Many people who call our New Mexico Estate Planning Law Firm recognize the importance of an effective estate plan in the event of a life-threatening illness, serious incapacitating injury or death, but they may have concerns about whether they can afford estate planning. Given the tough economic times faced by many throughout New Mexico, this is a legitimate concern. However, the cost of not creating an estate plan can dwarf the expenses associated with implementing estate planning strategies. A recent incident reported by Forbes provides an informative example of the potential consequences of postponing estate planning decisions.
The article reported that Roman Blum died when he was 97, and his estate was valued at $40 million at the time of his death. While many people presume that all people with substantial wealth or assets have an estate plan, Blum had not prepared even the most basic estate plan, such as a trust or even a last will and testament to indicate his intentions for succession of his assets.
When a person dies without a will or trust in New Mexico, the intestate succession statute determines how assets will pass to family members. While a complete overview of estate succession rules is beyond the scope of this blog post, we have provided a basic summary of what happens when someone dies in New Mexico without an estate planning device to explain how it applies to Mr. Blum’s situation.
If the person who passes is married and the property is a community asset, which in the simplest terms means that it is acquired or improved, or it increases in value during the marriage, the ownership of the asset by the spouse who dies will pass to the surviving spouse. However, the situation can be significantly more complex because many assets that have community property interest also have a separate property interest because they are acquired prior to marriage or because contributions are made from separate property funds (i.e. funds brought into the marriage). These kinds of complexities make it important to obtain legal advice from a New Mexico Estate Planning Attorney.
Putting aside the complexities associated with assets that have both community and separate property components, separate property passes through intestate law as explained below in simple terms.
If the person who dies has children, a quarter-interest in separate property passes to the surviving spouse with the balance of the separate property interest passing equally to children of the spouse who passed away. If the spouse that dies has no children, the separate property passes to the surviving spouses. While there are other scenarios, such as a parent that is predeceased by his or her child which can be more complicated, this is sufficient information for understanding the Roman Blum situation.
Mr. Blum had been predeceased by his spouse and had no surviving children. While there are other relatives that may inherit in this situation under intestate law, none of these other relatives have been located. In Mr. Blum’s state like New Mexico, the assets of someone who dies passes to the state if heirs cannot be located, or they do not come forward within a certain period of time. Although it is hard to imagine that Mr. Blum or anyone else for that matter would have chosen to leave all of his assets to the state, this is the outcome when no relative that is listed under the intestacy statute can be identified.
The above information is designed solely to illustrate general principles of law, and does not constitute a specific legal opinion on individual cases. We suggest that you contact experienced legal counsel for a specific opinion tailored to your individual circumstances.
This outcome can be avoided with even the most basic estate planning, such as a simple will or a basic trust. When considering whether you can afford the cost of estate planning, Mr. Blum’s story provides a cautionary tale of the cost to your family and friends of not preparing an estate plan. The New Mexico estate planning law firm of Jay Goodman & Associates offers a free consultation in our centrally located offices in Santa Fe and Albuquerque so that we can evaluate your complex family law issue and explain your options. Call us today to schedule your free consultation at 505-989-8117 so that you can learn about your rights.
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