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Planning to Fail?

by Sofia Wolinski, Legal Assistant Treveri Law, PC

It is always a good idea to do planning. As Ben Franklin famously said, “if you fail to plan, then you plan to fail.” In the estate planning context this is especially important although often the failure to complete a basic will or other incapacity document may be more than just forgetfulness – it could be a conscious decision.

What is a Will?

A will is a document that is signed before a Notary and two witnesses that directs the distribution of your assets by a named Personal Representative after your death to your designated heirs and beneficiaries. In a valid Will, you can disinherit heirs, grant specific distributions to non-family members and charities and you will designate whether you want your remains buried or cremated. The fact that you appointed someone to be your legal representative, in New Mexico, a Personal Representative, means they have priority over anyone else who may think they have the right to represent your estate.

Conversely, dying without a Will means that any person who is a blood heir will have the right to make a claim for a share of your estate. If you had no children, then your assets would automatically go (after payment of all debts and creditors) to your siblings and then their children. Without a Will or cremation authorization, your grieving kids can effectively put a grinding halt to your funeral services if there is a fight between them as to whether you wanted to be cremated or not. And without a Will, anyone, including a creditor, can petition the court to be the Personal Representative and therefore take control of your estate.

However, as with all your legal documents, a Will and Trust must be done while you have capacity to understand why and how your proposed estate planning is going to work. If your documents are drafted on an auto-populate system (eg. Rocket Lawyer, Nolo, etc.) and are signed by you in the middle of the night or before a notary who is not a legal professional, then your documents are not worth the paper they are printed on. The reason you need to work with an attorney and to sign before two witnesses and a notary is because when a wills or other estate planning documents are contested it is because there is an allegation that they were signed under duress, coercion or the signor lacked competency. The attorney you worked with to complete your documents will effectively become your voice after you die, to testify that you were not influenced, or forced to update or sign your documents all while you demonstrated that you understood what the signing of these documents meant.

What is Probate?

It is important to note that even with a valid Will, whether your family and heirs will need to go through Probate depends on what types of assets you own, the value of your assets and whether your heirs or creditors will contest the distribution of assets from the estate.

Probate is a court proceeding that authenticates the will (if there is one) and appoints a Personal Representative. In New Mexico, this is an informal process meaning that the appointed Personal Representative will have the legal authority to control assets, negotiate with creditors, transfer tangible and intangible assets, close down social media accounts, work with business partners to liquidate company shares, file and pay IRS and state tax liabilities, make insurance claims and finally distribute assets to heirs. Because probate is a public proceeding, anyone, including a creditor can ask the court to be appointed to manage your assets and anyone can obtain a copy of your Will which must be filed with the Court. This means that realtors can contact vulnerable elders who just lost a life partner to convince them to sell or to get a reverse mortgage. Or young beneficiaries can be targeted by scammers who will know how much they inherited.

What is a Trust?

A trust is a legal arrangement that allows a trustee to hold and direct assets in a trust fund on behalf of a beneficiary. One of the most common trusts is called a living or revocable trust. It allows you to place assets in a trust while you are alive, with control of the trust transferred after you die to the Trustee you have designated for the benefit of your named beneficiaries. In your trust you can dictate whether assets should be distributed immediately (after payment of debts and creditors) to your heirs, or whether the assets should be held back and used to help pay for things like college, to establish a business or even pay for a wedding. In a Trust, you can also provide for your Special Needs heirs by establishing a special trust that has particularly beneficial taxation requirements and distribution requirements that will not cause them to lose their current and future federal and state disability benefits.

Even if you are young, establishing a plan to have someone make decisions for you, to distribute your assets, or to provide for a spouse, or children, you should have an estate plan. Failing to plan should not be an excuse.

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