Probating Estates in AL

Probating Estates · Huntsville Probate Attorney

Probate is the legal process through which a court determines the validity of a will and oversees the distribution of the assets of a deceased person (sometimes referred to as a Decedent). Probate in Alabama, while not as cumbersome as some other states, can still be a difficult process with various legal pitfalls.

At its core, probate is the process of moving assets from one person to others either by will or through the Alabama statute of intestacy. Estates do not automatically require probate, but care should be taken to ensure the proper transfer of property to avoid problems down the line.

There are 68 probate courts in Alabama (Jefferson County is divided into two) and each probate court has slightly different rules. For instance, some probate courts require petitioners to be represented by an attorney while others are more accommodating to those looking to handle the probate themselves. Some probate judges are attorney while others are not and some probate judges have equity jurisdiction while others are not.

Each county has a slightly different recording and filing fee schedule so it’s advisable to call the probate court and get the exact fee before filing something in court. The minimum bonds differ between counties and some probate courts will publish notices in the newspaper for you while others expect the petitioner to handle everything. Some courts require original death certificates while others will accept a copy; a few probate courts don’t even require a death certificate.

Because of these differences, it is very important to contact the probate court where the estate will be opened and highly advisable to seek the assistance of an experienced probate attorney.

Does the Estate Have to Go Through Probate?

After the loss of a loved one or friend, you may quickly find that there is a lot to do. Contacting Social Security, the Veterans Administration, and considering whether to probate the Decedent’s estate are all important questions that should be addressed fairly soon after death. It can also be a stressful time. If the decedent left clear instructions, the process can be simplified; but often this is not the case.

How do I know if I need to open an Estate?

The key question to ask in determining whether an estate requires probate is the type of assets and the amount of assets owned solely by the Decedent in their individual name at the time of his or her death.

You are not automatically required to open an estate. Instead, the question hinges on whether there are “probate assets” or “non-probate assets.” If the estate includes one or more of the following assets, probate will likely be required. If the Estate only contains non-probate assets, probate may not be required, or an alternative method of probate may be available such as the summary distribution for small estates.

Assets That Require Probate:

• Real Estate (a house, an interest in land, etc.)
• A Bank Account, Investment Account, etc. with more than $29,000 bearing only the Decedent’s name that does not have a payable on death or transfer on death beneficiary
• Wrongful Death Claims (these are required to be filed by a court-appointed Personal Representative)
• Assets That Do Not Require Probate (or can be transferred using an alternative to full probate)
• The only asset is a vehicle (use MVT 5-6)
• The only asset is a bank account with less than $29,0000 (use Summary Distribution for Small Estates)
• The only asset is a bank account with less than $5,000 (make a request to the bank pursuant to Ala. Code 5-5A-38)
• The only assets are the personal effects and household furnishings and do not exceed $7,500 (file for personal property exemption)

What Do I Need to Probate an Estate?

If you believe that probate will be required, the next step is to begin gathering key documents and information and set an appointment with an experienced probate attorney. You will need to collect as much of the following as possible:

• Decedent’s Original Certified Death Certificate (note: get at least 5 certified copes from the health department or funeral home)
• Form DD 2-14 (if the Decedent was a veteran)
• Decedent’s Original Last Will and Testament
• List of the Decedent’s Heirs at Law and Their Addresses (note that predeceased children must be listed, and the predeceased child’s heirs stand in their shoes)
• General List of the Decedent’s Property
• Identify Potential Issues – will anyone contest the Will? Is any property distressed or behind on the mortgage or are any taxes delinquent?

