Avoiding Probate in Alabama

When it comes time for the estate of a deceased person to be distributed to heirs and/or designated beneficiaries, the estate must go through the process of probate (unless the deceased has a revocable or irrevocable living trust in place). If the decedent left no will or estate plan then the estate must go through probate or if the decedent left a will, then probate will also be necessary. The decedent’s assets are “administered and distributed” either according to his or her will or according to Alabama state law. Although the probate process can be complex in some instances, the process can be greatly facilitated by having an experienced Athens probate attorney by your side.

The Alabama Probate Process

If there is a will and no executor is named in the will, then the court will appoint an executor, usually a surviving spouse or adult child. Once appointed, the executor will inventory the assets of the deceased, obtaining a valuation on items, when necessary. The executor will also pay any bills owed by the deceased, ensure all taxes are properly paid, and, ultimately, distribute the assets of the decedent to the named heirs or beneficiaries. If there is no will, the court will appoint an executor who will determine who the legal beneficiaries are, under Alabama state law. The probate process essentially prevents theft and fraud following a person’s death—the estate is “frozen” until the property is identified and appraised, creditors are paid, and taxes are paid. The process for probate includes the following:

• A will must be filed within five years of the death;
• Alabama does not accept handwritten (holographic) wills;
• A Petition for Probate must be filed;
• Notice must be given to all heirs and beneficiaries;
• A notice must be published in a newspaper where the decedent lived to notify creditors;
• The Court issues Letters Testamentary to the executor, giving him or her the legal authority to act on behalf of the estate;
• The estate assets are inventoried and filed with the Court;
• Creditors and taxes are paid;
• A Petition to close the probate is filed with the Court;
• The Court issues the Order and the assets are distributed to beneficiaries, and
• The executor is entitled to fees for his or her service, however those fees are taxable.

Small Estates in Alabama

In the state of Alabama, not all estates are required to go through probate. If an estate is considered a “small estate,” meaning it falls below a certain threshold, then no supervision is required for the estate to be settled. The small estate option is valid no matter whether a will was left or not. Rather than having a court hearing in front of a judge, there must only be one or two simple forms filed, then there is a waiting period before assets can be distributed. Alabama allows the small estate process for any estate whose value does not exceed $25,000 and has no real property. Once the paperwork is filed for a small estate, the waiting period is 30 days.

Must All Assets Go Through Probate?

Not all assets must go through the probate process, as some assets transfer automatically upon the death of the owner of the asset. These types of assets include:

• Joint tenancy assets—This is also known as right of survivorship. As an example, if a married couple owns a home titled as “John Smith and Jane Smith, as joint tenants,” and John dies, then Jane automatically owns John’s interest in the home. Tenancy by the Entirety and Community Property with Right of Survivorship also function like a joint tenancy asset but are only available to married couples.
• Retirement accounts and life insurance policies have named beneficiaries, therefore upon the death of the owner of the retirement account or life insurance policy, the beneficiary receives the asset without the necessity of probate.
• A bank account or brokerage account can also have a named beneficiary. This is usually known as a Payable on Death Account or Transfer on Death Account, and, like a retirement account or life insurance policy will transfer directly to the beneficiary upon the death of the owner without going through probate.
• Assets left through a Living Trust are not required to go through probate unless the assets left outside the trust exceed the amount for Alabama’s small estate limit.

Why You Might Want to Avoid Probate

There are several reasons you might not want your estate to go through probate. Probate can be a lengthy process, full of delays. Even the simplest, uncontested probate can take from months to a year. If there are any disputes or other complications, the process can take much longer. These delays can keep your heirs from receiving their inheritance for a significant length of time. Probate is a public proceeding, meaning all the documents and hearings are open to the public. Anyone who happens to be curious about your estate can obtain detailed information through the probate process. This means if you have any interest in keeping your finances, property or heirs private, you will want to avoid probate.

The executor is required to notify all your creditors following your death; once the creditor is notified, they can file a claim with the probate court, and be entitled to payment assuming there are sufficient assets to pay. Probate is a court-supervised process with court approval required at every turn. In contrast, since a trust is usually administered without court involvement, there are far fewer rules, regulations and formalities. If you want to avoid the probate process, it is essential that you speak to your Alabama estate planning attorney to discuss how you can prepare your estate so that your heirs can receive their inheritance with the least amount of fuss possible.

The Martinson & Beason estate planning attorneys can help you determine the best way to set up your estate, taking into consideration your unique circumstances. Our experienced Athens estate planning attorneys will answer your questions, and work closely with you to ensure your estate plan reflects your wishes. Contact a Martinson & Beason attorney today for a comprehensive estate planning consultation.