Probate Basics

What is probate?
Probate is a legal process under the supervision of a court in which a person’s property is distributed after death. A Will ordinarily names an Executor or Personal Representative (in NM), but a Will alone does not give the Personal Representative the authority to gather the assets of the estate of a deceased person, or the authority to distribute them. A Court must first issue an Order appointing the person named in the Will. The submission of the Will, death certificate, and request for appointment is the first step in the probate of an estate.

A probate can be filed in either the Probate Court or the District Court in the county where the deceased was domiciled. The Probate Court can only handle probates in which there is an original Will and there is no dispute among the Personal Representative and beneficiaries. The District Court has jurisdiction over all probates, including disputed probates and formal probates.

A Probate is also used as the procedure for collection and distribution of assets, even when there is no Will. If there is no Will, then state law sets forth the priority of person who can be appointed as Personal Representative. State law also determines how property of a deceased person is divided if there is no will, under the laws of “intestacy” (no Will).

If a Will exists, the personal representative distributes the assets of the estate based on the instructions in the will, and on the state laws of inheritance under intestate succession if there is no will.

Similar tasks must be performed in every type of probate. In a formal probate, all heirs need to be notified, notice published and a hearing must be held before appointment of a personal representative. (Section 45-1-401 NMSA 1978) In an informal probate, notice is sent out to heirs after appointment, and generally published in a local newspaper of record. The creditors of the deceased person must be identified and paid. An inventory is done of all assets and property. An accounting is filed with the Court. The remaining assets, after bills are paid, are distributed to the proper beneficiaries. Real property is transferred and deeds are recorded. A final income tax return, and if necessary, an estate tax return, is prepared.

Probate can be complicated if there is no personal representative named, wills are outdated, or there are conflicting claims for estate property. Persons not named or excluded from the will may make claims. Previously unknown assets and debts may be located. If the deceased owned real property in another state, an ancillary probate must be filed there as well.

When estates are simple, well-organized, and there are no challenges or unexpected claims, some individuals file probate on their own, without an attorney. More often, however, probate is handled by an attorney who files the necessary papers on behalf of the personal representative in the court.

Similar tasks must be performed in every type of probate. In a formal probate, all heirs need to be notified and a hearing must be held before appointment of a personal representative. In an informal probate, notice is sent out to heirs after appointment, and generally published in a local newspaper of record. The creditors of the deceased person must be identified and paid. An inventory is done of all assets and property. An accounting is filed with the Court. The remaining assets, after bills are paid, are distributed to the proper beneficiaries. Real property is transferred and deeds are recorded. A final income tax return, and if necessary, an estate tax return, is prepared.

Probate can be complicated if there is no personal representative named, wills are outdated, or there are conflicting claims for estate property. Persons not named or excluded from the will may make claims. Previously unknown assets and debts may be located. If the deceased owned real property in another state, an ancillary probate must be filed there as well. 

How long does Probate take?
From start to finish, most New Mexico probates take about two years to complete. However, 90% of the work is usually done in the first five or six months of a probate, and most estates distribute assets within a year.

Creditors have up to one year to make a claim. However, publishing a proper notice to unknown creditors and unknown heirs can reduce the amount of time before distributions of the estate can be made to four months after the date of first newspaper publication.

The earliest time to close an estate has recently increased to six months after the appointment of the personal representative. Since one of the tasks required to complete a probate is the filing of the deceased’s final tax return, it is rare for a Personal Representative to be able complete a probate in so short a time. 

Do you need a lawyer?
Probate in New Mexico does not require a lawyer. The forms for a simple, uncontested probate are available for a free download from the website of the Supreme Court of New Mexico. Most probate judges and clerks will go out of their way to assist families at this difficult time, but they cannot provide legal advice.

Nonetheless, probate can place a lot of stress on families, especially when there is family strife, where important assets do not have proper title, or the estate is complex. In that situation, an experienced professional can assist families to find the best and least costly solutions. 

What does probate cost?
While there are minimal probate court costs, the majority of the expense of probate is in legal fees. An ordinary, simple probate can cost between $2,000-$3,000 in legal fees – and higher costs should be expected in contested or complex matters. In other states, probate costs can be much higher and people to try to avoid probate by distributing property before death or by holding assets in trusts, insurance policies or payable on death accounts – or by lifetime giving. In New Mexico, it is often less expensive to probate a will than to take elaborate steps to avoid it.

What kinds of assets are part of the probate estate?
Ordinary bank and credit union accounts, CDs, stock or brokerage accounts, bonds, real estate, retirement accounts and IRAs without beneficiary designations, annuities without beneficiary designations, life insurance without beneficiary designations, and tangible personal property including everything from clothing and jewelry to art and other collectibles, unless these are placed in a trust.

What kind of assets do not normally pass through the probate process?
Joint Tenancies. Under New Mexico law, joint tenants have a “right of survivorship”, which means that when one of the joint tenants dies, the assets transfers through operation  of law to the other joint tenant. The transfer takes place automatically and is not capable of alteration though a person’s will or trust. Assets that are sometimes held in joint tenancy by couples are checking and savings accounts, real estate, cars, stock, brokerage accounts, and savings bonds.

Transfer on Death Deeds. New Mexico law allows owners of real property to execute a Transfer on Death Deed that will transfer real property to a named beneficiary or beneficiaries automatically on death outside of probate. A Transfer of Death Deed is completely revocable until death.

Pay on Death (POD) or Transfer on Death (TOD) Accounts do not pass through probate. These accounts have a named beneficiary (an individual or a trust) who receives the assets in the account automatically when the owner dies, but unlike a joint tenant, has no right to the assets before the owner’s death. Bank accounts, certificates of deposit, credit union accounts, stock and brokerage accounts with named beneficiaries all transfer outside of probate on death. Naming an individual to receive the asset in a Will does not change a beneficiary designation on an account. Changes to the designated beneficiary must be made with the bank, account custodian, or holding company, usually on their own form.

Life insurance, IRAs, pension plans, profit sharing plans, and annuities with named beneficiaries will distribute outside of probate and cannot be changed simply by a devise in a will.