Tax Considerations During Probate

If your loved one dies and leaves a will, their assets aren’t automatically distributed to their heirs. Instead, the will must be validated through a legal process known as probate. If your loved one dies without a will, their estate will also be settled through the probate process. But you might wonder — will your loved one’s estate be taxed? Here’s a look at some key tax considerations during probate.

Depending on the size of your estate, taxes might not be required. However, the probate process is complex — even for estates that aren’t taxed.

What Is Probate?

Probate is the legal process of settling someone’s estate. It’s overseen by the Alabama probate court to ensure all taxes and debts are paid and all assets are distributed according to state law. Probate is necessary whether someone dies with a will or dies intestate — meaning they die without a will. It generally involves the following steps:

Filing of the Will

First, the will must be filed with the county probate court. If there is no will, the probate process typically begins with a petition to nominate an estate administrator.

Appointing of an Administrator or Executor

Sometimes, a person’s will includes their choice of executor. The executor is the person tasked with overseeing the settling of the estate. If the will doesn’t name an executor or the chosen executor is unable to handle the estate, the court will appoint an administrator.

Taking an Inventory of Assets

The executor or administrator makes a comprehensive list of all the deceased person’s assets.

Notifying Creditors

If the deceased person dies with debts, creditors have a right to try to recover those debts during the probate process. The executor or administrator must notify creditors of the deceased’s death so they can attempt to recover what they’re owed.

Paying Taxes and Outstanding Debts

If estate taxes are due, these and any debts must be paid before the remaining assets can be paid to beneficiaries.

Asset Distribution and Closing of the Estate

If assets remain after paying all debts, they are then distributed according to the will. If there is no will, the assets will be distributed according to state law. Once all assets have been distributed, the estate will be closed.

Do All Estates Go Through Probate?

Not all estates must go through probate — at least in the traditional sense. Alabama allows smaller estates to go through “summary distribution,” which is essentially a very simplified probate process. The “small estate” cutoff is adjusted with inflation each year (the 2024 value is $36,030). In addition to meeting this requirement, small estates must satisfy the following criteria to go through summary distribution:

• All of the estate’s debts have been paid (or payment arrangements have been made).
• There hasn’t been a petition to nominate a personal representative.
• All funeral costs have been paid (or payment arrangements have been made).
• At least 30 days have passed since the initial petition for summary distribution.

Although summary distribution is less involved than traditional probate, it’s still fairly complex. If you want your estate to avoid probate entirely, you may be able to use a trust as an estate planning tool. Certain kinds of trusts allow your assets to be distributed directly to your loved ones instead of having to go through probate first.

Do you have concerns about how taxes might impact the probate process? Call us at (251) 444-7000.

Taxes and the Probate Process

Not All Estates Are Taxed

Probate is a complex process, and taxes make it even more so. Some states impose a state-level inheritance tax or estate tax. Alabama does not impose any state-level taxes on estates, but your loved one’s estate could be subject to federal estate taxes. However, federal estate taxes apply only if an estate is valued over a certain amount. For 2025, that amount is $13.99 million. The amount doubles for married couples.

If your loved one made substantial financial gifts during their lifetime, the cutoff for federal estate taxes might be affected. That’s because $13.99 million (or $27.98 million) is the lifetime gift/estate tax exemption. For example, if your loved one gave you $3.99 million and then died in 2025, any amount of their estate exceeding $10 million would be taxed.

How an Estate Planning Attorney Can Help You

Whether the estate you’re handling meets the threshold for taxes or not, an estate planning attorney can offer support and guidance. Here are some of the ways the Southern Estate Lawyers team may be able to help simplify the probate process — as well as any associated taxes:

Helping You Fully Understand Probate Laws

Alabama’s probate laws aren’t static — they evolve over time. Because our team works with these laws on a daily basis, we stay up to date on key legal changes. We can help you fully understand Alabama probate law and how it can apply to your estate or those of your loved ones.

Managing Estate Administration

Administering an estate is a tremendous undertaking. Between arranging for debts to be paid, handling taxes, and distributing assets according to your loved one’s will, it’s very easy to make a mistake. If you do, you may face legal consequences.

Our team has years of experience helping Alabama residents navigate the challenges of administering estates. Whether you need help with estate administration or you would prefer to have our team manage the estate for you, Southern Estate Lawyers can simplify the process for you.

Estate Tax Planning

If your estate — or the estate of a loved one — is substantial enough to be taxed at the federal level, careful tax planning may be able to help you minimize liabilities. Our team can help you develop a detailed estate plan to ensure as many of your assets as possible are passed to your loved ones.

Need Help With the Probate Process?

Let Southern Estate Lawyers Help You

Probate can be confusing and difficult to navigate even under the best of circumstances. When you’re grieving the loss of a loved one, getting through it can seem next to impossible. Fortunately, you don’t have to handle probate alone. The Southern Estate Lawyers team is here to assist you through every step of the process.

Whether you’re going through probate now or planning ahead, our team can help. Give us a call at (251) 444-7000 or contact us online to request a free consultation.