties and still be cared for. After all parties have been served and the applicant is ready to proceed, a hearing is held so that the court may consider all of the relevant evidence and rule on the application. Incapacitation must be proven by clear and convincing evidence (a high standard of proof) and must involve the use of a certificate from a physician confirming the incapacity.
29. Are there alternatives to adult guardianship? What are they?
Yes. Adult guardianships are expensive and involve a time-consuming legal processes that require a lot of work from the guardian. If your loved one still has the capacity to execute disability planning documents they should consider doing so. Such documents may include powers of attorney (which can be for medical decision-making or related to finances/property) or a Trust. If you have questions about these alternatives or whether your loved one has the legal capacity to sign them, you should speak to a qualified attorney.