By Merri Rudd, appeared June 8, 2006, Albuquerque Journal, Business Outlook
Reprinted with permission

Editor's note: This column may not be quoted or reproduced in whole or part without express written permission of the author.

Q: I opened a probate but now the credit union wants Letters Testamentary instead of Letters of Administration. What should I do? S.B.E.

Tell the credit union to call the Probate Court, so we can set them straight. A district court or probate court issues Letters Testamentary in a probate case for an estate that has a valid will. Letters of Administration are issued for intestate estates without a valid will. Both documents give the personal representative of an estate identical powers to act on behalf of the estate.

By the way, the Bernalillo County Probate Court has new telephone numbers. The new numbers are 468-1233 and 468-1234.

Q: My mother died and willed everything to her trust. Does the personal property allowance of $15,000 still apply? Does that mean that $15,000 worth of property (things and money) is distributed to the children (no spouse is alive) before her 'everything' goes into the trust? I do not live in New Mexico and am trying to figure out if the personal representative is doing things legally. C.R.

New Mexico law creates family and personal property allowances for spouses and certain children of decedents. The personal property allowance of $15,000 is paid to a surviving spouse. If there is no surviving spouse, then decedent's children (except children who are disinherited under a will) share the personal property allowance. The two allowances have priority over creditors.

It sounds like your mother had a pourover will and had not funded her trust prior to her death? If so, a court probate proceeding would be required to transfer property titled in her sole name into her trust. If her estate is subject to the probate code, the personal property allowance should be paid before the trust is funded.

Moreover, under New Mexico's Uniform Trust Code, trust property can be used to pay the allowances even if no court probate proceeding is necessary. Section 46A-5-505(A)(3) of the law reads, "after the death of a settlor, and subject to the settlor's right to direct the source from which liabilities will be paid, the property of a trust that was revocable at the settlor's death is subject to claims of the settlor's creditors, costs of administration of the settlor's estate, the expenses of the settlor's funeral and disposal of remains and statutory allowances to a surviving spouse and children to the extent the settlor's probate estate is inadequate to satisfy those claims, costs, expenses and allowances."

Consult an attorney of your choice for more details.

Q: My mother recently died. She had no formal will. Her only assets were two savings accounts and a checking account, the total of these being less than $35,000.00. My name and my brother's name are listed as POD beneficiaries. There are no outstanding bills. Do I need to go through probate? C.L.M.

The bank accounts with payable on death (POD) beneficiaries should pass to you and your brother without a court probate proceeding. The bank will probably ask to see your mother's death certificate and proof of identification for you and your brother.
The bank accounts are considered non-probate assets, which would not be affected by a will, even if your mother had one. Neither account should require a probate.

Creditors would be able to reach the POD assets if the probate assets of your mother's estate (in this case, there appear to be zero probate assets) were insufficient to cover her debts or to pay the personal property allowance. But unless probate issues arise, such as other assets in your mother's sole name, creditor claims, or the need to file tax returns, a court probate proceeding should not be necessary.

© 2006, Merri Rudd & Albuquerque Journal, All Rights Reserved