Will Trusts and Estates (your story)

Wills, Trusts and Estates

It is your story, do you want to write the ending?

“Till death do you part.”  Well, we have all been to a wedding and heard that vow.  A wedding is a celebration, the embarking on a new chapter of life, so what will happen at the time of death of one member of the wedding couple is not discussed by the priest, preacher, or official administrating the serviceat the time of the wedding.  Really,that issue is not aninterest of anyone who attends the wedding.  Instead, everyone is focused on the beginning of the journey of two joined as one.   

Nevertheless, after the wedding, when one couple becomes one person, due to the death of a spouse, “till death do us part” may ring in our ears and signal the end of the marriage, but what about beyond that ending?  What happens at the time of “death,” legally, for the married couple, or for that matter, anyone?You may know the answer, already, from personal experience or something you have read.  For those who do not know or still have questions, we hope to answer them.

For the moment, keep in mind there are basically two types of assets:  Probate and non-probate.

Probate:  we need to change the name (or owner) on this asset,and we have to go to our local probate Court to get that done.

Non-Probate:  ownership will change automatically, due to a trust, contract (insurance beneficiary) or designation (survivorship for deed, checking account, etc.), and we do not need Court intervention. 

It is your life.  You or a loved one have the power to write the last chapter of your story utilizing a Trust, Will or Estate.  Whether one or all tools are used depends on you (or a loved one) and your objectives or goals. 

1. Everyone who is 19 years or older should consider having a Will.

A Will is a document that controls the distribution of your assets that are not otherwise controlled by a contract or designation.  For example, insurance proceeds are governed as a contract, and these proceeds will pass to those you designate as beneficiaries.  Further, if you have a home or checking account in the names of two different people, it is likely that you have designated that asset to pass to the living person should one pre-decease the other (by survivorship).  For all other assets, a Will determines who receives those assets.  If you do not have a Will, the State of Alabama, through her statutes, will determine the beneficiaries of your property. 

Therefore, if you want to control the distribution of your assets after your death, you need to consider having a Will.  We say “who is 19 or older” in the title of this section, because under Alabama law, a contract of a minor is void (other than an insurance contract for someone 15 years or older – see e.g.Ala. Code § 27-14-5), and thus a Will of a minor (someone less than 19 years old) will be void, and the distribution of the minors assets would go to the parents, unless there are children of the minor child.  See e.g.Ala. Code § 26-1-1.

2. If you have children, who are under the age of 19 (age of majority), a Will determines their guardian

A Will can decide guardianship of your children, if both parents are deceased.  If one parent of the children is alive, then they will be the likely guardian of the children, but if both parents are deceased, then a Will governs who their guardian will be.  You probably know best who will properly care for your children.  Therefore, it is important to have a Will, so that your knowledge of what is best for your children is implemented after your death. 

3. Along with a Will, you may need to consider a Trust

A Trust is something that you can fund before death or after death (pour over Will).  A trust is a separate entity.  By placing all assets in a Trust before your death and naming a successor trustee, you will not need to probate any of those assets in the Trust.  You will keep control over the assets during your lifetimeand have provisions, in the Trust documentation, for if you lose capacity during your lifetime.  If you have many children, the Trust may be an effective way to limit disagreements over how assets may be managed during your lifetime and after.  This could be a substantial time and cost savings to all those involved.  Further, since these assets are not probated, your privacy will be protected.  Keep in mind that probate documents are a matter of public record, unless sealed, under special circumstances, by the Court.  Also, in a Trust, you may be able to make special gifts to individuals or organizations without having to amend the Trust.  Further, Trusts may lessen estate taxes.[1]

Additionally, there may be times where you, as a beneficiary, will need the assistance of a trust to protect your governmental benefits such as Social Security Income and/or Medicaid benefits.  A Trust, such as a Self-Settled Special Needs Trust, may be the vehicle to protect those benefits, while receiving the inheritance.[2]  In Alabama, if you elect to establish a trust for an elderly person, to avoid a spend down of the elderly person’s assets to make them Medicaid eligible, please keep in mind that a trust may be established to make them immediately Medicaid eligible, but the trust assets may be subject to Medicaid reimbursement at the time of their death.[3]

4. What happens if I do not have a Will at the time of death?

The distribution of Estate assets will be determined by “intestate succession” under Alabama law.   How the assets will be distributed will depend upon if the decedent was married at the time of death and whether they had any children. 

