By Merri Rudd, appeared February 1, 2007, 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: You asked for comments about trust arrangements. A corporate fiduciary may be better than family trustees in some circumstances, particularly when a business is involved, but we encountered problems. My in-laws' wills set up a trust fund for my wife under the supervision of a local trust company. They named a religious organization as contingent beneficiary in the event of my wife's death. From the beginning, we got mixed signals from the trust company about my wife's use of the fund. At one point we signed a contract to buy a house after the trust officer verbally agreed to release funds for the down payment, and then had to dip into our retirement savings when the trust company changed its mind. My impression was that the risk of being sued by the religious organization was of greater concern to the trust company than my wife's welfare. We finally were able to dissolve the trust after we hired a lawyer to negotiate with the trust company and the contingent beneficiary. After this experience, I will never use a trust to leave money to my heirs as long as they are competent to manage their own financial affairs. J.M.

Thank you for sharing your story. I have long maintained that trusts are not appropriate for everybody. To determine which method best suits their needs, individuals should carefully analyze: (1) their estate planning goals, (2) the multiple ways to title property outlined in New Mexico's laws, and, (3) the pros and cons of trusts versus probate.

Trust management does not normally require court intervention. The unfortunate aspect of your scenario is that all parties had to hire attorneys and go to court to dissolve the trust. On the other hand, at least the case was ultimately resolved to the satisfaction of those involved.

Q: A few years ago we had an attorney in Albuquerque prepare a living trust for us, and our real estate in Bernalillo County is now in the name of the trust. Recently we acquired property in _________ County, New Mexico and the deed is in the name of our living trust. When we went to record the deed in the ________ County Clerk's office, we were told we must also record a copy of the trust with their office. We don't want to do this. Our trust is not recorded in the Bernalillo County Clerk's office, and they have not requested such. Our attorney tells us we shouldn't record the trust because it becomes a public record for anyone to view. What is the requirement (or law) in this matter and shouldn't there be uniform application of the requirement by all counties in New Mexico? Why is ________ County different from Bernalillo County? What is your view and/or recommendation in this matter? A.P., Albuquerque, NM

Being a mostly judicious person, I try to exercise restraint in expressing my views publicly. Your question raises a significant issue, so I will answer generally without exposing the guilty county's name. At the same time, I say "huzzah" to Bernalillo County for not requiring a copy of your trust.

Why? Because I know of no law that requires you to disclose a copy of your trust when recording the deed. As long as your deed is original and properly notarized, it should have been accepted for recording. While the Uniform Trust Code allows for a "certification of trust," it should not be required in your example.

I agree with your attorney that you do not need to record your trust. And to take it a step further, perhaps your attorney should write a letter to the county attorney for the county in question. The letter might briefly outline New Mexico's laws about recording deeds, as well as a smattering of trust law. Finally, the letter should ask the county to start following New Mexico's laws and to properly train its employees about these important matters.

I especially appreciate the irony of your situation: many people create trusts to keep their financial affairs private. Requiring you to record your trust into the public record so that anyone can view it would be quite contrary to that goal.

© 2007, Merri Rudd & Albuquerque Journal, All Rights Reserved