Common Issues in Probating Estates

• Disputes Between a Surviving Spouse and Other Family Members – statistics show that second marriages and blended families are becoming more common. This is perhaps the most prevalent dispute in estates in Alabama today. Each situation is different. Both surviving spouses and family members have rights.
• Dispute Between Siblings – perhaps the second most common form of dispute is disputes between siblings over who receives which assets, missing assets, and gifted assets before death.
• Theft by the Executor of Administrator – Beneficiaries have rights against a Personal Representative who has stolen from the Estate. Personal Representatives may be liable up to the amount of assets which “have come to his hands or which have been lost, destroyed, wasted, injured, depreciated or not collected by want of diligence on his part or an abuse of his trust.” Ala. Code 43-2-110. If the Personal Representative is bonded, the beneficiaries will have an action on the bond.
• Heirship Real Estate Disputes – Beneficiaries who inherit property from an estate receive title to the property as tenants in common. All it takes is one beneficiary to file a sale for division to trigger the process. Heirship property disputes are governed by Ala. Code 35-6A-1.
• Trouble Identifying Assets – sometimes the beneficiaries may be working together productively but may have trouble identifying assets or “learning what all mom or dad had.” One way to identify assets held in bank accounts, investment accounts, etc. is to request tax transcripts from the IRS. If you believe the Decedent owned bonds, you can search those online. You or your attorney should also always search for unclaimed property with the State of Alabama.
• Trouble Collecting Assets – sometimes the Personal Representative (the person whose duty it is to collect and protect or “marshal” the assets) has trouble collecting the assets from banks, brokerage firms, or even family members. The Personal Representative has a degree of flexibility in leaving assets in the possession of people presumptively entitled to the assets. See 43-2-837.
• Executor Refuses to Close Estate or Pay Shares to Beneficiaries – An Estate must stay open for at least six months. While there is no statutory requirement to close an estate shortly after the six-month mark, a Personal Representative has a duty to move “as expeditiously and efficiently as is consistent with the best interests of the estate.” Ala. Code 43-2-833. In fact, many Alabama probate courts will send notices to the Personal Representative inquiring about closing the estate after six months. Some counties will even set the matter for hearing if a timely status report is not filed.
  • A beneficiary of a Will may also seek to compel payment of a legacy (i.e. a bequest in a Will) pursuant to Ala. Code 43-2-580. A beneficiary may also petition the Court for an Order ordering the Personal Representative to file his or her final settlement to close the estate.
• Person in Possession of a Will Refuses to Turn it Over – Occasionally, someone in possession of a Will refuses to turn it over. Pursuant to Ala. Code 43-8-270, a person in possession of a Will may be compelled to turn it over to someone “able to secure its probate.”
• A Beneficiary is a Minor or Incompetent – if a beneficiary or heir at law is a minor (under nineteen years of age in Alabama) or is incompetent, a Guardian ad Litem must be appointed. The Guardian ad Litem is charged with representing the best interests of the minor or incompetent. The guardian ad Litem is usually an attorney. The Guardian ad Litem’s fee is usually borne by the Estate.

Alabama Statutory Exemptions

Alabama law provides certain statutory exemptions for family members of the Decedent that are exempt from creditor claims. Exemptions are available first to the surviving spouse (if there is a surviving spouse). If there is no surviving spouse, exemptions are available to the surviving children. If the surviving children are minors, all of the exemptions are available. However, if the surviving children are adults, only the personal property exemption is available.

• Homestead Exemption
  • Alabama law allows the sum of $15,000 to be set aside as a Homestead Exemption
• Personal Property Exemption
  • The first $7,500 in Personal Property is exempt from all creditor claims. This exemption is available first to the surviving spouse, and if there is no surviving spouse, to the children of the Decedent.
  • Note that this is the one exemption that can be claimed by adult children of the Decedent.
• Family Allowance
  • The Court may award up to $15,000 for the surviving spouse and/or minor children of the Decedent to provide for them during the administration of the Estate. The family allowance may be lump sum or in periodic installments. It is most often awarded as a lump sum.

While there are technical differences between the exemptions, some Alabama probate courts allow claimants to group the exemptions together. For instance, as a matter of practice, some probate courts allow claimants to petition to be awarded $37,500 out of the Decedent’s bank account as their exemption.

What are the Steps to Probate an Estate in Alabama?

