No matter whether you pass away with a valid will prepared or not, Alabama’s inheritance laws are quite elaborate and complicated. This is mostly because of its probate court that includes multiple ways you can file. So even though the state doesn’t have its own inheritance or estate tax, the estate planning process isn’t really any simpler. If you’d like some help with your estate or understanding Alabama inheritance laws, SmartAsset’s free financial advisor matching tool can pair you with advisors who serve your area.
Does Alabama Have an Inheritance Tax or Estate Tax?
There are many financial implications that come into play when a resident or nonresident with property in Alabama dies. However, these don’t include an inheritance tax or estate tax, as the state has done away with both.
While they are sometimes conflated, estate and inheritance taxes work in notably different ways. An inheritance tax involves taxing the assets received by beneficiaries after they’re removed from the estate, meaning the beneficiaries themselves incur the tax. An estate tax, on the other hand, is charged to the estate directly based on if its value exceeds the set limit of the state or federal government.
There is also no gift tax in Alabama. The federal gift tax still applies, though, specifically when you give an individual more than $16,000 over a single calendar year. If your gifts total less than that amount, the federal gift tax won’t come into play either.
Other Necessary Tax Filings for Estates
Be sure you’re also mindful of these other required filings for the estates of decedents:
- Final individual federal and state income tax returns – each due by tax day of the year following the individual’s death
- Federal estate/trust income tax return – due by April 15 of the year following the individual’s death
- Federal estate tax return – due nine months after the individual’s death, though an automatic six-month extension is available if requested prior to the conclusion of the nine-month period
- This is required only of individual estates that exceed a gross asset and prior taxable gift value of $12.06 million ($24.12 for couples) in 2022
To file with the IRS in name of the estate, executors must register for an employer identification number (EIN). You can handle this online, by fax or via mail.
Dying With a Will in Alabama
Testate is the legal term used to describe a will that has successfully abided by all the rules of what makes a valid will under Alabama inheritance laws. For this, you must sign your will in front of two witnesses who follow your signature up with their own. It’s recommended that the witnesses not be heirs in the will, so as to eliminate any fears of influence in the eyes of the court or relatives.
You must name heirs to your estate when you’re creating a will, so it can be easy to forget about naming a personal representative, sometimes commonly referred to as an executor. The role of this individual is to manage your estate, either on orders of the will or the courts, depending on whether probate becomes necessary.
Dying Without a Will in Alabama
An intestate decedent is anyone that has passed away without a valid will prepared to dictate the inheritance of his or her real and personal property. For obvious reasons, this isn’t very desirable, as the Alabama state government is required to step in and choose heirs based on the laws of intestate succession.
While testate wills have a predetermined executor picked out, an intestate estate needs one appointed for it. This will typically occur through the probate process.
The Probate Process in Alabama Inheritance Law
Although it’s usually seen as a costly and time-consuming venture, probate is really there to guard the decedents’ estates against any sort of mishandling. This is true regardless of if the estate is intestate or testate, though the proceedings differ slightly. When there is a valid will, the court looks to implement its instructions exactly as the decedent laid them out. On the other hand, intestate succession calls for court supervision, unless you can claim the estate as a small estate.
The aforementioned small estate distinction allows an estate to skip over probate. However, it is only available if the overall legal value of the Alabama estate is no more than $25,000 and more than 30 days have passed since the estate holder died.
Spouses in Alabama Inheritance Law
For anyone married at the time of his or her death, how much of the subsequent intestate estate goes to the surviving spouse is dependent on whether the decedent had children, whether some of the children are the product of a relationship with another partner other than the spouse and whether the decedent has a parent or both parents who are still alive. Otherwise, if none of these relatives exist, the spouse is entitled to the whole estate.
If your only children were from the marriage, your spouse is given the first $50,000 of your intestate estate and half of whatever’s left over. However, individuals that had children with another partner will lower their spouse’s intestate share to just half of the estate.
Outside of children, parents are the only other type of surviving relative that can alter a spouse’s share of an intestate estate in Alabama. So should you pass away with a surviving spouse and parents, but no children, your spouse will receive the first $100,000 of your estate and half of the balance, with any leftover assets going to your parents.
