Resources · New Mexico

Do I need a trust or is a will sufficient?

People often ask whether they need a trust or whether a will is enough. It is a reasonable question, and it does not have a single answer. For some people, a will-based plan may be sufficient. For others, a trust may provide useful additional structure. Which is the better fit generally depends on the person’s property, family, and what they are trying to accomplish.

This article describes what wills and trusts generally do under New Mexico law and how they differ. It is general information, not legal advice about your circumstances, and it does not try to answer the question for any particular person.

What a will generally does

A will generally directs who receives property that passes under the will at death. It also names a personal representative, the role often called an executor: the person responsible for settling the estate and distributing it according to the will.

New Mexico sets specific formalities for a will. It must be in writing, signed by you or at your direction, and signed by at least two witnesses.

Property that passes under a will is generally subject to probate — the legal process for settling a person’s estate after death under New Mexico’s probate code. How involved that process is may vary depending on the estate and the circumstances.

A will can also do something a trust generally does not. A parent of a minor child may name a guardian for the child in a will, or in another signed writing witnessed by at least two people.

A will does nothing while you are alive. It generally takes effect only at death.

What a trust generally does

A trust is an arrangement in which a trustee holds and manages property according to written terms, for the benefit of one or more beneficiaries. The person who creates the trust is called the settlor.

A trust may be created during your lifetime or through your will. New Mexico law sets requirements for creating a trust, including requirements concerning intent, beneficiaries, and the trustee’s duties.

Many trusts used in estate planning are revocable — meaning the person who created them can change or cancel them. Under New Mexico law, a trust can generally be revoked or amended by the settlor unless its terms expressly say that it is irrevocable. While a trust is revocable and the settlor has the capacity to revoke it, the trustee’s duties are generally owed to the settlor. In practical terms, that may mean the settlor keeps control of the trust during their lifetime, depending on how it is written.

A trustee also has continuing legal duties. New Mexico law generally requires a trustee to administer the trust in good faith and according to its terms, and to keep beneficiaries reasonably informed about it.

Where the two may differ

Timing. A will generally matters only after death. A trust may operate during life as well, and a properly prepared and funded trust may provide continuity if the person who created it becomes unable to manage trust property.

Probate. Under New Mexico law, a provision in a trust that transfers property at death is treated as operating outside the will. Property properly held in a trust may therefore be administered under the trust’s terms without passing through probate. Property that is not held in the trust generally is not covered by that arrangement.

Funding. A trust generally controls only property that has been placed in it. New Mexico law describes a trust as being created by transferring property to a trustee, or by an owner declaring that they hold identifiable property as trustee. Signing a trust document does not necessarily accomplish that step on its own. Moving property into a trust — often called funding the trust — may involve changing how real estate, accounts, or other property is titled.

Upkeep. A trust may require ongoing attention: keeping property titled correctly, adding new property when appropriate, and meeting the trustee’s continuing duties. Whether that is worth the added cost and effort depends on the situation.

Why a trust does not necessarily replace a will

People who have a trust often have a will as well. A will may leave property to the trustee of an existing trust, so that anything left outside the trust at death can become part of it. This is sometimes called a pour-over will. Property that passes through a pour-over will is still passing under a will, so it may still be subject to probate.

A will may also be where a parent names a guardian for minor children, which a trust generally does not address.

Neither a will nor a trust takes the place of a financial power of attorney or an advance health-care directive. What documents are included in a basic New Mexico estate plan? describes how those documents fit together.

Things that may pass outside both

Some property may pass under a beneficiary designation or other transfer-on-death arrangement rather than under a will or a trust. Life insurance, retirement accounts, and certain bank or investment accounts commonly work this way. New Mexico law treats those arrangements as operating outside the will.

Whether a plan uses a will, a trust, or both, those designations may need to be coordinated with it. A trust generally cannot redirect an account whose beneficiary designation names someone else.

Questions that may shape the answer

There is no checklist that settles this. The following are some of the questions that may make a trust worth discussing, and none of them decides the matter on its own:

• Do you own real estate, or property in more than one state?
• Are you concerned about who would manage your property if you became unable to?
• Would you want some beneficiaries to receive property over time rather than all at once?
• Are there minor children, a blended family, or a beneficiary for whom an outright distribution may not be appropriate?
• Does privacy in how your plan is carried out matter to you?
• How much ongoing attention are you prepared to give the plan after it is signed?

It is a question to ask, not an assumption to start from. Whether a trust, a will-based plan, or some combination is appropriate depends on your circumstances, and it is a conversation to have with an attorney rather than a decision this article can make.

A reasonable next step

If you are weighing this question, what to gather before a first conversation sets out what is useful to think through. You can also read about trusts and how the process works, or contact Amanda by email or schedule a free introductory call.

This article is general information about estate planning in New Mexico. It is not legal advice, it does not account for your circumstances, and reading it does not create an attorney-client relationship.