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Trusts may be able to help preserve assets

Individuals and families in New Mexico may be able to preserve assets and minimize estate taxes by implementing various strategies. For instance, the use of a dynasty trust may make it possible for multiple generations of family members to avoid paying estate or gift taxes. As of February 2020, the federal estate tax exemption is roughly $11 million for an individual, but that amount could go down to about $6 million in 2026.

Tax rates can be as high as 40% for estates that are worth more than $500,000. The use of spousal lifetime access trusts allow individuals to retain access to assets and the income that they generate. However, they are kept out of the estate, which can help to minimize the estate's value. The use of an irrevocable asset protection trust can make it difficult or impossible for creditors or other parties to gain control of assets inside of them.

The use of trust protectors can be ideal for trusts designed to hold a child's inheritance. A trust protector could be a sibling or another party who will take over the trustee role if there is a threat to that trust. For instance, if the child's parents get divorced, the terms of the trust can help to ensure that assets won't be divided in a divorce settlement.

By creating a trust, it may be possible to minimize estate taxes and keep assets in the family for many generations. A trust may also help people manage their finances in the event that they become mentally incapacitated. This may also help ensure that a person's wishes are respected and that an individual's assets are preserved. An attorney may help those who are going through the estate planning process.

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