Estate Administration

Estate administration is required to settle the estate of someone who has passed away. In New Mexico the Probate Court and District Court have jurisdiction over probate and estate administration. A personal representative is a fiduciary appointed by the Probate Court to care for the day-to-day estate administration activities under the supervision of the court. The two main goals of estate administration are to settle the decedent’s affairs by paying their debt and by distributing their assets to their beneficiaries and heirs according to the terms of their will or New Mexico law. The first step is to initiate probate by opening the estate.

Initiating Estate Administration

Probate is initiated by filing paperwork with the Probate Court in the county where the decedent resided at the time of their death. If the decedent left a will, then the person named in the will to serve as the personal representative (aka executor) is typically the person who files the will along with the death certificate and petition. If there is not a will, then the person wishing to serve as the personal administrator must file the death certificate along with a petition. Before the personal representative is qualified they must post bond if it is legally required, and they must sign a statement of acceptance.

Notice to creditors. Contrary to what some might believe, a person’s debts generally are not forgiven when they die. Debt must be paid from the decedent’s assets. To make sure that all creditors are aware of a decedent’s death and have the opportunity to request payment, the law requires that the personal representative notify creditors by publication or by mail. Creditors have four months after the published notice, or 60 days after the mailing or other delivery of the notice, whichever is later, to file claims. NM Stat § 45-3-801

Inventory estate assets. As part of the administration process, the personal representative must take control of estate assets. Within 3 months of appointment, New Mexico law requires the personal representative to create an inventory of estate assets that includes both a description of the estate’s probate assets as well as their date of death value. If an interested party requests a copy, the personal representative must provide it. The personal representative may also file the original of the inventory with the appropriate court. NM Stat § 45-3-706.

Pay debts. Once the 2 month claims period ends, the personal representative must pay all valid claims that are timely filed. Upon receiving a claim against the estate, the personal representative must determine the validity of the claim and either allow or disallow the claim. The personal representative has 60 days after the time for the original presentation of the claim has expired to accept or reject the claim. If the personal representative does not respond within 60 days, the claim will be deemed valid and accepted.

While the personal representative is required to pay claims that are submitted on time and that are valid, if there is not enough money in the estate to pay all claims, some will be left unpaid. If there is a shortfall, the personal representative must decide which claims get paid and which do not. The law makes it clear as to which bills get priority over others. Expenses of administration get top priority. Next are the bills related to the decedent’s funeral, followed by federal debts and taxes. If there is enough money, the medical and hospital expenses of the decedent’s last illness must get paid, followed by state of New Mexico debts and taxes. After that, all other claims can get paid.

Distribute assets. Asset distribution is the last major step in the estate administration process and for beneficiaries and heirs, the most anticipated step. Before the Probate Court will give the personal representative authorization to move forward with asset distribution, the personal representative must submit confirmation that debts and expenses have been paid or otherwise cared for. The personal representative will then distribute the property that remains in the estate according to the decedent’s will or New Mexico law.

Closing the Estate

Before administration is formally over and the personal representative is discharged, the personal representative must file a verified statement with the Probate Court. The statement cannot be filed earlier than 6 months after the date of appointment of the personal representative and must include the following information:

• That the creditor’s claims period has expired
• That all claims have been paid or otherwise settled
• That expenses of administration have been paid
• That taxes have been paid
• That assets have been distributed to the persons entitled

In addition, the personal representative must send a copy of the statement to all those who received distributions from the estate and to all creditors whose claims are neither paid nor barred.