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Alabama UTC Enactment? Yes, Effective January 1, 2007

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Alabama UTC Enactment? Yes, Effective January 1, 2007 UTC UPC Enactment State Alabama UTC enactment? Yes, effective January 1, 2007. ALA. CODE § 19-3B-101, et seq. UPC Art. II enactment? Alabama adopted Article II of the 1969 Uniform Probate Code with substantial modifications. Article II of the 1991 Uniform Probate Code has not been adopted in Alabama. ALA. CODE § 43-8-1, et seq. (for adoption of provisions of the 1969 Uniform Probate Code); ALA. CODE § 43-8- 40, et seq. (for Article II of the 1969 Uniform Probate Code). 1. USE OF REVOCABLE TRUST AS ************* PRIMARY DEVICE TO TRANSMIT PROPERTY AT DEATH Is there a consensus in your state that a No consensus although wills are used more than revocable revocable trust (and not a will) should trusts. be used as the primary device to transmit property at death? UTC UPC Enactment If yes, general reasons for primacy of [NO RESPONSE] revocable trust? UTC UPC Enactment If no consensus, is there a consensus No consensus although wills are used more than revocable that a will should be used as the trusts. primary device to transmit property at death? If yes, reasons for primacy of will? [NO RESPONSE] UTC UPC Enactment If no consensus, reasons why? Alabama is an inexpensive probate state. Court and creditor publication costs typically do not exceed $150.00. Court costs are not impacted by the size of the estate. As a result there is little financial incentive to avoid probate, and the establishment and maintenance costs of revocable trusts can easily exceed the cost of probate. Also, the administration of estates pursuant to a will are not court supervised if adequate powers are granted to the personal representative. Settlement of an estate can be done by consent is all beneficiaries are sui juris. Alabama probate, like most states, is not avoided by using a revocable trust unless all assets (with limited exceptions such as a vehicle or small bank account) have been conveyed to the revocable trust. If the decedent is actively employed, his or her final paycheck will not be a trust asset. If the decedent is an active member of certain professions (e.g., attorney, physician, certified public accountant), his or her professional practice cannot be owned by the revocable trust, thereby requiring probate. A cost factor for some revocable trust is the Alabama deed tax, which applies to a conveyance of real property to a revocable trust ($.50 for each $500.00 in value of the real property). The deed tax does not apply to real property transferred at death pursuant to a will. UTC UPC Enactment 2. REVOCABLE TRUSTS ****** COMPARED TO TESTAMENTARY TRUSTS Advantages of revocable trusts over No. testamentary trusts apart from avoiding the need to probate a will, Periodic accountings under a will can be waived by a including any differences that involve provision in the will, and common practice is to waive accountings? such accountings. A final accounting of a probate estate can be waived by the beneficiaries if all beneficiaries are sui juris. The beneficiary of an estate or a trust can petition the court asking that an accounting be ordered, and such orders are routinely issued upon request. UTC UPC Enactment Will a clause exonerating or exculpating No authority identified. a trustee from liability for ordinary negligence be recognized in both a revocable trust and in a testamentary trust? If no, are such clauses only recognized in a revocable trust? UTC UPC Enactment Does your state prohibit a lawyer who No. drafts a revocable trust from serving as a trustee of a revocable trust? Does your state prohibit a lawyer who No. drafts a will from serving as a testamentary trustee? UTC UPC Enactment From serving as executor? No. 3. USE OF REVOCABLE TRUSTS Creditor's Rights TO AVOID CREDITORS’ AND FAMILY RIGHTS AT DEATH OF UTC UPC Enactment Can creditors of the settlor reach Yes, effective January 1, 2007. ALA. CODE § 19-3B- property held in a revocable trust after 505(b). the settlor dies? UTC UPC Enactment If yes, which creditors? Property in a revocable trust can be reached after the settlor’s death to pay claims of the settlor's creditors, costs of administration of the settlor's estate, the expenses of the settlor's funeral and disposal of remains, and homestead allowance, exempt property and family allowance to a surviving spouse and children to the extent the settlor's probate estate is inadequate to satisfy those claims, costs, expenses, and homestead allowance, exempt property and family allowance. ALA. CODE § 19-3B-505(b). UTC UPC Enactment If yes, under what circumstances? The rule applies to the extent that assets of the settlor’s probate estate are inadequate. ALA. CODE § 19-3B-505(b)(4). UTC UPC Enactment When must creditors’ claims against The claim generally must be presented in writing to the revocable trusts be filed? personal representative of the settlor's estate or to the trustee within six months from the date of appointment of the personal representative of the estate. If no personal representative is appointed within six months from the settlor's date of death and the claim is not presented in writing to the trustee within six months from the settlor's date of death, the trustee may pay or distribute in good faith in satisfaction of any lawful claims, expenses, or taxes or to any beneficiary before the claim is presented. A trustee may give notice to any person the trustee has reason to believe may have a claim against the settlor at death. If the person fails to present the claim in writing within 90 days from the date of the notice, the claim is barred against the trust. ALA. CODE § 19-3B-505. UTC UPC Enactment When must creditors’ claims against Generally within six months after issuance of letters estates be filed? testamentary or letters of administration. However, the personal representative has a duty to notify known creditors in writing, and the time to file claims by a known credit is tolled until thirty days after the creditor is notified. ALA. CODE § 43-2-350. UTC UPC Enactment Any other uses of revocable trusts [NO RESPONSE] regarding creditors’ rights after the settlor dies? 3. USE OF REVOCABLE TRUSTS Family Rights TO AVOID CREDITORS’ AND FAMILY RIGHTS AT DEATH OF UTC UPC Enactment Does your state provide a surviving Yes. ALA. CODE § 43-8-70, et seq. spouse with elective share rights? UTC UPC Enactment If your state provides a surviving Yes. spouse with elective share rights, can a revocable trust limit or avoid these rights? UTC UPC Enactment Can a revocable trust avoid other No, effective January 1, 2006. ALA. CODE § 19-3B- spousal and family rights such as 505(a)(3). exempt property rights, homestead rights, and family allowance provisions? Any other uses of revocable trusts No. regarding family rights after the settlor dies? 4. ADDITIONAL REASONS, APART Privacy Aspects FROM AVOIDANCE OF CREDITORS’ AND FAMILY RIGHTS, TO USE REVOCABLE TRUST TO TRANSMIT PROPERTY AT DEATH UTC UPC Enactment Are revocable trusts useful to prevent Yes. public disclosure of trust terms? UTC UPC Enactment Under what circumstances will a There rarely are any such circumstances. Litigation might revocable trust become public record lead to disclosure in addition to requirement to convey after the settlor dies? real property. Specifically, will it become public if a No. pour-over will is probated? UTC UPC Enactment Other privacy issues? [NO RESPONSE] 4. ADDITIONAL REASONS, APART Other Considerations FROM AVOIDANCE OF CREDITORS’ AND FAMILY RIGHTS, TO USE REVOCABLE TRUST TO TRANSMIT PROPERTY AT DEATH UTC UPC Enactment Are there any state tax or property law No advantages in having a revocable trust (instead of a testamentary trust) as the receptacle for life insurance and pensions, TOD accounts and other devices? UTC UPC Enactment Is a revocable trust useful if Yes determining and locating intestate takers will be difficult? UTC UPC Enactment Can a revocable trust avoid ancillary Yes probate of out-of-state real property? If your state is a community property [NO RESPONSE] state, is a revocable trust used to hold separate property to preserve its character? UTC UPC Enactment Other reasons for using a revocable [NO RESPONSE] trust? 5. REASONS FOR NOT USING A ****** REVOCABLE TRUST TO TRANSMIT PROPERTY AT DEATH UTC UPC Enactment Can the interest of an individual in a No. professional practice be held in a revocable trust? Is there any other property that cannot None identified be held in a revocable trust? UTC UPC Enactment Is there any other property that should None identified not be held in a revocable trust? If yes, please identify the specific type of None identified property and the reason(s) why it should not be placed in a trust UTC UPC Enactment Other reasons why a revocable trust None identified should not be used? 6. REVOCABLE TRUST Formalities CREATION/VALIDITY ISSUES: UTC UPC Enactment What formalities are statutorily “A trust may be created by: required to create a revocable trust that does not include real property? (1) transfer of property to another person as trustee during the settlor's lifetime or by will or other disposition taking effect upon the settlor's death; (2) declaration by the owner of property that the owner holds identifiable property as trustee; (3) exercise of a power of appointment in favor of a trustee; or (4) a court in the exercise of its equitable powers.” ALA. CODE § 19-3B-401. UTC UPC Enactment May a trust of personal property be Yes. ALA. CODE § 19-3B-407. Its terms must be oral? If so, under what circumstances? established by clear and convincing evidence.
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