Step 1: Open the Estate

• Obtain a Death Certificate
  • The nominated Executor or next of kin should obtain a certified copy of the death certificate from the Alabama Department of Public Health. These are sometimes supplied by a funeral home. This is usually required by the probate court to verify the death of the deceased person.
• Locate the Will
  • The Executor nominated in the Will should search the Decedent’s home, safe deposit box, or other secure location to find the original will. If the original will cannot be located, the nominated Executor may need to file a petition with the probate court to establish the validity of a copy of the will.
• Notify Heirs at Law and Obtain Consents
  • The Personal Representative should gather the names, addresses, and phone numbers of heirs at law. If the deceased individual had a will, the contact information for heirs may be listed in the will.
  • In order for the Will to be admitted without a hearing, the heirs at law must sign a consent to the Will being probated. If all of the heirs at law do not consent, or if there are heirs that are minors or incapacitated and cannot consent, a hearing must be held.
• File the Petition to Open the Estate with Probate Court
  • The Will is filed (together with the petition to probate the Will and death certificate and other accompanying documents such as Consents from the Heirs at Law and a bond as applicable) in Probate Court.
  • Typically, the Estate is opened in the county in which the Decedent lived.
  • A will must be filed for probate within five years from the date of the Decedent’s death.
  • Why File the Will with the Probate Court?
    • Filing the will with the probate court initiates the legal process of distributing the deceased person's assets according to their wishes. The probate court oversees the administration of the estate, ensuring that all debts and taxes are paid and that assets are distributed in accordance with the deceased person's wishes.
    • It is also the process by which the Probate Court will grant Letters Testamentary (if the Decedent had a Will) or Letters of Administration (if the Decedent died without a Will). This important document helps the Personal Representative manage the estate, including marshaling assets, paying creditor claims, distributing assets, and communicating with the court.

Step 2: Marshal the Assets

• It is the duty of the Personal Representative to “marshal” the assets of the Estate. Marshaling the assets means locating and taking charge of all probate assets.
• What assets should I look for?
  • Land and Real Estate Interests
  • Mineral Rights
  • Cash (on hand and belonging to the Estate)
  • Uncashed checks
  • All bank accounts, brokerage accounts, investment accounts, etc.
  • Stocks, bonds and promissory notes
  • Vehicles
  • Business interests
  • Life insurance policies payable to the Estate
  • Furniture
  • Antiques
  • Artwork
  • Jewelry
  • Collections (coins, stamps, books, etc.)
  • Other Personal Property and Effects
• Appraise the Assets if Needed

Step 3: File an Inventory (if required)

• What is an Inventory?
  • An Inventory is the list of assets of the Decedent’s estate. This includes real property, personal property, and any other assets that are part of the Estate. The Inventory is used to determine the total value of the Estate and to ensure that all assets are accounted for during the probate process.
• When There is No Will
  • The Personal Representative must file an inventory within two months from the date Letters of Administration (or Letters Testamentary if the Will does not waive the inventory) are issued.
  • In accordance with Ala. Code 43-2-835, The Inventory must show:
    • property owned by the Decedent at the time of death
      • With reasonable detail
    • Fair market value of the property
    • The type and amount of encumbrance on the property
  • The inventory should be kept current and updated with the Probate Court if new assets are located.
  • Failing to file an inventory is a good way to get in hot water with the Probate Court.
• When There is a Will That Waives the Requirement to File an Inventory
  • Most Wills waive the requirement that the Personal Representative file an Inventory with the Probate Court.
  • Nevertheless, it is highly advisable for the Personal Representative to maintain at least an informal list of assets to be shared with Beneficiaries of the Estate as they may request. This will help the Personal Representative administer the Estate and avoid disputes with Beneficiaries.
• When There is a Will but it does not Waive the Requirement to File an Inventory
  • Follow the procedure as if there is no Will.

