New Mexico

New Mexico Estate Planning Considerations

Community Property State

There are nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Alaska is an opt-in community property state that gives both parties the option to make their property community property.

Domicile is a person’s legal permanent residence and may not be where they currently live. For those in the military, people who have homes in several states, or those who have moved frequently, figuring out which state is their proper domicile is vital.

IRS Publication 555 provides guidance and states that generally, community property is property:

Guidance is also given regarding what is considered separate property:

  • Property that you or your spouse owned separately before your marriage.
  • Money earned while domiciled in a noncommunity property state.
  • Property that you or your spouse received separately as a gift or inheritance during your marriage.
  • Property that you or your spouse bought with separate funds or acquired in exchange for the separate property during your marriage.
  • Property that you and your spouse converted from community property to separate property through an agreement valid under state law.
  • The part of property bought with separate funds was purchased with community funds and amount with separate funds.

A premarital agreement is an agreement that may change the result of the property division.

Last Will and Testament

Will Creation

The minimum age of a person competent to make a will is 18 (plus emancipated minors. The number of witnesses necessary to execute a will is two.

Uniform Transfer to Minors Act (UTMA)

The original custodial gift may be a life insurance policy or annuity contract.

Custodial property may be invested in or used to pay premiums on (1) a policy on the minor’s life if the minor’s estate is the sole beneficiary, or (2) a policy on a third party in whom the child has an insurable interest if the minor or the custodian is the irrevocable beneficiary.

The custodial arrangement terminates when:

  • The minor child reaches age 21 for custodial transfers made by irrevocable lifetime gift, will, trust, or exercise of a power of appointment.
  • The minor child reaches age 18 for other custodial transfers.
  • The minor child dies.

Dying without a Last Will, the {{ state_of_home }} laws of Intestacy.

The estate goes to the surviving spouse, taking the entire 50% of the community property over which the decedent could have exercised a power of testamentary disposition. Separate property goes to the spouse as follows:

If there is no surviving spouse, or if a portion of the estate does not go to the spouse:

  • 100% to descendants, by representation (see, NMS §45‐2‐106)

If there is no surviving spouse or descendant:

  • 100% to surviving parent or parents equally

If there is no surviving spouse, descendant, or parent:

  • 100% to descendants of the decedent’s parents (or descendants of either parent), by representation (see, NMS §45‐2‐106)

If none of the above:

  • Intestacy laws outline further distribution steps to grandparents’ level, then individuals related to deceased spouses and their descendants. See NMS §45‐2‐103 A.(4),(5), and B.

If no legally described recipient can be found

Digital Assets: New Mexico follows the Revised Uniform Fiduciary Access to Digital Assets Act to ensure that testators can retain control of their digital property and plan for its ultimate disposition.

Taxes

Inheritance Tax

New Mexico does not impose an inheritance tax.

Credit Estate Tax

New Mexico imposes an estate tax equal to the maximum credit allowed under the federal tax code for paid state estate and inheritance taxes under IRC Sec. 2011. However, the current federal tax code does not permit a credit for paid state estate or inheritance taxes. Therefore, there is no credit estate tax in effect at this time.

Generation-Skipping Transfer Tax (GST Tax)

New Mexico does not impose a GST tax.

Gift Tax

New Mexico does not impose a gift tax.

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