Alabama Homestead Exemption
The Alabama homestead exemption can be an alternative to probate in some situations. Alabama law provides a monetary homestead exemption of $6,000 to the surviving spouse of a decedent who lived in Alabama. If the decedent does not leave a surviving spouse, the homestead exemption is available to minor or dependent children. Each minor or dependent child is entitled $6,000.00 divided by the number of minor and dependent children of the decedent. The Alabama homestead exemption is a super-priority claim that will trump all other claims against the estate.
The surviving spouse need not dissent from the will (claim an elective share) to qualify for the homestead exemption. But the homestead exemption does not take effect automatically –the surviving spouse must claim it during his or her lifetime. If the surviving spouse dies without claiming the homestead exemption, there is no way for the surviving spouse’s estate to later claim the homestead exemption. If the surviving spouse makes the election during his or her lifetime, however, the subsequent death of the surviving spouse will not terminate the homestead. Similar rules apply for children claiming the homestead exemption.
The Alabama homestead exemption is in addition to any share passing to the surviving spouse or minor or dependent child by the will of the decedent unless otherwise provided in the will, by intestate succession, or by way of elective share.
Exempt Property Allowance
For decedents who lived in Alabama at the time of death, Alabama law provides an allowance of real and personal property up to $3,500 in excess of any security interests (debts that are secured by an interest in property, such as a mortgage on a home to secure the loan on the home) in household furniture, automobiles, furnishings, appliances and personal items. The exempt property allowance is in addition to the homestead exemption. If there is no surviving spouse, the decedent’s children share jointly to the same value.
If there is not $3,500 worth of exempt property of the estate or if there are no “free and clear” assets that are worth at least $3,500, the $3,500 exempt property allowance may come from other sources to the extent necessary to reach the $3,500 value. Rights to exempt property and assets needed to make up a deficiency of exempt property have priority over all claims against the estate. But if the assets needed to satisfy the exempt property allowance are needed to satisfy the homestead exemption or family allowance, the assets will go toward the homestead and family allowances before they are used for the exempt property allowance.
As with the Alabama homestead exemption, the exempt property rights are in addition to any benefit or share passing to the surviving spouse or children by the will of the decedent, by intestate succession, or by way of elective share.
Claiming the Homestead Exemption and Exempt Property Allowances
There are a few restrictions on the property that can be used to satisfy the homestead and exempt property allowances. The Alabama homestead exemption and exempt property allowance come out of the “residuary” assets of the estate (assets that are not specifically described and left to particular individuals). If the Alabama probate estate has enough assets to satisfy all specific bequests (specific items left to specific people) and satisfy the homestead exemption and exempt property allowances, then all specific bequests must be satisfied.
If property that is subject to homestead rights is given by will, the person or persons that are entitled to receive the property under the will can clear the property of homestead right by paying the personal representative $6,000 in lieu of such right.
Beyond these general restrictions, however, those who are entitled to the homestead exemption or exempt property allowance can choose the property to be used to satisfy the allowance.
If the surviving spouse or children do not make a choice within a reasonable time, the personal representative can decide. To do so, the personal representative can sign a deed of distribution or other instrument to establish ownership of the property taken as homestead allowance or exempt property. The personal representative can also disburse funds of the estate in payment of any part of the homestead exemption that is payable in cash.
About Jeramie Fortenberry
