Jan Neal Law Firm, LLC

Alabama Estate, Elder and Special Needs Law


by 2 Comments

Unintended Consequences of Failing to Probate a Will

A will has no legal effect if not filed with the court and accepted as a legitimate document meeting the testamentary requirements (which is known as probate).  Many people do not know this, and they do not know that a will must be probated within five years of death.

If the will is not filed within five years of death, then the law of intestacy determines where property passes, and it may result in very unfortunate consequences for the intended beneficiaries.

The best way to explain this is an example:

Mrs. Smith’s husband died last year, and she decided to update her will.  They owned multiple pieces of property, most of which they owned as joint tenants with right of survivorship (meaning that when the first owner dies, the other will automatically own all of the property).  But the one piece of property on which their home is located was owned by her husband without right of survivorship.  Since most people don’t sit around reading deeds after the death of a spouse, Mrs. Smith did not know this until the deeds were produced to rewrite her will.  Her husband’s will left everything to her, so if his will is probated, no problem.  But if his will is not probated within five years, she will own her home property jointly with his children by a previous marriage.  Not only will she be unable direct all of the property to pass to the children of this marriage at her death, if she wants to downsize she will not be able to sell the property without the agreement of her husband’s children by a previous marriage.  And if those children agree to sell, she will only get half of the proceeds from the sale.  This could have been a serious problem for Mrs. Smith if she had not found this need to probate her husband’s will within five years of his death. 

The best practice is to always check to see if a will needs to be probated rather than assuming it does not.  With that said, not all wills need to be probated.  For instance, there may be nothing in the probate estate to pass because all assets were jointly titled in bank accounts, and the home was owned by the spouses as joint tenants with right of survivorship.  But if there is property that does not automatically pass to others, take action sooner, rather than later, to determine what you need to do.


by Leave a comment

Arranging to Pass Personal Property at Death

The person who makes a will is known as the testator.  Rather than requiring the testator to list all of his individual pieces of personal property in a will, some states allow the person to make a list of personal property stating to whom each item should pass.  Known as a personal property memorandum, the document is separate from the will but must be referenced in the will to be legally binding. 

Alabama does not have a provision for this type of distribution, but there is a work-around.

A will may state that the personal representative has complete authority to distribute personal property.  If the personal representative is highly trusted by the testator he or she may be given such a memorandum to follow for the distribution of personal property.  It is important to recognize that the personal representative is not legally bound by this personal property memorandum, but where the testator has a high trust level, he may feel comfortable with such an arrangement.           


by Leave a comment

Medigap Coverage

Medigap premiums for plans from insurance companies offering the same benefits vary widely, so it pays to be a smart shopper.

So why do you need a Medigap? You need this supplemental coverage to cover the Medicare gaps in coverage.  With all the deductibles, copayments and coverage exclusions, Medicare pays for only about half of the medical costs for Medicare eligible persons.  Much of the balance not covered by Medicare can be covered by purchasing a Medigap insurance policy.

As always with Medicare, timing is important.  A Medicare recipient cannot be denied a Medigap policy if he or she applies for one within six months of enrolling in Medicare Part B. Otherwise, claims relating to pre-existing conditions can be denied only during the first six months that the policy is in effect. However, federal law does not require that fee-for-service Medigap policies be offered to those who enroll in Medicare Part B because they are disabled, although some states require the insurance companies to offer at least one kind of Medigap policy to people with Medicare under 65.   Alabama is not one of those states.

Medigap policies do not fill all the gaps in Medicare coverage. The biggest gap they fail to bridge is for custodial care in a nursing facility or for skilled care in a nursing home beyond the first 100 days. For coverage of this type of care, you must either purchase long-term care insurance or qualify for Medicaid coverage.

Federal law requires that each insurance company offers the same benefits for each of the Medigap plans lettered A through M, but each company sets its own premium rates.  The 8 available Medigap policy packages are identified by the letters A, B, D, G, K, L, M, and N. Plans E, H, I, and J are no longer sold, but, if those who already had that plan when discontinued were allowed to keep that coverage. As of January 1, 2020, Medigap plans sold to people new to Medicare were not allowed to cover the Part B deductible. Because of this, Plans C and F were no longer available to people who are new to Medicare on or after January 1, 2020, but those who already had either of these two plans were able to keep their plans.   

A Medigap insurance company sets premiums in three ways:

  • Community-rated, where the premiums are the same, regardless of age
  • Issue or entry age-related, where premiums are cheaper if purchased at a younger age
  • Attained-age-related, where premiums are based on your age at the time of purchase

When choosing a Medigap plan, compare the different benefits each plan offers and the price for each company’s plan. Consider your current health status, what your health care needs might be in the years to come, as well as your future health care budget.

Premiums vary drastically from state to state.  For instance, The American Association for Medicare Supplement Insurance found that in 2022 the lowest costs for a female age 65 ranged from $99.24 per month in Dallas to $278.25 per month in New York City.

