Creation, Validity, Modification and Termination of Trust

NMSA 1978 ch. 46A, art. 4

in effect

NMSA 1978, § 46A-4-401 Methods of creating trust

46A-4-401. Methods of creating trust A trust may be created by: A. transfer of property to another person as trustee during the settlor's lifetime or by will or other disposition taking effect upon the settlor's death; B. declaration by the owner of property that the owner holds identifiable property as trustee; or C. exercise of a power of appointment in favor of a trustee. Laws 2003, ch. 122, § 4 -401.

NMSA 1978, § 46A-4-402 Requirements for creation

46A-4-402. Requirements for creation A. A trust is created only if: (1) the settlor has capacity to create a trust; (2) the settlor indicates an intention to create the trust; (3) the trust has a definite beneficiary or is: (a) a charitable trust; (b) a trust for the care of an animal, as provided in Section 4-408 [46A-4-408 NMSA 1978] of the Uniform Trust Code; or (c) a trust for a noncharitable purpose, as provided in Section 4-409 [46A-4-409 NMSA 1978] of the Uniform Trust Code; (4) the trustee has duties to perform; and (5) the same person is not the sole trustee and sole beneficiary. B. A beneficiary is definite if the beneficiary can be ascertained now or in the future, subject to any applicable rule against perpetuities. C. A power in a trustee to select a beneficiary from an indefinite class is valid. If the power is not exercised within a reasonable time, the power fails and the property subject to the power passes to the persons who would have taken the property had the power not been conferred. Laws 2003, ch. 122, § 4 -402.

NMSA 1978, § 46A-4-403 Trusts created in other jurisdictions

46A-4-403. Trusts created in other jurisdictions A trust not created by will is validly created if its creation complies with the law of the jurisdiction in which the trust instrument was executed or the law of the jurisdiction in which, at the time of creation: A. the settlor was domiciled, had a place of abode or was a national; B. a trustee was domiciled or had a place of business; or C. any trust property was located. Laws 2003, ch. 122, § 4 -403.

NMSA 1978, § 46A-4-404 Trust purposes

46A-4-404. Trust purposes A trust may be created only to the extent its purposes are lawful, not contrary to public policy and possible to achieve. A trust and its terms must be for the benefit of its beneficiaries. Laws 2003, ch. 122, § 4 -404.

NMSA 1978, § 46A-4-405 Charitable purposes; enforcement

46A-4-405. Charitable purposes; enforcement A. A charitable trust may be created for the relief of poverty, the advancement of education or religion, the promotion of health, governmental or municipal purposes or other purposes the achievement of which is beneficial to the community. B. If the terms of a charitable trust do not indicate a particular charitable purpose or beneficiary, the court may select one or more charitable purposes or beneficiaries. The selection must be consistent with the settlor's intention to the extent it can be ascertained. C. The settlor of a charitable trust, among others, may maintain a proceeding to enforce the trust. D. The corpus and income of a charitable trust may only be expended in furtherance of the charitable mission of the charitable trust, unless that charitable mission is amended or the charitable trust terminated pursuant to a cy pres proceeding as described in Section 4-413 [46A-4-413 NMSA 1978] of the Uniform Trust Code. E. The attorney general, as parens patriae, shall have authority to maintain a proceeding to enforce the charitable trust and its charitable mission. F. Nothing contained in the Uniform Trust Code [46A-1-101 NMSA 1978] shall limit the authority of the attorney general under the Charitable Solicitations Act [Chapter 57, Article 22 NMSA 1978]. Laws 2003, ch. 122, § 4 -405.

NMSA 1978, § 46A-4-406 Creation of trust induced by fraud, duress or undue influence

46A-4-406. Creation of trust induced by fraud, duress or undue influence A trust is void to the extent its creation was induced by fraud, duress or undue influence. Laws 2003, ch. 122, § 4 -406.

NMSA 1978, § 46A-4-407 Evidence of oral trust

46A-4-407. Evidence of oral trust Except as required by a statute other than the Uniform Trust Code [46A-1-101 NMSA 1978], a trust need not be evidenced by a trust instrument, but the creation of an oral trust and its terms may be established only by clear and convincing evidence. Laws 2003, ch. 122, § 4 -407.

