Inheritance and Property

• When a person dies, “probate” is the legal process used in court to give what the person owned — their “assets” — to other people (heirs or beneficiaries).
  • If the person had a will, the probate process may be used to carry out their wishes.
  • Assets can include real property, such as a house, condo, or land as well as personal property, such as cars, jewelry, furniture, and money in a bank account.
• Title clearing decides who owns a property or home.
  • Especially important when a property has many owners. See “Problems That May Arise During Probate”

Some assets are not passed along by probate. The transfer to a new owner occurs in other ways.

Non-Probate Assets

• Assets that are passed along directly to a named, living person (beneficiary) or joint owner;
  • The document that created the asset controls these assets. For example:
• When a person buys life insurance, they tell the insurance company which person or people should get the payments from the policy when they die.
• When a person starts a retirement plan, they must name which person or people will inherit the plan. Examples include an individual retirement account (IRA) and 401(k).
• Revocable living trust.
  • A legal entity that owns the assets the person places in it.
    • The person tells the trust how to manage the assets and names a trustee.
      • The trustee’s job is to manage the assets according to the instructions.

When the person dies, the instructions for the trust say who gets which assets. The instructions also dictate when the property is transferred to them. In most cases, the heirs don’t have to do or prove anything else.

Probate Assets

• Everything else the person owned.
  • This personal property may include items such as money in a non-joint bank account, stocks, cars, furniture, jewelry, art, real estate, and personal items.
    • If two people own a home as “joint tenants in common,” the share of the person who died would go to probate.

• When a person creates a plan for what will happen to their money, property, and other assets when they die.
  • Can include a will, trust, power of attorney, guardian choices, and more.
    • Most people hire lawyers, accountants, or financial advisers to help them create this plan. A person may need this help if they have many assets or if their assets are complex.

• A will is a legal document.
  • It says what a person wants to happen with their assets when they die.
  • It’s important for anyone with assets to have a will.
    • Helps prevent disagreements and legal battles between people who believe they should get the assets.
    • Helps make sure the person’s assets go to the people they want to give the assets to.
• A will usually names:
  • The testator.
    • This is the person who died and made a will.
  • An executor.
    • Person who makes sure the things written in the will get done.
    • AARP provides tips on How to Be a Good Executor of a Will or Estate.
    • Many people choose a family member to be the executor.
  • Beneficiaries
    • Inherit the assets.
    • The will describes which assets go to which people
      • Also describes how and when the beneficiaries will receive the assets.
  • Guardians
    • People who get custody of any minor children.
      • Usually, any child younger than 18 is considered a minor.
  • Many financial products are also legal contracts.
    • Examples: retirement accounts and life insurance policies.
      • A will can’t replace the instructions in these contracts.
      • No matter what a person’s will says, the money from these products must go to the people the person named when filling out the forms.

• The person who died is a “testator.”
  • When the testator dies, the person named as executor in the will must start the probate process.
    • The executor’s first step: file the person’s death certificate and the will with a probate court.
    • In New Mexico, this first step must usually occur within 3 years of the testator’s death
      • New Mexico Probate Laws

• Dying “intestate”
  • The probate process distributes the person’s assets according to default laws for the state.
  • New Mexico Intestate Laws
  • A court may appoint an administrator to oversee the estate of the person who died and to act as the executor.
    • The administrator is responsible for:
      • Finding the legal heirs of the person who died.
      • Assessing the assets that need to be distributed.
      • Distributing the assets according to the state or territory’s probate laws.

• A legal document that gives someone the power to make decisions on behalf of another person.
• People may use a POA for different situations.
  • For decisions about their money, property, and children only if the person becomes incapacitated.
    • “Incapacitated”: unable to make decisions
  • Power of Attorney generally expires when the person who gave the authority dies.
  • New Mexico Power of Attorney Laws

• Title refers to who owns a property (home and land) and the rights they have to use, sell, lease, or transfer ownership of the property.
• Clear title.
  • A person or a couple are the only owners of a property, without question.
    • They have documents to prove their ownership.
    • No one else can legally claim to own it.
    • No one else has a financial interest in the property.
• Cloudy (or clouded) title.
  • It’s not clear who owns the property, or
  • People disagree about who legally owns it.
    • Examples:
      • The federal government may have a legal claim on the property because the owner owes money on taxes.
      • The property could have many owners or many people who say they own part of it.

• Home and land that was informally passed down from ancestors over many generations.
  • Often, many people own the property.
  • Usually happens because the ancestor died without a will, or
  • The person died without having some other legal document to transfer ownership.
  • Heirs’ property often leads to a cloudy title.
    • The various owners can have different opinions about what they want to do with the land or home.
      • These differences can make it more difficult to keep, improve, lease, or sell the home and land.
      • They can also affect probate.

• Will
  • A will names a person or people who should get the property.
    • Helps prove they now own the property.
• Quitclaim deed.
  • Transfers ownership of a property or someone’s share of ownership to another person or organization.
• Application to determine heirship.
  • Process to determine who inherits property after somebody dies without a will.

• Guardianship
  • Legal way for a designated person to make decisions for someone who can’t make decisions for themselves.
  • Child guardian.
    • Someone chosen or appointed to care for and make decisions for a child until the child becomes an adult.
    • If the person didn’t have a will or didn’t name a guardian in their will:
      • The court will appoint a guardian based on the children’s best interests.
  • When an adult can’t make decisions for themselves.
    • A court may appoint a guardian or conservator to manage the person’s financial and personal affairs on their behalf.
      • Can also involve probate court proceedings.
      • It’s important to talk with an attorney who is familiar with the guardianship and probate laws.