When shopping for a Medigap policy, get quotes from two or more insurance agents working for different insurance brokers. Every insurance broker may not represent all of the insurers offering a plan in the state or city where you live.

It will take time to shop around, but the money you save will be worth it.


by Leave a comment

Avoid The Ultimate Co-mingling of Assets

It is standard advice to avoid co-mingle property of an older relative with your own money because it may be necessary to prove what belongs to each.  For instance, if your relative needs to apply for Medicaid it may be difficult to provide a clean trail of his or her assets and expenditures for five years prior to application as is required by Medicaid.

But the ultimate co-mingling is when families live on property owned by the older relative who never partitioned the property to deed individual parcels to the children or grandchildren. It is not unusual to see families who live and operate businesses off the property of an aging mother, father, or grandparent.  This can provide a great family support system and work for all parties involved.  Until it doesn’t. 

If the aging parent becomes sick enough to need nursing home placement and there are not enough liquid resources to pay for that, then the property will need to be liquidated to provide income to pay for nursing home care or to spend down assets before qualifying for Medicaid.  This leaves the relatives living on the property in a very precarious position.

If you are in this position, get legal advice now about what you can do to protect yourself and your aging relative before it becomes an emergency.     


by Leave a comment

Is Your Out-of-State Health Care Directive Valid?

Making sure your end-of-life wishes are followed no matter where you happen to be is important. If you move to a different state or split your time between one or more states, you should make sure your advance directive is valid in all the states you frequent.

A medical advance directive gives instructions on the kind of medical care you would like to receive or who should speak for you if you become unable to express your wishes yourself. Each state has its own laws setting forth requirements for valid advance directives and health care proxies. For example, some states require two witnesses, other states require one witness, and some states do not require a witness at all.

Most states have provisions accepting an advance directive that was created in another state. But some states only accept advance directives from states that have similar requirements and other states do not say anything about out-of-state directives. States can also differ on what the terms in an advance directive mean. For example, some states may require specific authorization for certain life-sustaining procedures such as feeding tubes while other states may allow blanket authorization for all procedures.

To find out if your document will work in all the states where you live, consult with an attorney in the state. You may want to prepare documents for each state. 

As for Alabama, health care directives prepared in other states are valid if they comply with Alabama law or the law of the state where created.  Even if an out of state directive is honored, Alabama will not authorize the administration, withholding or withdrawal of health care if prohibited in Alabama.  For instance, in Alabama a health care directive permits the agent to make all decisions the person who made the document could make but does not include psychosurgery, sterilization, abortion when not necessary to preserve the life of the principal, or involuntary hospitalization. Further, the advance directive for healthcare of a patient who is known by the attending physician to be pregnant shall have no effect during the course of the patient’s pregnancy.

Even if you have a valid out of state directive, consider that research may be needed during an emergency to determine whether the out of state document is valid under the laws of the state where prepared since medical professionals will not know without further investigation.  This is why creating a document which complies with the law of each state may be the most straightforward solution. 


by Leave a comment

Physician Order For Life Sustaining Treatment (POLST)

You can get a good deal of information from the internet, but it is not always accurate for your state.  An example is the Physician Order for Life Sustaining Treatment (POLST) for Alabama.  This is an advance directive agreement between a doctor and a patient with advanced, chronic, or end-stage illness stating the patient’s choices for treatment. A doctor signing the form turns those choices into physician orders to assure that the patient gets only the treatment he or she wants. It is known as a portable medical order.  

There are a number of states which recognize this national form first developed in 1991 in Oregon, but Alabama is not one of them.  The closest thing Alabama has is a portable DNAR (Do Not Attempt Resuscitation) which only instructs health care providers not to perform cardiopulmonary resuscitation (CPR) if a patient’s breathing stops or if the patient’s heart stops beating. 

According to the Alabama Department of Public Health, A POLST form from another state (or downloaded from the internet) cannot be a substitute for the Alabama Portable DNAR form published by Health Department. If a hospital or other health care entity wants to use its own DNAR rather than the Health Department form, it can, but it will not be portable from facility to facility.

If you want specific treatments honored in Alabama you need to either name an agent who knows your wishes to act for you as your health care proxy or prepare a detailed Advance Directive For Health Care, but no doctor will sign off on it.    


by Leave a comment

Transfer on Death Deed (TODD) Not Valid in Alabama

You may have read a widely circulated post on Facebook that would make you think you should prepare a Transfer on Death Deed (TODD) to pass your property when you die without the need for probate.  And you can download and prepare such a document at various online locations.  See https://www.templateroller.com/template/2142576/transfer-on-death-deed-form-alabama.html. The only problem is Alabama does not have a TODD statute, so any such deed would have no validity.