NMSA 1978, § 46A-4-408 Trust for care of animal

46A-4-408. Trust for care of animal A. A trust may be created to provide for the care of an animal alive during the settlor's lifetime. The trust terminates upon the death of the animal or, if the trust was created to provide for the care of more than one animal alive during the settlor's lifetime, upon the death of the last surviving animal. B. A trust authorized by this section may be enforced by a person appointed in the terms of the trust or, if no person is so appointed, by a person appointed by the court. A person having an interest in the welfare of the animal may request the court to appoint a person to enforce the trust or to remove a person appointed. C. Property of a trust authorized by this section may be applied only to its intended use, except to the extent the court determines that the value of the trust property exceeds the amount required for the intended use. Except as otherwise provided in the terms of the trust, property not required for the intended use must be distributed to the settlor, if then living, otherwise to the settlor's successors in interest. Laws 2003, ch. 122, § 4 -408.

NMSA 1978, § 46A-4-409 Noncharitable trust without ascertainable beneficiary

46A-4-409. Noncharitable trust without ascertainable beneficiary Except as otherwise provided in Section 4-408 [46A-4-408 NMSA 1978] of the Uniform Trust Code or by another statute, the following rules apply: A. a trust may be created for a noncharitable purpose without a definite or definitely ascertainable beneficiary or for a noncharitable but otherwise valid purpose to be selected by the trustee. The trust may not be enforced for more than twenty-one years; B. a trust authorized by this section may be enforced by a person appointed in the terms of the trust or, if no person is so appointed, by a person appointed by the court; and C. property of a trust authorized by this section may be applied only to its intended use, except to the extent the court determines that the value of the trust property exceeds the amount required for the intended use. Except as otherwise provided in the terms of the trust, property not required for the intended use must be distributed to the settlor, if then living, otherwise to the settlor's successors in interest. Laws 2003, ch. 122, § 4 -409.

NMSA 1978, § 46A-4-410 Modification or termination of trust; proceedings for approval or disapproval

46A-4-410. Modification or termination of trust; proceedings for approval or disapproval A. In addition to the methods of termination prescribed by Sections 4-411 through 4-414 [46A-4-411 to 46A-4-414 NMSA 1978] of the Uniform Trust Code, a trust terminates to the extent the trust is revoked or expires pursuant to its terms, no purpose of the trust remains to be achieved or the purposes of the trust have become unlawful, contrary to public policy or impossible to achieve. B. A proceeding to approve or disapprove a proposed modification or termination under Sections 4-411 through 4-416 [46A-4-411 to 46A-4-416 NMSA 1978] of the Uniform Trust Code or a trust combination or division under Section 4-417 [46A-4-417 NMSA 1978] of that code may be commenced by a trustee or beneficiary, and a proceeding to approve or disapprove a proposed modification or termination under Section 4-411 [46A-4-411 NMSA 1978] of that code may be commenced by the settlor. The settlor of a charitable trust may maintain a proceeding to modify the trust under Section 4-413 [46A-4-413 NMSA 1978] of that code. Laws 2003, ch. 122, § 4 -410.

NMSA 1978, § 46A-4-411 Modification or termination of noncharitable irrevocable trust by consent

46A-4-411. Modification or termination of noncharitable irrevocable trust by consent A. A noncharitable irrevocable trust may be modified or terminated upon consent of the settlor and all beneficiaries, even if the modification or termination is inconsistent with a material purpose of the trust. If upon petition the court finds that the settlor and all beneficiaries consent to the modification or termination of a noncharitable irrevocable trust, the court shall approve the modification or termination even if the modification or termination is inconsistent with a material purpose of the trust. A settlor's power to consent to a trust's modification or termination may be exercised by an agent under a power of attorney only to the extent expressly authorized by the power of attorney or the terms of the trust; by the settlor's conservator with the approval of the court supervising the conservatorship if an agent is not so authorized; or by the settlor's guardian with the approval of the court supervising the guardianship if an agent is not so authorized and a conservator has not been appointed. B. A noncharitable irrevocable trust may be terminated upon consent of all of the beneficiaries if the court concludes that continuance of the trust is not necessary to achieve any material purpose of the trust. A noncharitable irrevocable trust may be modified upon consent of all of the beneficiaries if the court concludes that modification is not inconsistent with a material purpose of the trust. C. For purposes of this section only, a spendthrift provision in the terms of a trust is not presumed to constitute either a material or an immaterial provision of the trust. D. Upon termination of a trust under Subsection A or B of this section, the trustee shall distribute the trust property as agreed by the beneficiaries. E. If not all of the beneficiaries consent to a proposed modification or termination of the trust under Subsection A or B of this section, the modification or termination may be approved by the court if the court is satisfied that: (1) if all of the beneficiaries had consented, the trust could have been modified or terminated under this section; and (2) the interests of a beneficiary who does not consent will be adequately protected. Laws 2003, ch. 122, § 4 -411; 2007, ch. 128, § 10.

