Huntsville Estate Planning Lawyers
Serving Clients Throughout the Huntsville, Alabama Area
There are many legal strategies involved in estate planning, including wills, revocable living trusts, irrevocable trusts, durable powers of attorney, and health care documents. New clients often say that they do not have an estate plan. Most people are surprised to learn that they actually do have a plan. In the absence of legal planning otherwise, their estate will be distributed after death according to Alabama’s laws of intestacy. Of course, this may not be the plan they would have chosen. A properly drafted estate plan will replace the terms of Alabama’s estate plan with your own. Start the process and create your estate plan alongside an estate planning lawyer.
Your Last Will and Testament
Your last will and testament is just one part of a comprehensive estate plan. If a person dies without a will, they are said to have died “intestate” and Alabama laws will determine how and to whom the person’s assets will be distributed. Some things you should know about wills:
- A will has no legal authority until after death. A will does not help manage a person’s affairs when they are incapacitated, whether by illness or injury.
- A will does not help an estate avoid probate. A will is the legal document submitted to the probate court, so it is basically an “admission ticket” to probate.
- A will is a good place to nominate the guardians (or back-up parents) of your minor children if they are orphaned. All parents of minor children should document their choice of guardians. If you leave this to chance, you could be setting up a family battle, and your children could end up with the wrong guardians.
Trusts: Revocable Living Trusts, Irrevocable Trusts, Testamentary Trusts, Special Needs Trusts, etc.
Trusts come in many “flavors,” they can be simple or complex, and serve a variety of legal, personal, investment or tax planning purposes. At the most basic level, a trust is a legal entity with at least three parties involved: the trust maker, the trustee (trust manager), and the trust beneficiary. Oftentimes, all three parties are represented by one person or a married couple. Depending on the situation, there may be many advantages to establishing a trust, including avoiding probate court. In most cases, assets owned in a revocable living trust will pass to the trust beneficiaries (or heirs) immediately upon the death of the trust maker(s) with no probate required. Certain trusts also may result in tax advantages both for the trust maker and the beneficiary. Trusts may be used to protect property from creditors, or simply to provide for someone else to manage and invest property for the trust maker(s) and the named beneficiaries. Another advantage of a trust is the continuing effectiveness even if the trust maker dies or becomes incapacitated. Reach out to our estate planning lawyers to find out if you and your family could benefit from establishing a trust.
Powers of Attorney, including Health Care Power of Attorney
A power of attorney is a legal document giving another person (the attorney-in-fact) the legal right (powers) to do certain things for you. The documents will set out what powers are transferred to the agent. A power of attorney may be very broad or very limited and specific. All powers of attorney terminate upon the death of the maker, and may terminate when the maker (principal) becomes incapacitated (unable to make or communicate decisions). When the intent is to designate a back-up decision-maker in the event of incapacity, then a durable power of attorney should be used. Durable Powers of Attorney should be frequently updated because banks and other financial institutions may hesitate to honor a power of attorney that is more than a year old. Anyone over the age of 14 is considered medically emancipated and may execute a Health Care Power of Attorney. The HCPOA is a legally binding document in Alabama.
An advance directive is a document that specifies the type of medical and personal care you would want should you lose the ability to make and communicate your own decisions. Your advance directive can specify who will make and communicate decisions for you, and it can set out the circumstances under which you would not like your life to be prolonged if, for example, you were in a coma with no reasonable chance of recovery. A document that goes hand-in-hand with your advance directive is an authorization to your medical providers to allow specified individuals to access your medical information. Without this authorization, your doctor may refuse to communicate with your hand-picked decision maker.
Probate, Estate and Trust Administration
How does probate work?
The fundamental duties of a personal representative (also known as an “executor,” if male, or an “executrix,” if female) of an estate are the same as those of a trustee–protecting the assets and interests of the beneficiaries. One way to protect those assets and interests and, at the same time, help the probate process go smoothly, is to have all of your ducks in a row and prepare for court as best you can.
Read on for some essential reminders about the probate process and how representatives can assist with the process.
What should I know about the probate process?
A personal representative is required to prepare and file an inventory and a list of debts owed to the estate if any exist. The timeframe for this important chore is set by statute, and is 60 days after appointment of the personal representative. This inventory should detail all of the assets subject to probate and their value at the date of death. Assets subject to probate are those that did not pass by operation of law or otherwise. It is appropriate to obtain an appraisal of these assets as well.
The inventory provides both potential beneficiaries and creditors of the estate an idea of the estate’s assets. There might be penalties and/or fines if the inventory is filed late.
The gifts and bequests listed in a will are not given out until the claims period has expired. This is a 6 month (in Alabama) period in which any creditors of the estate have the right to file a claim against the assets of the estate. The personal representative must give proper notices to creditors, to include making publication in the appropriate newspaper and sending written notice to known secured creditors by certified mail. The personal representative must settle the decedent’s claims before making any distribution of the assets.
The representative must keep the beneficiaries/interested parties informed including providing each with notice that the will has been admitted to probate and a copy of the will. The representative is responsible for the care and maintenance of estate property, treating it with even greater care than his or her own property. The representative is able to sell any property that is perishable or would deteriorate in value during the probate process.
As you can see, being a representative is a big job. Consequently, he or she can be removed if proven to have been guilty of any gross misconduct or mismanagement in the role of representative. The representative may be subject to a suit for breach of fiduciary duty. Along the way, there are taxes to be paid and returns to be filed, along with many other details.
It is essential that the representative work in concert with Alabama Estate Planning Attorneys, an experienced probate firm to guide the representative or beneficiaries during this process … and avoid all of the hidden landmines.