Generally:

  • Spouse will receive first $100,000, plus ½ of remaining Estate, if no surviving children, but the parents of decedent are alive.  Ala. Code § 43-8-41(2).
  • Spouse will receive only first $50,000, plus ½ of remaining Estate, if there are surviving children.  Ala. Code § 43-8-41(3).
  • If no spouse, then all living children, of same degree of kinship will be distributed to equally.  Ala. Code § 43-8-42(1).
  • If no spouse and no children, then to the parents of the decedent.  Ala. Code § 43-8-42(2).
  • If no spouse, children, or parents of decedent, then to the children of the parents of the decedent – generally, brothers and sisters of the decedent. Ala. Code § 43-8-42(3).

Suffice it to say, if you had someone or some organization in mind as a distributeefor your Estate (e.g., assets to go to them), over and instead of an estranged family member, but you do not have a properly executed Will, then your wish or desire will not be honored.  Therefore, if you want control over the distribution, you will need a Will and/or a Trust.            

One exception to this scenario of distribution of Estate assets to heirs, is a wrongful death civil lawsuit in the State of Alabama.  Under Alabama law, a wrongful death claim is a punitive damages only claim.  Since it is not compensatory in nature (as many civil personal injury claims are – damages intended to put you where you were before the incident occurred), the recovery in a wrongful death lawsuit does not pass through the Estate, and therefore, the proceeds are distributed pursuant to the laws of intestate succession in Alabama (any Will does not govern, since these are non-Estate assets).  Therefore, if there is a Will, any compensatory damages in the case will be distributed pursuant to the Will (as these are an Estate asset), but wrongful death damages will be distributed pursuant to the intestate succession laws of the State of Alabama, and therefore, the Will does not control the distribution of these wrongful death damages.

5. Why open an Estate?

When we say open an Estate, we basically mean to petition the probate court to create a third-party representative to stand in the shoes of the decedent (the deceased individual).  For example, if there is a Will, we ask the Court to name the executor to be the Personal Representative of the Estate (which is generally stated in the Will itself).  Further, generally, a Will states that a Personal Representative will be named without the need of surety or a bond, which saves time and costs, when opening an Estate. When an Estate is opened and there is a Will, the Court will issue Letters Testamentary.  

Alternatively, if there is no Will, the Court will issue Letters of Administration, after being Petitioned with the necessary documentation, which will vary, generally, upon the venue of the probate court petitioned.  The Estate may be opened in this situation by a spouse, child, close family member or by an attorney representing the Estate. 

By opening an Estate and having a Personal Representative named, the Estate may do things a living person can do.  This includes, order medical records, file lawsuits, etc.  Therefore, after someone dies, if you desire to investigate the cause of their death, you likely will need to open an Estate to gather information pertinent to your investigation into the cause of their death.  Please contact us, if we can assist you with opening an Estate.  You may call us at (205) 443-7264, send us a text at (205) 563-3525 or contact us via our webform.

Keep in mind, everyone can have an Estate at the time of their death.  Under the law of Alabama, an Estate is not a literal English version of the word – “an extensive land in the country, usually with a large house.”  Instead, Estate is “all the money and property owned by a particular person.”  Even if the Estate has a value of $0, you can still open an Estate.  Think of an Estate as a way to allow the deceased to take action, as if they were alive.  It is a tool that we employ for many clients to continue a personal injury action, begin a wrongful death action, or to request medical records or other documents or information, as part of an investigation into a civil claim.

Conclusion

There was a popular movie some years ago (1994) titled “Four Weddings and a Funeral.”  The title suggests the celebration or beginning of something new we discussed initially, which is the wedding of two people about to embark on a journey in life together, as well as what some may describe as the end or the closing of the final chapter of life, the funeral.  Alas, you now know that the funeral is not the end.  Your religious beliefs may have already confirmed for you that there is “life after death,” but, also, in the legal world, the funeral is not the final chapter: a Will, Trust or Estate allows the decedent power, after death, over their affairs or assets, which allows the decedent’s story to continue.

Please contact us via email, webform, telephone or text, if we may be able to assist you with any Will, Trust or Estate issue.    You may call us at (205) 443-7264, send us a text at (205) 563-3525 or contact us via our webform.


RESOURCES

[1] See https://www.livingtrustnetwork.com as of December 28, 2019.

[2] See https://www.hooklawcenter.com as of December 28, 2019.

[3] See https://www.alabamafamilytrust.com/trusts/elderly-trusts (First Party Special Needs Trust) as of December 28, 2019.

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