NMSA 1978, § 46A-4-412 Modification or termination because of unanticipated circumstances or inability to administer trust effectively

46A-4-412. Modification or termination because of unanticipated circumstances or inability to administer trust effectively A. The court may modify the administrative or dispositive terms of a trust or terminate the trust if it is established by clear and convincing evidence that there are circumstances not anticipated by the settlor and modification or termination will further the purposes of the trust. To the extent practicable, the modification must be made in accordance with the settlor's probable intention. B. The court may modify the administrative terms of a trust if continuation of the trust on its existing terms would be impracticable or wasteful or impair the trust's administration. C. Upon termination of a trust under this section, the trustee shall distribute the trust property in a manner consistent with the purposes of the trust. Laws 2003, ch. 122, § 4 -412; 2007, ch. 128, § 11.

NMSA 1978, § 46A-4-413 Cy pres

46A-4-413. Cy pres A. Except as otherwise provided in Subsection B of this section, if a particular charitable purpose becomes unlawful, impracticable, impossible to achieve or wasteful: (1) the trust does not fail, in whole or in part; (2) the trust property does not revert to the settlor or the settlor's successors in interest; and (3) the court may apply cy pres to modify or terminate the trust by directing that the trust property be applied or distributed, in whole or in part, in a manner consistent with the settlor's charitable purposes. B. A provision in the terms of a charitable trust that would result in distribution of the trust property to a noncharitable beneficiary prevails over the power of the court under Subsection A of this section to apply cy pres to modify or terminate the trust only if, when the provision takes effect: (1) the trust property is to revert to the settlor and the settlor is still living; or (2) fewer than twenty-one years have elapsed since the date of the trust's creation. C. The attorney general as parens patriae is a necessary party to any cy pres proceeding in the Uniform Trust Code [46A-1-101 NMSA 1978]. Laws 2003, ch. 122, § 4 -413.

NMSA 1978, § 46A-4-414 Termination of uneconomic trust

46A-4-414. Termination of uneconomic trust A. After notice to the qualified beneficiaries, the trustee of a trust consisting of trust property having a total value less than fifty thousand dollars ($50,000) may terminate the trust if the trustee concludes that the value of the trust property is insufficient to justify the cost of administration. B. The court may modify or terminate a trust or remove the trustee and appoint a different trustee if it determines that the value of the trust property is insufficient to justify the cost of administration. C. Upon termination of a trust under this section, the trustee shall distribute the trust property in a manner consistent with the purposes of the trust. D. This section does not apply to an easement for conservation or preservation. Laws 2003, ch. 122, § 4 -414.

NMSA 1978, § 46A-4-415 Reformation to correct mistakes

46A-4-415. Reformation to correct mistakes The court may reform the terms of a trust, even if unambiguous, to conform the terms to the settlor's intention if it is proved by clear and convincing evidence that both the settlor's intent and the terms of the trust were affected by a mistake of fact or law, whether in expression or inducement. Laws 2003, ch. 122, § 4 -415.

NMSA 1978, § 46A-4-416 Modification to achieve settlor's tax objectives

46A-4-416. Modification to achieve settlor's tax objectives To achieve the settlor's tax objectives, the court may modify the terms of a trust in a manner that is not contrary to the settlor's probable intention. The court may provide that the modification has retroactive effect. Laws 2003, ch. 122, § 4 -416.

NMSA 1978, § 46A-4-417 Combination and division of trusts

46A-4-417. Combination and division of trusts After notice to the qualified beneficiaries, a trustee may combine two or more trusts into a single trust or divide a trust into two or more separate trusts, if the result does not impair rights of any beneficiary or adversely affect achievement of the purposes of the trust. Laws 2003, ch. 122, § 4 -417.

Source: New Mexico Compilation Commission (nmonesource.com)URL: https://nmonesource.com/nmos/nmsa-unanno/en/item/18548/index.doFetched: 10/20/2026