What is a Will?
A Will is a legal document that contains your instructions for what you want to happen to your assets when you die. A will must be validated by the probate court before it can be enforced. Accordingly, if you use a Will as the core of your estate plan (and many of our clients do), you are anticipating a future probate.
In the strictest sense, the term “Will” is a general term, while the term “Testament” applies only to dispositions of personal property. However, this distinction is seldom observed today. In fact, the terms are often used interchangeably.
Besides saying who should get your property when you die, a Will also gives you the opportunity to say who you want to be in charge of settling your estate. It also gives you the opportunity to say who you want to serve as guardians of your minor children. And, it gives you the opportunity to protect any money or property you give to minor children and/or other beneficiaries who are not good candidates to receive an inheritance outright; i.e., via the creation of a Trust.
Who can make a Will?
An individual eighteen or more years of age who is of sound mind may make a will. [New Mexico Statutes, 45-2-501]
Except as provided in Sections 45-2-506 and 45-2-513 NMSA 1978, a will must be:
A. in writing;
B. signed by the testator or in the testator’s name by some other individual in the testator’s conscious presence and by the testator’s direction; and
C. signed by at least two individuals, each of whom signed in the presence of the testator and of each other after each witnessed the signing of the will.
[New Mexico Statutes, 45-2-502]
A. An individual generally competent to be a witness may act as a witness to a will.
B. The signing of a will by an interested witness does not invalidate the will or any provision of it.
[New Mexico Statutes, 45-2-505]
Choice of law as to execution:
A written will is valid if executed in compliance with Section 45-2-502 NMSA 1978 or if its execution complies with the law at the time of execution of the place where the will is executed or of the law of the place where at the time of execution or at the time of death the testator is domiciled or is a national.
What happens if I die without a Will?
If you die without a will in New Mexico, your assets will go to your closest relatives under state “intestate succession” laws.
Only assets that would have passed through your will are affected by intestate succession laws. Usually, that includes only assets that you own alone, in your own name. Many valuable assets don’t go through your will and aren’t affected by intestate succession laws. Here are some examples:
- property you’ve transferred to a living trust
- life insurance proceeds
- funds in an IRA, 401(k), or other retirement account
- securities held in a transfer-on-death account
- payable-on-death bank accounts
- real estate held by transfer-on-death deed, or
- property you own with someone else in joint tenancy.
These assets will pass to the surviving co-owner or to the beneficiary you named, whether or not you have a will.
Under intestate succession, who gets what depends on whether or not you have living children, parents, or other close relatives when you die.
In New Mexico, if you are married and you die without a will, what your spouse gets depends in part on how the two of you owned your property — as separate property or community property. Generally, community property is property acquired while you were married, and separate property is property you acquired before marriage. There are a couple of big exceptions: Gifts and inheritances given to one spouse are separate property, even if acquired during marriage.
If you die without a will in New Mexico, your children will receive an “intestate share” of your property. The size of each child’s share depends on how many children you have and whether or not you are married. For children to inherit from you under the laws of intestacy, the state of New Mexico must consider them your children, legally. In case you want to read the law, New Mexico Statutes §§ 45-2-115 to 45-2-122 cover parent-child relationships.
If you die without a will and don’t have any family, your property will “escheat” into the state’s coffers. However, this very rarely happens because the laws are designed to get your property to anyone who was even remotely related to you. For example, your property won’t go to the state if you leave a spouse, children, siblings, parents, grandparents, aunts or uncles, great uncles or aunts, nieces or nephews, cousins of any degree, or the descendants of a spouse who dies before you do.
You can find New Mexico’s intestate succession laws in Sections 45-2-101 to 45-2-114 of the New Mexico Statutes.
All things considered, it is never a good idea to die without a Last Will and Testament
What does a personal representative do?
A personal representative is responsible for the administration and settlement of your estate. If your personal representative is designated under your Will, then he or she will be called an “Executor.”
If you die without a Last Will and Testament, the court-appointed personal representative of your estate will be called an “Administrator.” In addition, if you die with a Will but neither your designated personal representative nor any of your named successors are willing or able to serve in that capacity, then the court will appoint a personal representative for your estate. In that case, the personal representative will be called an “Administrator, C.T.N.” The letters C.T.N. stand for “cum testamento annexo” in Latin, which means “with the Will attached.”
Regardless of the designated name, a personal representative is charged with the responsibility of administering and settling your estate. The duties include preparing an inventory of your assets and liabilities, notifying creditors to present their claims, determining the validity of claims presented, paying the debts of creditors and the expenses of administering the estate, then distributing the remaining assets to the proper beneficiaries. A personal representative is really an agent of the probate court in settling your estate.
What about taxes?
A properly drafted Last Will and Testament may contain certain provisions that enable your estate to minimize or eliminate certain estate and/or death taxes. It may also contain certain provisions that enable your estate to minimize or eliminate certain taxes on income earned by your estate. It is important, therefore, that you prepare your Will with tax considerations in mind. It’s also a good reason why you should always have your Will reviewed by an qualified estate planning attorney who is familiar with estate and death taxes as well as income taxation of estates.
Does my Will control all of my property?
No. The only property that is disposed of by a Last Will and Testament is property that is solely owned by you at the time of your death. If you think about it for a moment, it does make sense. Solely-owned property is the only type of property that does not have a built-in beneficiary. A life insurance policy has a designated beneficiary – you don’t need a Will to know who gets that money. The same is true with annuity contracts. Retirement plans also have designated beneficiaries, including your 401(k) plan and your IRA.
Property held in a revocable living trust also has built-in beneficiaries. If property is held in a revocable living trust upon your death, the trust instrument determines who gets the property. That’s one of the primary reasons why living trusts have become so popular over the past two decades. It’s a very good way to avoid probate.
Finally, jointly-owned property “with rights of survivorship” is another form of property ownership that has a built-in beneficiary. When a joint owner dies, title to the entire property is automatically vested in the surviving joint owner(s) as an matter of law. Property that is owned jointly with a spouse is presumed to be owned with rights of survivorship.