If you have been appointed to serve as the trustee of a trust, it is important to understand the creditor claim process. To ensure you handle things correctly, let us help. There are many tools a trustee can use to reduce or possibly eliminate claims against the trust. While probate estates have a mandatory creditor claims procedure, trustees have the ability to use an optional procedure for creditors claims. Creditor claims can include all debts and liabilities incurred by the deceased. In California, there is a one year statute of limitations for lawsuits that seek damages resulting from the conduct of the decedent. A trustee can use this relatively short time frame as a powerful means for eliminating claims. Trustees can even take matters into their own hands and establish a creditors claim procedure by filing notice in an eligible newspaper. The trustees published notice must inform the creditors of the estate that the claim procedure is being used and it must allow the creditors four months in which to file or submit their claims against the trust. For known creditors, notice can be mailed directly which reduces the deadline for filing a claim to 60 days. A trustee can also require all creditors to file a claim before filing a lawsuit. If done correctly, the trustee may bar the claims of creditors who fail to properly file their claim.
Once a trustee has received the filed claims, they must approve or deny the claim in whole or in part. If the trustee fails to take any action, the creditor may treat the lack of action as a denial of the claim and proceed with filing a lawsuit.
If you are interested in learning more about fighting or eliminating creditor claims against a trust, contact us at (714) 963-7543 to schedule a no-cost consultation. Our systems are designed to save you time, to save you money, and to put you in control. At The Legacy Lawyers, we are dedicated to your peace of mind.