As of January 14, 2022, twenty-nine states, along with the District of Columbia and the U.S. Virgin Islands, have some form of TODD.  Alabama is not one of them, and neither is Georgia or Florida.  Mississippi, bordering Alabama, does have a TODD statute, and, as of January 14, 2022, a TODD statute was pending in Tennessee.

There are other ways to pass property while avoiding probate, but be aware of the fact that the TODD is not available in Alabama. 


by Leave a comment

How Gift Giving Can Affect Medicaid

If you will need Medicaid to pay for long-term care for you or your spouse in the next five years, you need to be careful with gift giving because giving away money or property can interfere with your eligibility. 

Under federal Medicaid law, if you transfer certain assets within five years before applying for Medicaid, you will be ineligible for a period of time (called a transfer penalty), depending on how much money you transferred. Even small transfers can affect eligibility. While federal law allows individuals to gift up to $16,000 a year (in 2022) without having to pay a gift tax, Medicaid law still treats that gift as a transfer.  In fact, for every $6600 you give away you will incur a one month period of ineligibility for Medicaid. A month of penalty means Medicaid will not pay for your care, no matter how destitute you are.    

Medicaid reviews all bank records for five years prior to application. Any transfer that you make, however innocent, will come under scrutiny. For example, Medicaid does not have an exception for gifts to charities. If you give money to a charity, it could affect your Medicaid eligibility down the road. Similarly, gifts for Christmas, weddings, birthdays, and graduations can all cause a transfer penalty, however reasonable gifts are usually allowed. If you buy something for a friend or relative, this could also result in a transfer penalty.  Also selling property for less than the tax assessor’s appraised value is considered an uncompensated transfer of the amount for which you sold the property for less than the tax value.  You will need documentation showing that you received fair market value in return for a transferred asset to avoid incurring a penalty. Repaying a debt not supported by a promissory note will also be considered a transfer subject to a penalty.

While most transfers are penalized, certain transfers are exempt from this penalty. Even after entering a nursing home, you may transfer any asset to the following individuals without having to wait out a period of Medicaid ineligibility:

  • your spouse
  • a trust for the sole benefit of your child who is blind or permanently disabled
  • a special needs trust for the benefit of the Medicaid applicant

In addition, special exceptions apply to the transfer of a home. The Medicaid applicant’s home may be transferred to the following individuals without incurring a transfer penalty:

  • A spouse
  • A child who is under age 21
  • A child who is blind or disabled (the house does not have to be in a trust)
  • A sibling who has lived in the home during the year preceding the applicant’s institutionalization and who already holds an equity interest in the home
  • A “caretaker child,” who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant’s institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.


by Leave a comment

Medicaid Spousal Income Allowance Increase

Medicaid’s maximum monthly maintenance needs allowance (MMMNA) changes every July.  This is the most in monthly income that a spouse living at home (known as the community spouse) is allowed to have when his or her own income is not enough on which to live, allowing him or her to take some or all of the institutionalized spouse’s income. The minimum monthly maintenance needs allowance as of July 2022 for Alabama is $2289 (up from $2178)  As an example, a community spouse who has income of $1500 whose spouse entering the nursing home has $2200 in income, would be allowed to keep $789 of the institutionalized spouse’s income each month – enough to bring his or her income up to $2289.

As for resource limits established every January, in 2022 the community spouse may keep as much as $137,400 without jeopardizing the Medicaid eligibility of the spouse who is receiving long-term care. Known as the community spouse resource allowance or CSRA, this is the most that a state may allow a community spouse to retain. While some states set a lower maximum, the least that a state may allow a community spouse to retain in 2022 is $27,480.  As of January 2022 Alabama allows the community spouse to keep one-half of the couple’s resources, not to exceed the maximum of $137,400.

If nursing home care is anticipated in the future it is important to calculate the income and resources of a couple to determine the financial impact long term care will have and to plan to retain as much as possible and still qualify for Medicaid coverage.     


by Leave a comment

Planning for Burial/Cremation

Alabama allows an individual to prepare an affidavit appointing an agent to deal with disposition of his or her remains at death. This can be a useful document to have when there is the potential for disputes in a blended family concerning where someone should be buried or whether to bury or cremate the remains.

I have written about this affidavit previously on this blog (see https://janneallaw.com/2017/01/06/appointing-an-agent-for-disposal-of-remains-in-alabama/), but it bears repeating due to a development I have seen in recent years.

Often unmarried significant others are making burial/cremation arrangements for a partner, and it comes as a surprise to them to learn that the funeral home will not accept the instructions of the unmarried partner to cremate. Instead the instruction must come from the next of kin. This can be especially problematic when there are estranged children, making the process even more stressful than it already is.

To avoid this problem, when preparing estate planning documents, it is a good idea to have an affidavit prepared or included in your will giving the person of your choice, especially an unmarried partner, the authority to make arrangements in the manner you wish, to include cremation.