The final step in the Alabama probate process is closing the estate. Because each one is different, the exact steps that must be done to close an estate vary from one to the next. In most cases, you will provide the attorney with an accounting of the estate. The attorney then presents the accounting to the court and petitions the court for settlement of the estate.
Accounting and Settlement
A settlement is an accounting of the assets that have been collected and the debts that have been paid. It typically includes a full or partial distribution to the heirs or beneficiaries.
Alabama personal representatives must make annual settlements of their administration. A final settlement can be made six months from the date of the grant of Letters Testamentary or Letters of Administration. If the estate is closed in less than one year, the final settlement is the only settlement.
If everyone agrees to the final settlement, the Petition for Final Settlement is presented to the probate court, along with consents by all heirs or beneficiaries. The court will then close the matter without the need for a formal hearing or full accounting.
Things are more complicated if not everyone agrees to the settlement. In that case, the personal representative will hold the assets until a final hearing is held. After the hearing, the court will issue a ruling on how to distribute the assets. Once the assets are distributed, the personal representative will file documentation with the court to report that all of the orders of the court have been fulfilled. This process can result in a delay in the distribution of assets and will almost certainly incur additional attorney fees.
Since unknown creditors have six months from the date that letters testamentary or letters of administration are granted, accounting and settlement does not occur until at least six months have passed. But final settlement can be postponed for much longer. For example, what if the decedent’s Last Will and Testament requires a parcel of land to be sold? If the market is slow at that time, the property could remain on the market for several months or even years before it is sold. Complicating factors like this can delay final settlement of the decedent’s assets.
Probate Note: Before making a final settlement, the personal representative should have done everything required, including filing decedent’s income taxes and providing for the ultimate distribution of the decedent’s assets.
Final Tax Matters
Because personal representatives can be personally liable for unpaid Federal taxes, you will want to be sure that all tax returns have been filed and all taxes paid. Required tax returns might include a final tax return for the year of the decedent’s death and fiduciary tax returns for all income earned after the decedent’s death in excess of $600. If the decedent was wealthy, it may also be necessary to file appropriate transfer tax returns. The personal representative’s tax filing obligations are discussed in our article on Death and Taxes.