One of the major advantages of having a living trust is that upon death, assets of the trust are not subject to the probate process. But occasionally there are situations where probate might be an advantage. One of those would be where the decedent has legal obligations that are unknown or undefined. The decedent’s creditors would have a right to bring suit to collect on their claims against the trust for one year after the decedent’s death. If the decedent’s estate were being probated, the creditors would have only four months to file their claims.
Thus in the instance where the estate is held in a trust, the trustee may want to withhold distribution until after the one year statute of limitations has run so they are not faced with the possibility of having to recover distributions made in order to pay lawful claims of the estate. In such a circumstance the trustee may want to consider availing themselves of the optional claims procedure permitted by Probate Code Section 19000 through 19403. Under this procedure, the trustee can file formal documents with the court, serve copies on creditors, and the creditors will only have four months to file a claim, thus opening the way for distributions to be made without waiting for one year.
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