Albuquerque Attorneys Prepare Trusts to Carry out Clients’ Wishes

Knowledgeable estate planning lawyers can protect your assets and help establish your legacy

Even if you have accumulated substantial wealth, you can still be vulnerable to losses related to legal liability, taxation and healthcare costs as you age. Protecting your wealth for your own use and to pass on a suitable legacy to your loved ones might require added safeguards. At Hurley, Toevs, Styles, Hamblin & Panter, P.A. in Albuquerque, our estate planning attorneys help clients establish trusts to protect their wealth and facilitate the transfer of assets at the appropriate time. Trusts can be important parts of your comprehensive estate plan, which our skilled attorneys can craft to meet your specific needs.

Common types of trusts in New Mexico

A trust is an entity created by a grantor to serve as the legal owner of assets transferred into the trust. Management and distribution of trust assets is controlled by a trustee appointed by the grantor. If you create a trust, you no longer technically own the assets, so in some circumstances they can be protected from claimants who might want to attach your wealth. You might also be able to use a trust to reduce the size of your estate, so you do not trigger the federal estate tax. For these reasons and more, New Mexico residents establish various types of trusts, such as:

  • Revocable living trusts — These flexible instruments can be changed or dissolved at any time while allowing the grantor to transfer assets upon their death outside of the probate system.
  • Irrevocable living trusts — An irrevocable trust must stay in place, but it might be useful to shield assets from creditors, lower tax liability or retain eligibility for Medicaid long term care benefits. 
  • Testamentary trusts — You can utilize your will to create a testamentary trust with funds from your estate.  
  • Marital trusts — When a married person’s assets exceed the federal estate tax threshold, they can create a marital trust to help their surviving spouse avoid taxation. 
  • Special needs trusts — Families often create a trust that can help to support a loved one with special needs without affecting eligibility for government benefits.
  • Charitable trusts — By establishing a charitable trust, you can create a mechanism for supporting a cause you believe in, even after your death. 

Along with advantages such as the ability to bypass probate, trusts also offer greater privacy than wills to the grantor and beneficiaries. Our estate planning attorneys can help you identify how a trust might be able to accomplish your particular objectives. 

When can a grantor modify a trust?

A grantor can modify a revocable trust at any time for any reason. However, once a grantor establishes an irrevocable trust, changes might not be possible unless the grantor receives approval from a court and all trust beneficiaries.

Contesting trusts in New Mexico

Parties with standing can challenge the validity of a trust on several grounds:

  • Fraud — The person challenging a trust alleges that someone has deceived the grantor, and the document does not reflect the grantor's true intentions.
  • Counterfeit — The trust document is not authentic.
  • Undue influence — A person used improper manipulation to induce the grantor to favor them over other potential beneficiaries in the terms of the trust.
  • Duress — Someone used threats to compel the grantor to include certain terms.
  • Lack of capacity — The grantor was not of sound mind when the trust was executed.

A trust litigation attorney can explain your rights if you believe a trust is invalid or if you’re a trustee responsible for a trust that is being challenged.

Trust reformation and termination lawsuits

Once established, a trust can exist until its purpose is fulfilled or until that purpose becomes impossible to fulfill. However, along the way, a trustee or beneficiary might sense that something isn’t quite right. If an error was made in the drafting the trust document, there can be a conflict between the expressed terms and the grantor’s actual intentions. In such cases, an interested party can seek a reformation from the court. Reformation means that a judge can rewrite parts of the trust document to reflect more accurately what the grantor intended. When a trust has achieved its purpose, has exhausted its fund, or its purpose has proven to be impossible to fulfill, interested parties can petition the court to terminate the trust. In cases where assets remain but the trust’s purpose cannot be fulfilled, assets will be dispersed to named beneficiaries.

Contact an Albuquerque lawyer to discuss the creation or administration of a trust

Hurley, Toevs, Styles, Hamblin & Panter, P.A. in Albuquerque helps clients establish and administer trusts created for asset protection and estate planning purposes. Please call 505-888-1188 or contact us online for a consultation.