Alabama

Alabama Estate Planning Considerations

Common Law State

Alabama is a Common Law State, which means the rules governing the ownership, division, and inheritance of income and property acquired by a husband or wife during their marriage hold that subject to various qualifications, each spouse owns and has complete control over their own her income and property.

Last Will and Testament

Will Creation

The minimum age of a person competent to make a will is 18. The number of witnesses necessary to execute a will is two.

Revocation of Wills   

A will or any part of a will can be revoked by a subsequent will, which either revokes the will expressly or by a change or inconsistency. Wills can also be revoked by burning, tearing, or destroying with the intent of rescinding.

However, if a person other than the testator physically destroys the will, it must be at the testator’s direction and proved by two witnesses to be at the testator’s request.

Uniform Transfers to Minors Act (UTMA)

The custodial arrangement terminates when:

  • The minor child reaches age 21 concerning custodial transfers made by irrevocable lifetime gift, will or trust, or the exercise of a power of appointment.
  • The minor child reaches age 19 concerning other custodial transfers.
  • The minor child dies.

Dying without a Last Will, the Alabama laws of Intestacy.

The estate goes to the surviving spouse, as follows:

  • If there are no surviving descendants or parents, —100% of the estate
  • If there are a surviving parent(s) but no surviving descendants—$100,000 plus 50% of the balance of the estate
  • If there are surviving descendants, all of whom are also descendants of the spouse—$50,000 plus 50% of the balance of the estate
  • If there are surviving descendants, at least one of whom is not also a descendant of the spouse, —50% of the estate

If there is no surviving spouse, or if a portion of the estate does not go to the spouse:

  • 100% (or applicable portion) to descendants, by representation (see Ala. Code §43‐8‐45)

If there is no surviving spouse or descendant:

  • 100% to surviving parent or parents equally

If there is no surviving spouse, descendant, or parent:

  • 100% to descendants of parents, by representation (see Ala. Code §43‐8‐45)

If none of the above:

  • Intestacy laws outline further distribution steps to the level of grandparents and related individuals. See Ala. Code §43‐8‐42(4).
  • If no legally described recipient can be found, estate assets go to the state of Alabama.

Digital Assets

 Alabama follows the Revised Uniform Fiduciary Access to Digital Assets Act to ensure that testators can retain control of their digital property and plan for its ultimate disposition.

Taxes

  • Alabama imposes an estate tax equal to the maximum credit allowed under IRC Sec. 2011 for paid state estate and inheritance taxes. However, the current federal tax code does not permit a credit for paid state estate or inheritance taxes. Therefore, Alabama has no credit estate tax in effect at this time.