Ask the Probate Judge—Out of State Trusts
Rudd, appeared February 13, 2003, 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 recently moved to New Mexico from California. In 1999 I had a Living Trust prepared in California. My assets are in Arizona --including real estate and raw land. My question is does my Living Trust have to be established again according to New Mexico law? I intend to remain a New Mexico resident. M.P., Mesilla
Wow, a trust with a three-state nexus. Your question illustrates three good reasons to have a trust. You can: (1) move from state to state without having to make new legal documents, (2) establish titles to property located in several states, and (3) avoid a court probate.
Trusts and wills are ambulatory. "Ambulatory" usually means "able to walk about under your own power." But the textbook I selected to teach estate planning to paralegal students used the term to mean that legal documents, such as wills, can move from state to state (I always imagined wills wearing tiny tennis shoes).
Similar rules apply to other legal areas. For example, a marriage that is good in the state or country where performed (the Latin term is "lex loci," the law of the place) is good elsewhere. Thus, states will usually honor wills, trusts, marriages, contracts, and other legal documents from other states.
If your trust was properly created in California, with the proper paperwork, signatures, witnesses (if required), and notarization, then it should work in any other state where you might live.
As I have discussed previously, once a trust is created, the trustor must transfer all assets into the name of the trustee of the trust. This includes land, houses, bank accounts, stock accounts, and other assets.
Making these transfers completely, accurately, and as promptly as possible is very important. Assets that have been transferred into the trust pass automatically to the trust's beneficiaries when the trustor dies. If legal title to all assets, no matter where located, is held in the name of the trustee, no court probate proceeding should be necessary. As people acquire additional assets, they should also title those in the name of the trustee of the trust.
People who set up trusts should review them periodically to make sure that their choices of successor trustees and beneficiaries are still current.
Presuming that your trust was properly set up and executed according to California law, your trust should be honored in New Mexico. If you or your attorney has properly transferred all of your assets, both real and personal property, from California, Arizona, New Mexico, and elsewhere into the name of the trustee of the trust, your estate should not need to be probated.
© 2003, Merri Rudd & Albuquerque Journal, All Rights Reserved