Creating a New Mexico living trust allows you to protect and maintain your assets for your use during your life, but allows you to pass them to your beneficiaries after your death. Often called a living trust, a revocable living trust is an effective estate planning tool. This form of trust is a legal entity that holds assets, provides privacy, and other benefits such as avoiding probate, or family fighting.
There are two people involved in a trust, the grantor (or trustmaker) as well as the trustee. You can either choose a person to be the trustee who controls the assets or choose an institution to do so. Overall, a revocable living trust ensures that the right money gets into the right hands at the right time.
Trusts are legal entities created with a purpose. These entities are able to hold assets and property but are considered empty until ownership is transferred into the name of a trustee. This is referred to as funding the trust.
The major difference between a revocable and an irrevocable trust is that the trustee will continue to own the assets in a revocable trust. Additionally, in a revocable trust, the assets can be managed by the original owner when acting as trustee. When it comes to an irrevocable trust, the trustmaker must appoint someone else to serve as trustee. In this case, the trustmaker will never be able to take back property or assets after putting them into an irrevocable trust.
In a revocable trust, the trustmaker can make changes to the trust at any time. The trustmaker can reclaim assets that are placed into it, make themself the trustee, or change the beneficiary. The trustee still retains final control.
Another difference between the revocable and irrevocable living trust is that a revocable living trust does not have its own taxpayer identification number. Revocable trusts will share a social security number with the trustmaker, and then all of the income and deductions from the trust are reported on the trustmaker's personal tax return. This is no different than if the trustmaker were to hold ownership of the assets personally.
If you have a will when you die, your assets will go through probate. This is a long and slow procedure that can cause your beneficiaries a lot of hassle. The costs of going through probate can also cut down what your beneficiaries inherit. With revocable living trusts, your beneficiaries can avoid the probate process which allows them to mourn without worrying about assets.
As compared to an irrevocable trust, revocable living trusts are extremely flexible. These allow you to change the names of your beneficiaries whenever you choose and allow you to make changes if you decide to start your estate planning young.
When you go through the probate process everything that you own becomes public knowledge. Additionally, the names of your beneficiaries and everything that they inherit will become public as well. If you have a revocable living trust, then you will be able to keep all of this private for both yourself and your beneficiaries.
If you are living in New Mexico and own assets that you wish to go to your heirs you may consider setting up a revocable living trust. This can ensure that if you become incapacitated your assets will get into the right hands. Additionally, upon your death, you can help your family avoid the probate process.
If you decide to set up a revocable living trust you should plan to spend around $1,000 in fees to set up and establish it. It is not necessarily a difficult process, but it does require a bit of documentation and paperwork. Overall, you should plan to discuss with a lawyer about what assets you want to place into the trust, and who you want to name as your trustee.