Estate Planning – Death of a Spouse

My husband died and while most everything was in both of our names there is one financial account with about $15,000.00 in it. How can I get to it since I am the primary beneficiary under his Will?

Most often on the first death of a spouse if everything has been tied together during life it is unnecessary to probate following the first death. When doing your estate plan it is important to think about EVERYTHING that you own or have control over, and I do mean EVERYTHING. Who wants to learn that there is an $8,000 life insurance policy that has the estate as the beneficiary or an $8,000 bank account where the deceased spouse was the sole owner? In both cases it will be necessary to probate the estate and the court, newspaper notice and legal fees will unfortunately take up a significant percent of the $8,000.00. It’s not that the costs are meant to take up a significant amount of the $8,000.00, it’s that the work required can be the same amount of work required for a $24,000.00 estate and maybe a $100,000.00 estate.

When looking at your estate plan did you also look at your insurance policies? Make sure all insurance policies have beneficiaries which does not include your estate as a beneficiary. Look at your investments; you may wish that they go to your heirs by way of probate or you may have set up a TOD (transfer on death) to transfer investment assets outside of probate or you may have been given the opportunity to transfer to beneficiaries. Bank accounts can be transferred by setting up a POD (payable on death) without giving that person or persons rights over the account or setting up an account with more than one owner. If the decedent owned real property, was the surviving spouse also on the deed “with rights of survivorship” or was there a life estate in place so that those named with remainder interests would take after death or were there beneficiaries in the Will for real property? Even if there are no beneficiaries for the real property was the Personal Representative (Executor/ Executrix) given absolute right under the Will to sell real property and distribute the assets to the beneficiaries?

Now on to your question. It’s unfortunate that the amount is greater than $5,000.00. There is banking law that allows a bank account under $5,000.00 to be transferred to heirs if there are not other assets to probate. A specific process must be followed as outlined in the Code of Alabama, 1975.

But of course these assets are greater than $5,000.00 but note that they are less than $25,000.00. Why is the $25,000 important? The Alabama Small Estates Act provides for a quicker settlement of estate assets when the total is less than $25,000. That amount however is adjusted annually by the State Finance Director based on the Consumer Price Index. That amount is current $30,608.00.

The requirements of §43-2-692 are:

(a) The surviving spouse, if there is one, otherwise the distributees of an estate of personal property only, may initiate a proceeding for summary distribution of the estate by filing a verified petition in the office of the judge of probate of the county in which the decedent was domiciled at death alleging the conditions provided in subsection (b). The petition shall include a description of the estate of the decedent. No bond shall be required to be filed with the petition.

(b) The surviving spouse or distributee shall have a defeasible right to the personal property of the decedent without awaiting the appointment of a personal representative or the probate of a will if all of the following conditions exist:

(1) The value of the entire estate does not exceed twenty-five thousand dollars ($25, 000). This figure shall be adjusted annually for changes in the Consumer Price Index by the State Finance Director who shall notify each judge of probate of the newly adjusted figure.

(2) The decedent died a resident of this state.

(3) No petition for the appointment of a personal representative is pending or has been granted.

(4) At least 30 days have elapsed since the notice of the filing of the petition was published as hereinafter provided.

(5) All funeral expenses of the decedent have been paid, or alternatively, that arrangements for the payment out of the estate of the decedent of all unpaid funeral expenses have been made by the surviving spouse or other distributee.

(6) If the decedent died intestate, the awards due under Alabama descent and distribution statutes to the surviving spouse and to the child or children have been determined by the judge of probate.

(7) If the decedent died testate, a document purporting to be his or her will, which on its face, is properly executed, witnessed, and attested in compliance with Alabama law, has been duly filed in the office of the judge of probate.

(8) Notice of the filing of a petition for a summary distribution under this division shall be published once in a newspaper of general circulation in the county in which the decedent was domiciled, or if there is no newspaper of general circulation in the county, then notice thereof shall be posted at the county courthouse for one week.

(9) All claims against the decedent’s estate have been paid or arrangements for the payment out of the estate of the decedent have been made by the surviving spouse or other distributee according to the following priority:

a. First, to each person entitled to payment for any funeral expenses owed by the decedent or his or her estate.

b. To the judge of probate for fees and charges incurred in the proceedings for summary distribution.

c. To any person entitled to payment for expenses incurred in the decedent’s last illness.

d. To the State of Alabama, the county, and any municipality therein for taxes assessed on the estate of the decedent previous to his or her death.

e. To each secured creditor.

f. To each unsecured lienholder.

g. To each remaining general unsecured creditor of the decedent.

h. To each surviving spouse, child, or other distributee who is entitled to take under Alabama’s descent and distribution laws, or, alternatively, to each devisee entitled to take under any testamentary disposition of the decedent.

(Acts 1975, 3rd Ex. Sess., No. 145, § 3; Act 2009-399, p. 724, § 1.)

So basically, after appropriate filings are made and notice is made in a newspaper generally circulated in the county of residence or if not one then posted at the court house, there is a wait of at least thirty days. After that point a hearing is held. If the probate judge is satisfied that the requirements are met then the judge can order that the assets be distributed to the appropriate individual(s). This is a time saver in that typical probate of an estate greater than the mentioned, $30,608.00 will have a minimum wait time of six months before the estate can be closed and all distributions made. Generally the cost is less with a Small Estates Distribution as well. I hope this helps.

Ronald A. Holtsford, Esq., Ronald A. Holtsford, LLC, 7956 Vaughn Road, Box #124, Montgomery, AL 36116, (334) 220-3700, raholtsford@aol.com

This article is informative only and not meant to be all inclusive. Additionally this article does not serve as legal advice to the reader and does not constitute an attorney- client relationship. The reader should seek counsel from their attorney should any questions exist.”No representation is made that the quality of legal services performed is greater than the quality of legal services performed by other lawyers.”