Step 4: Notice to Creditors

• Notice to the Alabama Medicaid Agency
  • Alabama law now requires that every Estate give notice to the Alabama Medicaid Agency even if the Decedent never received Medicaid benefits. The notice can be filed electronically or by US Mail.
  • The Alabama Medicaid Agency will process all valid notices within 30 days from the date of receipt.
• Known Creditors
  • Known Creditors are entitled to actual notice by the Personal Representative that they should file their claims.
  • Notifying Creditors also protects the Personal Representative of the Estate from potential legal disputes down the line. By notifying all interested parties, the executor can ensure that the estate is distributed fairly and that all creditor claims are paid before assets are distributed.
• Unknown Creditors
  • For unknown creditors, the Personal Representative is required to run a weekly newspaper notice for three successive weeks (typically handled by your estate attorney or the probate court). This notice should include the name of the deceased individual, the date of death, and the name and contact information for the Personal Representative and/or where the claim should be filed. The notice should also state that interested parties have a certain amount of time to file a claim against the Estate.
• How do I look for Creditors?
  • Notes payable to banks
  • Real estate mortgages
  • Debts owed to individuals or businesses
  • Accounts payable
  • Unpaid taxes
  • Other liabilities

Step 5: Deal with Creditor Claims

• Creditors have six (6) months from the date Letters Testamentary (or Letters of Administration) are issued to file their claim in Probate Court.
• At the end of the claims period, the Personal Representative (or their attorney) should check with the Probate Court to see what all (if any) claims were filed.
• The Personal Representative, in consultation with their attorney, should determine whether claims are valid (and thus should be paid) or which claims are not valid (and should be objected to in Probate Court).
• If there are more debts owed by the Estate than Estate assets, the Estate may be insolvent, which requires a separate petition and process in Probate Court.

Step 6: A Note on Estate Tax

• For 2023, the Gift and Estate tax exemption is $12.92 million ($25.84 million per married couple). If the value of the Estate exceeds the exemption, an estate tax return (form 706) must be filed, and an accountant should be consulted as soon as possible.

Step 7: Distribute Assets

• With the exception of statutory exemptions, no assets should be distributed before the end of the six-month claims period.
• Before assets can be distributed to beneficiaries or heirs, the Personal Representative must deal with outstanding debts and taxes owed by the Estate. This may include funeral expenses, medical bills, and other outstanding debts.
• After the six months claims period has ended and after dealing with all creditor claims, the Personal Representative can begin distributing assets assuming prior approval is note required by the Probate Court.
• Method of Distribution
  • If the Decedent had a Will that was Admitted to Probate Court:
    • Generally, the assets will be distributed according to the Decedent’s Will (note that the surviving spouse can file for an elective share and there are certain other exceptions and nuances).
  • If the Decedent did not have a Will:
    • Generally, asset will be distributed according to the Alabama Statute of Intestacy, codified in Ala. Code 43-8-40 et seq.

Step 8: Closing the Estate

• Final Accounting
  • Note that this requirement is sometimes waived by the Decedent’s Will.
  • Once all assets have been distributed, the Personal Representative of the estate must prepare a final accounting. This accounting should detail all assets take in, all expenses paid, and assets distributed or proposed to be distributed. The final accounting should also note the proposed commission taken by the Personal Representative and legal fees.
  • After the final accounting has been filed, the Probate Court will review it to ensure that all debts have been paid and assets have been distributed properly. If everything is in order, the Court will approve the final accounting.
• Petition for Final Settlement
  • The Petition for Final Settlement, similar to the original Petition for Letters Testamentary or Letters of Administration, is the formal mechanism for closing the Estate.
  • The Petition for Final Settlement concludes probate and relieves the Personal Representative of further duty.

What is the Cost of Probate in Alabama?

The costs of probate in Alabama include court fees, attorney fees, and executor or administrator fees. Pylant Estate Law charges reasonable probate fees, typically around $2,500 for a simple estate. The Personal Representative is also allowed a commission up to 2.5% of the assets taken in and 2.5% of the assets distributed out (5% total).

One way to eliminate the cost of probate is to create a revocable living trust. A revocable living trust is a legal document that allows the creator of the trust (the grantor) to transfer his or her assets into the trust during his or her lifetime. The grantor can then manage the assets in the trust, and can also name a successor trustee to manage the trust after his or her death. Because the assets in the trust are not considered part of the grantor's estate, they do not go through probate. This can save time, money, and energy.

The probate process in Alabama can be difficult, but choosing a knowledgeable estate attorney can help guide you. Probate is an important part of ensuring that the assets of a deceased person are distributed according to his or her wishes.