Alabama law establishes an estate administration process for settling the deceased person’s assets and remaining debts and obligations when a loved one passes away. While not all estates require formal probate administration by a court, a substantial number do. It is entirely dependent on the estate’s total value and asset ownership at the time of death.

Alabama provides a probate process for handling small estates. This option simplifies the process of transferring property left by a deceased person. You could transfer a large amount of property, which will save you time, money, and aggravation. It can also get you back on the road to healing after a family member’s death faster.

In this article, Huntsville attorney, Sarah S. Shepard, discusses small estate administration and everything you should about filing for one.

How Alabama Small Estate Probate Works

Alabama permits the distribution of small estates via a streamlined estate process called summary distribution. A spouse or inheritor must petition the local probate court requesting that it use the simplified procedure for this case. The court may grant you authority to distribute the assets without going through the formalities of probate.

You can qualify for small estate probate if the estate meets the following criteria:

• Last will and testament: Decedent does not need a last will and testament to qualify for small estate probate.

• Maximum estate value: The maximum amount for a 2021 small estate is $30,608. Note: This number increases annually with inflation.

• Personal property: Personal property does not count toward the maximum dollar amount to qualify.

• Asset transfer rules: Assets transfer to heirs according to Alabama probate laws when no will is available. Otherwise, probate courts follow the will’s instructions. This is part of why it is crucial to have an estate plan in Alabama.

• Permitted filers: A closely-related family member, such as a spouse or adult-aged child, should file for probate on behalf of the estate.

• Waiting period: There is a thirty (30) day waiting period before you can petition the probate court for summary destruction of the Alabama small estate. In the meantime, there are other items to complete, which we will discuss later in this article.

You may also need to address bank account issues that do not offer a beneficiary designation. The financial institution will send a list of documents required to access the account’s funds in this situation. Typically, the list requires a death certificate and other documents establishing an individual’s right to the deceased person’s funds, such as letters testamentary or letters of administration.

How to Settle a Small Estate in Huntsville, Alabama

Alabama’s probate process is similar to that of other states. You must follow specific procedures to ensure that you administer the estate according to the decedent’s final wishes and best interests of the estate. Every case is unique, so the process your loved one’s estate follows may look different from another.

However, you can review the following six steps to get a general sense of what it will entail:

• Step 1. If any, file the decedent’s will with the probate court in their county of residence.

• Step 2. The probate court appoints an executor and issues letters authorizing the executor to conduct estate business.

• Step 3. The executor will then publish a notice of the estate in a widely-distributed, local newspaper in the county where the deceased person resided to notify creditors and heirs.

• Step 4: The personal representative must serve notice of the probate case filing upon the Alabama Medicaid Agency. 

• Step 5. The executor is accountable for the estate’s debts and taxes.

• Step 6. After paying all debts, the executor can distribute the remaining assets and petition the court to close probate.

It is vital to know that there will be costs associated with initiating and concluding probate. For example, suppose there are insufficient liquid assets to cover the fees and other debts. In that case, the executor will be responsible for selling other assets with the court’s approval. Therefore, keep careful track of your expenses throughout the entire process.

The personal representative is obligated to pay the following claims against the estate in the next order:

• Funeral costs

• Estate administration fees

• Medical bills

• Local, county, state, and federal taxes

• Secure creditors

• Unsecured creditors

The personal representative then distributes any remaining assets to the inheritors under the deceased person’s wishes or state intestate succession laws.

Assets That Do Not Count Toward the Dollar Limit

When calculating the total value of a probate estate, it is critical to keep in mind that courts do not automatically include everything in a decedent’s estate. Some traditional assets are left alone or added in, and in doing so, change the entire probate strategy.

Generally, the following types of assets pass to heirs without going through probate:

• Assets held in irrevocable and revocable trusts

• Life insurance policies

• Accounts payable or transferable in the event of death

• Lifetime gifts between the decedent and beneficiaries

Speak with an estate planning lawyer in Alabama to help you determine which assets count toward your family member’s estate. We may discover that you qualify for either process, which can pave the way toward more legal options and a chance to close out the estate properly.

How Much Does Small Estate Probate Cost in Alabama?

The cost of probate varies according to several factors, including the estate’s size, complexity, intestacy, disputes, debts, and the court. However, the court filing fee, attorney fees, and professional fees for accountants or other necessary services are ordinary expenses associated with probating an estate.

The filing fee and court costs for probating will vary according to the jurisdiction where you filed the case. For example, the filing fee to probate a small estate in Madison County, Alabama, is $50.00. Similarly, attorney’s fees and professional service costs such as appraisers, accountants, and land surveyors vary depending on factors such as experience, the size of the estate, and the complexity of their involvement.

Compensation for Small Estate Administration

The fee charged to the executor of an estate cannot exceed 2.5 percent of the estate’s value, plus 2.5 percent of disbursements. The court may award additional financial compensation if the executor’s services are required to be extraordinary. The court must approve payment unless otherwise specified in the will, and the estate will pay the fee.

How Does It Take to Settle an Alabama Small Estate?

It generally takes around two (2) months to settle an Alabama small estate. However, the time required to complete your probate process varies according to several factors.

A small estate will take less time to administer than one that requires formal probate. If someone challenges any will provision, delays prevent the executor or administrator from proceeding with the distribution, regardless of estate size.

Is Probate Required for a Small Estate with a Will?

Yes, in Alabama, a small estate with a will must be probated. The representative files the will with the probate court to ensure that you follow all applicable procedures and make decisions in the estate’s best interests. You have up to five years to file the will, and depending on the size of the estate, the estate may go through the small estate process or formal probate.

How Much Time Do You Have to File an Alabama Small Estate Probate?

According to the Alabama Small Estates Act, you must petition for probate within five (5) years of the decedent’s death. Otherwise, you cannot transfer assets to beneficiaries if there are any left behind in the will. Instead, you must use an intestate estate proceeding.

Advantages Of Hiring A Probate Attorney For A Small Estate

The probate process can be complicated and confusing, and those who attempt it on their own are personally liable for their errors. Additionally, they may end up costing time and money due to filing errors.

A judge rescheduling an appointment due to a mistake is a nightmare scenario for anyone attempting to access their probate estate. Without authorization from the probate court, the estate’s executor or next of kin cannot take the necessary action to administer it properly.

Here are three advantages of hiring a small estate probate lawyer in Alabama:

Advantage 1. Protection From Personal Liability

Personal liability may arise in a probate situation, such as errors in organizing assets, creating reports, paying creditors and heirs in the wrong order or with the incorrect amounts, failing to obtain court authority before taking specific actions, or failing to notify the appropriate individuals promptly.

Advantage 2. Process Efficiency

When probating a small estate, it can take several months to several years if the executor does not complete all the forms correctly the first time, provide proper notice to all necessary parties, obtain the required signatures of heirs and interested creditors, and file all the required documents before each deadline.

Advantage 3. Reduce Family Stress

The net effect of expediting the probate process, reducing the amount of time the executor must devote personally to the case, and resolving any disputes minimizes the amount of stress that the deceased’s family must deal with during an already emotional time.

Get Legal Help with Estate Planning in Huntsville, AL

Probate is avoidable with the proper documents, such as living trusts, powers of attorney, and advance directives. Contact Sarah S. Shepard, LLC for more information by calling 256-512-6019 or message us online privately. Our legal team looks forward to learning more about your needs!