Estate planning is a important way to care for yourself and offer loved ones clear directives in trying times. Photo by Shutterstock

The New Year invites us to reflect on what matters most, making it an ideal time to ensure that our affairs are in order. For older adults, this can mean revisiting estate planning—a thoughtful way to care for yourself and offer peace of mind to loved ones. 

Estate planning designates different legal documents for different needs, including power of attorney (overseeing affairs in case of incapacitation, when someone is unable to make and communicate decisions for themself), a payable on death designation (for transferring financial accounts), a transfer on death deed (for real estate), and a will (for personal property like vehicles and household items). “Lots of people are so focused on making a will that they skip the important part, which is making sure they’re being properly cared for while they’re still living,” says Brwyn Downing, executive director of the Senior Citizens Law Office, which offers low-cost estate-planning services to people aged 60 and older residing in central New Mexico with small estates. “A will alone doesn’t necessarily take care of everything. What happens if you can no longer make decisions for yourself and need someone to oversee your care and finances?”

One of the goals of estate planning is to avoid probate, a time-consuming and sometimes costly court process. “By law, probate takes a minimum of six months,” Downing says. “And anybody that has acted as an executor of an estate can tell you that it is tons of work.”

To simplify the process, Downing suggests that you first decide who will be your beneficiaries. “Is it family members, a charitable organization, or a religious organization?” she asks. “An attorney then advises you on how to accomplish your goals under New Mexico state laws. That could involve a will, a trust, or other instruments, depending on the assets.”

Everyone’s circumstances are unique, so it’s important to consult with a local attorney to address your specific needs. While the following should not take the place of legal advice, here are five tips for beginning your estate planning.

1. Set up a power of attorney.

Power of attorney is a document that allows you to name someone to handle your health care or financial decisions if you can no longer make decisions for yourself. “Powers of attorney are important because they impact your quality of life while you’re living,” Downing says. “They allow you to plan for any potential period of losing autonomy.”

For example, if you’re in a car accident and fall into a coma, someone will need legal authority to speak on your behalf regarding your medical care—a designation known as a health care power of attorney. In addition, everyday obligations like rent and credit card bills still need to be paid, a role you can designate to someone with a financial power of attorney. 

Powers of attorney apply only when you can’t make decisions on your own, and it’s crucial when the time comes. “You need someone to be able to speak on your behalf and handle the business of life,” Downing says. If you don’t have these documents in place, a guardianship proceeding can be initiated, which may result in a court assigning a certified professional to act on your behalf. This person likely won’t know what your preferences are. “They don’t know your religious background, what is important to you, anything like that,” Downing says. 

2. Set up a payable on death designation for bank accounts. 

Setting up a payable on death (POD) designation is quick and easy, and it ensures that your bank and other financial accounts will seamlessly transfer to a beneficiary upon your death. Simply contact your bank, request and fill out a POD form, and they keep it on file. “This ensures the bank knows who the money goes to without family members having to probate or hire a lawyer,” Downing says.

Banks make this process relatively seamless, because they want to have a record of who should receive money left behind after the death of an account holder. When a person doesn’t come forward with proper legal authority, the bank treats the account as unclaimed property, and it will be transferred to the state after a period of years. “There is misinformation we hear around this, such as clients saying, ‘I need a will so the state doesn’t take my stuff,’ ” Downing says. “That’s not how it works. The State of New Mexico doesn’t want anybody’s stuff, and banks love the POD designation so they know what to do with the money when an acount holder dies.” 

3. Get a transfer on death deed for real estate. 

A transfer on death deed (TODD) is similar to a POD designation, but specifically for real estate. New Mexico law allows owners of real estate to sign a TODD during their lifetime, enabling the property to transfer to designated beneficiaries upon death without probate. TODDs are recorded in the county clerk’s office where the property is located, and the property is only transferred once a death certificate is recorded. “Transfer on death deeds are a really clever instrument for a number of reasons,” Downing says. “They help you protect your property while you’re living, because it keeps it in your name. Then, upon passing, the TODD makes it easy for your listed beneficiary to receive the property.”

When it comes to real estate and bank accounts, Downing doesn’t recommend joint ownership with someone who isn’t your spouse. New Mexico is a community-property state, which means that spouses are generally responsible for each other’s debts. For example, you put a child’s name as a joint owner on your house, that child will be a partial owner during your lifetime, which comes with certain risks. First, you lose sole control of your home, and will need the child’s permission if you want to sell it. Second, if a child has debt, then a creditor—after going through the legal process—can place a judgment lien against your home and initiate foreclosure proceedings to take possession of it. Downing advises holding property solely in your name during your lifetime, then passing it on to designated beneficiaries with a legal instrument like a TODD.

“Don’t add a person who is not your spouse onto the titles of your assets,” Downing says. “We suggest folks use other tools that protect property while allowing for an easy transfer.”

4. Create a will for all other assets. 

Once you’ve worked with a legal professional to set up powers of attorney, POD designations, and TODDs, focus on assigning beneficiaries for remaining assets in a will. It’s a good idea to identify all beneficiaries by name, instead of, say, designating one child to distribute the property fairly.

“Not everybody needs a will,” Downing says. “Someone may just be passing on real estate, which can be handled with the transfer on death deed. But a lot of personal possessions can be passed through a will, including vehicles.”

5. Learn more by attending a free session at a senior center. 

The Senior Citizens’ Law Office offers free, hourlong presentations at senior centers primarily across central New Mexico. “It’s a popular program in which we cover lots of material, including how to avoid probate,” Downing says. “We’re happy to serve seniors, and advise everyone to meet with a lawyer to get individualized legal advice about their estate planning.”

Another great resource is the Legal Resources for the Elderly Program provided by the State Bar of New Mexico. The program offers a free statewide help line for residents 55 and older. Call the number and get connected with staff attorneys who provide legal advice in English and Spanish.

---

Estate planning resources:

Senior Citizens’ Law Office: sclonm.org

State Bar of New Mexico: sbnm.org

Free statewide help line for residents 55 and older: 

(505) 797-6005 and (800) 876-6657