When people hear the term “estate planning,” they might be tempted to equate it with people who drive luxury cars and live behind locked gates in fancy homes — but it’s really a much more universal concept than that.
Estate planning involves making plans to care for your family and loved ones, should something unexpected happen to you. It also involves making plans for your own care, should you suffer an unexpected health crisis. Finally, it obviously concerns making plans for the transfer of your assets when you pass on.
Estate planning is such a basic and universal concept, but one that we sometimes put off tending to because we don’t want to contemplate the inevitable, let alone the possibility of unforeseen setbacks.
Once you’ve entered the working world and started accumulating assets — cars, homes, furnishings, cash, vehicles, even precious photos and mementos — you should begin to consider creating an estate plan. The longer you put it off, the greater the risk that an unexpected event can throw a wrench into your life plans and the lives of your loved ones.
To better understand estate planning — and the necessity of embracing the future with concrete contingencies in place to care for your loved ones and yourself — contact the attorneys at Bischoff & Bischoff Law, P.A. Our experienced estate planning attorneys stand ready to help clients in Albuquerque, Rio Rancho, Santa Fe, and throughout Valencia County, including Los Lunas and Belen.
We’re all familiar with the concept of the last will and testament from TV and movie dramas, where someone’s will is read and gasps rise from the attendees who feel cheated. While drafting a will is an essential first step when designating who gets what after you pass, it is not always the best or ultimate solution in estate planning.
First of all, wills must go through probate court, which can take months. Should anyone take issue with the provisions stated in the will, the will can be challenged, and both the cost and time of probate proceedings will escalate.
A will must name an executor, someone you trust who will oversee the inventory, potential sale, and distribution of your assets when you’re gone. Depending on the size of your estate, this can be a heavy burden for anyone without a financial or legal background. During probate, attorneys will inevitably need to be hired to answer questions and negotiate settlements if any disputes arise.
It’s even worse if you die without a will, as this is known as dying intestate. In that case, the court will have to choose an administrator to serve in the executor’s stead. Then the court will be left with the task of deciding who gets what, generally using a hierarchy of relatives left behind, starting with spouse and children.
There is, however, a simplified probate process in New Mexico for estates worth less than $50,000, and for a surviving spouse with community property valued at less than $500,000. Assets outside of community property would still be subject to probate. Consulting an attorney in both situations is advised.
A better solution that avoids probate almost entirely is to execute a living trust. You, as the trustor, can place some or all of your assets into a trust and name a trustee to oversee the management of your assets. The trustee acts as an executor would in a will going through probate. However, the trustee becomes, in a way, both probate court and executor after you’re gone
The best part about a living trust is the “living” aspect of it. While you’re alive, you can act as the trustee. You can specify conditions for the named trustee in waiting who will assume the role and responsibilities, should you become incapacitated or pass on. You can even revoke the trust and write a new one, or make amendments to it to redesignate your beneficiaries and amend which assets are assigned to them.
In contrast, an irrevocable trust is cast in legal stone. You assign all your assets to a trustee, who manages them in perpetuity. You can neither amend nor revoke this type of trust. The major advantage to an irrevocable trust is that it places your assets out of reach of financial claims against you, since you no longer control them or in a legal sense, even own them. There can also be several tax advantages.
In short, for most people, a living trust is the most sensible and beneficial choice. There are other types of trusts tailored for specific circumstances, so in drafting any trust or estate planning instrument, it’s important that you seek the knowledge and counsel of an experienced estate planning attorney.
While a living trust will seamlessly transfer the management of your assets to your named trustee should you become incapacitated, you may find yourself in the precarious position of being hospitalized and unable to speak for yourself.
Planning for medical contingencies is also an important element of estate planning. Through what is called an advanced healthcare directive, you can specify the decisions you would make in a life-or-death situation. Do you want to be resuscitated? Put on perpetual life-support? Allowed to die naturally? Donate your organs?
An advanced healthcare directive will specify your decisions, but you must also empower someone to convey those decisions to the attending physicians. This can be done through a power of attorney (POA), which names someone to convey your wishes for you.
The combination of an advanced directive and POA can become your voice should you become incapacitated and unable to speak for yourself.
As you can see, estate planning goes well beyond a simple will that outlines basic considerations for the length and inconvenience of probate proceedings. It also can do so much more than simply helping you clarify your wishes for your own medical prerogatives in times of incapacitation. These are not easy decisions, and the legal documents needed to achieve your goals – with wills, trusts, advanced directives, and powers of attorney – are not something the average person can do on their own.
If you or someone you know is considering creating an estate plan, or you simply just want to learn more about the estate planning process, reach out to our firm, Bischoff & Bischoff Law, P.A. Our experienced estate planning attorneys can answer all of your questions and provide you with the guidance and advocacy you need.
We at Bischoff & Bischoff Law, P.A., are experienced in all phases of estate planning. We can provide reliable guidance that will help you put together the legal instruments needed to care for you and your loved ones in the face of any eventuality. If you would like to learn more about estate planning and live in Albuquerque, Rio Rancho, Santa Fe, or anywhere else throughout Valencia County, including Los Lunas or Belen, call or reach out to our firm today!