Children in Alabama Inheritance Law
Exactly how much of your intestate estate your children are afforded is dependent on if they’re all the children of your surviving spouse too or if you also have at least one child with another person. For children who all come from your marriage to your recent widow or widower, they receive property only after your spouse has claimed the first $50,000 of the estate and half of the balance. Any residuals are split between the children, if there are more than one.
Your children’s cut of your estate gets larger if you’ve had children both with your spouse and another partner, or solely with another partner. In this case, your surviving spouse is permitted to receive just half of your estate, leaving the other half to divide among your children.
|Intestate Succession: Spouses & Children|
|Inheritance Situation||Who Inherits Your Property|
|– If spouse, but no children or parents||– Entire estate to spouse|
|– If spouse, and only children from marriage||– First $50,000 of estate to spouse |
– 1/2 of the estate’s balance to spouse
– Leftover to children
|– If spouse, and children from marriage and another relationship||– 1/2 of estate to spouse |
– 1/2 of estate split evenly among children
|– If spouse and parents||– First $100,000 of estate to spouse |
– 1/2 of the estate’s balance to spouse
– Leftover to parents
When it comes to what’s considered a biological child in accordance with Alabama inheritance laws, the definitions are pretty loose. In fact, the state has declared that it will view any child born within the bounds of a domestic partnership or marriage to be biologically that of both partners.
If you put up your biological child for adoption and another family legally adopts him or her, the child becomes disinherited from your estate completely. On the other hand, any child you adopt are afforded the same level of inheritance as any other biological child. Stepchildren and foster children who live with you, but whom you’ve not adopted, don’t get any right to your intestate will, according to Alabama inheritance laws.
Contrary to most common references of grandchildren in inheritance and estate planning language, they are not automatic heirs in the event you do not leave a valid will. But if your child (their parent) has passed away prior to your death, they will inherit some of your estate.
Illegitimate children, those born outside of a marriage, hold the same rights to your intestate estate as any other biological child you might have, according to Alabama inheritance laws. However, you must prove this via a paternity test or after the death through legal evidence.
Unmarried Individuals Without Children in Alabama Inheritance Law
The last thing most people would want is have their property end up in the hands of the state of Alabama after their death, a process called escheatment. So in order to take every measure possible to avoid this from happening, Alabama inheritance laws have created guidelines to find any relatives to inherit your estate:
|Intestate Succession: Extended Family|
|Inheritance Situation||Who Inherits Your Property|
|– If parents, but no spouse or children||– Entire estate to parents|
|– If no parents||– Estate split evenly among siblings|
|– If no siblings||– Estate split evenly among paternal/maternal grandparents|
|– If no grandparents||– Estate split evenly among paternal/maternal aunts and uncles|
Non-Probate Alabama Inheritances
Because certain assets of a decedent have a pre-named beneficiary, Alabama inheritance laws do not require them to be part of the probate or intestate succession processes. So if you want specific people to end up with the following accounts, check who the beneficiary is:
- Retirement accounts, like IRAs
- Assets within a revocable trust
- Pay-on-death bank accounts
- Transfer-on-death investments
- Life insurance policies
- Jointly-owned real estate and other property
If you’d prefer that these assets become a part of your will or of intestate succession should you die without a valid will, simply name your estate as the beneficiary.
Other Situations in Alabama Inheritance Law
An individual must live for at least five days to become a valid heir under Alabama intestate succession laws. If not, the process will not include them.
Alabama inheritance laws dictate that a relative that only shares a half-blood relationship with you is included in your intestate estate as if they were wholly related to you.
If someone in your family was pregnant prior to your death and born following it, he or she receives standard inheritance rights. While this technically doesn’t guarantee that he or she will receive any of your estate, it does give the person full rights to fall into intestate succession.
Alabama law strips killers of any inheritance rights if they were due to inherit from their victim. This, of course, requires conviction of a felonious and intentional murder.
Resources for Estate Planning
- Managing your own will or the estate of a loved one who has recently passed away, includes many complex factors to consider. It can be such an overwhelming venture — with taxes to file, possible court proceedings to endure and more — that the services of a professional might be welcome, especially in getting help understanding the intricacies of Alabama inheritance laws. Finding a qualified financial advisor who can help doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Estate planning is incredibly important, as a strong plan can save your family from stressful court proceedings after you’re gone. SmartAsset’s comprehensive estate planning guide can help you start building out your plan.
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