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Probate and Trust Administration
After a loved one dies, Probate is the legal process of administering the decedent's estate. Even if the deceased person had a Last Will and Testament, someone will have to apply to the Probate Court to prove the Will was valid, find and take control of assets, pay taxes and final bills and ultimately distribute the assets.
Having a written Last Will that was executed by a legally competent person will make is easier for your loved ones to inherit your assets. If you fail to do a Will, the Probate court will rely on established New Mexico law to figure out who and how much heirs will get. Either way, the probate process is public - meaning that your Last Will does get filed with the Court and is accessible by anyone. And if your heirs have no interest in becoming Personal Representative and therefore legally responsible for your bills? Then anyone - including your creditors can petition the court to become your Personal Representative and have access to your assets.
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Having an established and well funded Living Trust means that when you die, your Successor Trustees automatically get to step into your shoes. The ownership of the asset stays with the Trust for the benefit of your heirs. The Trustee will continue to manage the assets as per your detailed instructions and may even establish new Trusts to protect your beneficiaries if they happen to get themselves involved in a Divorce, Bankruptcy or lawsuit situation.
A Trust will also protect assets for beneficiaries who are minors. Under the law of most states, any person under the age of 18 can not legally inherit assets, which means that if little Johnny is supposed to get something, and if no trust is set up for little Johnny's benefit, the asset will be managed by a court appointed guardian until little Johnny is 18 at which time the balance of the funds will be given to him. The distribution is public (ie. predators can find about it) with no requirement that the funds are used for something to protect the heirs future - which means it could all go to Bitcoin, a yellow corvette or a big party instead of what you would have wanted your money used for. If the money is in Trust for Johnny's benefit, then a Trustee will step into the parental role of discretionary distributions to Johnny until he can prove he is mature enough to spend and protect his own money. If Johnny has a drug or alcohol or gambling problem, or if he is the recipient of means-based federal or state benefits, the Trustee can hold on to the assets and establish Supplemental Needs Trusts for Johnny's benefit.
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Whether you are a Personal Representative or a beneficiary to the estate of a loved one, Treveri Law can help you navigate the Probate and Trust Administration process. We have worked with the Probate Courts of nearly every County in New Mexico. Call 505-808-0234 today to schedule a consultation.
I have been appointed Executor of an Estate, what do I do now?
When a parent or individual passes away, regardless of what estate planning documents they have completed, someone needs to make sure the deceased person's estate is closed. What does this mean? It means that someone needs to take charge.
Under New Mexico law, a Personal Representative (or Executor in other states) is the person appointed by the Court to take responsibility in finding, valuing and distributing assets of a deceased person. Even if a person is named in a Last Will and Testament they can not take over assets until they have been appointed by the Court. And Court does not automatically need to appoint the person named in the Will. Anyone, including a creditor may petition the court to become the Personal Representative. And anyone can contest the appointment of the Personal Representative.
What if I am the child of a person who died, do I automatically become the Personal Representative?
No. The Probate Court will review the Last Will to determine who the deceased person would have wanted to administer the estate. If there is a contest to that nomination, the Probate Judge is required to forward the case to a District Court Judge for hearings and findings. While informal Probate in New Mexico is very inexpensive, formal probate before a District Court is estimated to result in costing the estate at least 10 to 25% of the value of all the assets.
Once the court has appointed the Personal Representative, what is their job?
Once appointed, the Personal Representative is supposed to find all the assets, pay the final taxes and credit card bills and then distribute what is left to the persons who are legally entitled to receive assets as per the Will. If there is no Will, anyone, even an estranged child or creditor - has the right to make a demand for their share of the estate - provided they prove they are in fact the blood or legal heir to the estate.
In addition to determining who the heirs are supposed to be, the PR is required to find all the deceased persons assets and debts and on-line accounts and secure them to prevent identity theft. This may mean going back to make sure assets are actually owned by the deceased person - as in did they really have the right to claim a 1/5th interest in that ranch land? Was that ranch land, or oil and gas well in their names so that they can be transferred to their heirs? Have taxes been paid in the past? Are their any outstanding debts? Will the surviving spouse be able to collect social security benefits or pensions? Will the Surviving spouse be capable enough to manage a Trust? Will it be necessary to report to the IRS the total Gross Estate of the decedent so that the surviving spouse may benefit from an unused exemption amount?
A Personal Representative also needs to understand that their responsibility to the deceased person's estate will last at least a year after death and sometimes longer if the estate is contested. Further, if money is spent too quickly and valid creditors or an IRS claim arises, the Personal Representative may find themselves personally responsible for paying those bills.
These are only a few questions and issues a Personal Representative will have to deal with when they are appointed. At Treveri Law, we work with Personal Representatives, Trustees and other fiduciaries every day to help them avoid the pitfalls and potential liability when marshalling assets, assessing values and distributing assets.
Is it always necessary to do Probate Administration?
No. Probate is only needed for property in the 'probate estate' meaning only those assets without beneficiary designations become subject to the probate administration. Therefore, our firm assists our clients with establishing and verifying annual their beneficiary designation on real property, investment accounts, IRAs, life insurance policies and even bank accounts holding more than $50,000 in funds. By completing and diligently maintaining these designations, our clients may be able to avoid the probate process and expedite and simplify distributions for surviving spouses and heirs.