By The Wyoming LLC Attorney TeamSep 01, 2022
A New Mexico revocable living trust (RLT) is an estate planning tool that allows individuals to manage their assets during their lifetime and dictate their distribution after death. RLTs provide privacy, avoid probate, and prevent family disputes. Assets such as investments, bank accounts, real estate, business interests, and personal property can be placed in an RLT.
A revocable living trust (RLT) is an estate planning tool that allows individuals to efficiently manage their assets while alive, and ensure they are divided up and allocated according to your wishes when you die. RLTs allow you to set up a system that guards your privacy, avoids probate, and prevents potential fighting between family members about inheritance or wills upon your demise.
An RLT is set up while an individual is still living and of a clear mind. They can be set up at any time, but tend to be more common among older individuals trying to plan out their estate. To set up an RLT you will need a grantor (the owner of the estate is sometimes referred to as a “settlor” in New Mexico) and a trustee (this can also be the owner, but is often another individual).
This trustee is hired to manage and administer the estate while the grantor is still living, and to disperse the assets to the beneficiaries according to the agreement after the grantor has died.
Throughout this process, the grantor remains in control over the estate and at any time can revoke the trust (hence the name, “revocable”). The trustee will legally be on the title for the grantor’s assets, but the stipulations of the trust ensure the grantor still has full power and will still collect on any profits or payouts the assets might generate.
By moving your assets into a trust, it means you will avoid the process of probate. Probate is when a deceased person’s will is read by the courts and assets are allocated to named beneficiaries. Though this process sounds similar to a trust, probate is often a lengthy, expensive affair. Trusts can accomplish the same thing in a shorter time period usually without involving the courts.
You can put most assets into an RLT, though each type will require a different transfer process, and each state may vary in its criteria. Below are some but not all assets you can put into your RLT.
Here are 5 reasons to start a revocable living trust in New Mexico.
A major benefit of setting up an RLT is to avoid probate. When a person dies and only has a will (or no will at all), their estate is handed over to the courts to decide who gets what. Oftentimes this is a lengthy, costly, and stressful process. It is not uncommon to have family members fight over inheritance and without thorough direction, many instructions can be contested.
In New Mexico, there is no inheritance or estate taxes which can make these assets even more valuable for opportunistic relatives. With an RLT, you will mostly avoid probate (though there may be a few items that still need to go through it), and ensure your assets go where you want them. RLTs make this happen faster, with fewer headaches, and less spending than probate.
Because an RLT is set up when you are still alive, you remain in control of your assets while the trust is being held. This allows you to update the trust, add or remove assets, or revoke the trust if you deem it necessary.
When assets are put in a trust, the legal ownership of them transfers over to the trustee, meaning they will no longer be in your name. This can be beneficial for those who wish to remain private, and it can make it harder for the general public to ascertain your net worth or the scope of your assets.
RLTs provide less hassle both during your lifetime and after you die. You can rest easy knowing that your assets are in good hands and your estate is squared away while you are still living, and know you are saving your beneficiaries hassles down the road.
Though the FDIC insures bank deposits of up to $250,000 when you put assets in a trust, it will insure them for each beneficiary for up to $250,000 up to $1,250,000 total.
Revocable living trusts are good for anyone who wants peace of mind about their estate planning and also values their privacy. You don’t have to have a large estate to start an RLT, but they are very popular with individuals who have a lot of assets.
Compared with a will, an RLT can be more comprehensive and will avoid the lengthy probate process. They also offer flexibility to change around asset allocation which can be easier to do with an RLT than with a will, though they are more expensive than wills.
If you are interested in starting an RLT, you should consult with an estate planning attorney or a financial planner. The process is not exactly hard, but it does take a while to inventory all your assets and ensure they are properly transferred over to your trustee. Because of this, you’ll want to start early and hire a trusted professional to walk you through the process.