When your loved one passes away, they put their trust in your hands. You may encounter immediate questions from the family, specifically regarding the timing of their inheritance. As much as you want to help them as soon as you can, moving too fast can be a costly legal mistake.
As a trustee, you must follow the rules of trust administration strictly. Here are two important factors that can help you manage expectations.
Following the 120-day contest period
Upon the death of a grantor, you must serve notice to the beneficiaries named in the trust and the heirs of the deceased person. If the trust involves a charitable beneficiary, you also need to notify the Attorney General.
After this step, a legal countdown begins. Recipients of the notice have 120 days from the date of the served notice to file a lawsuit contesting the trust. During this period, it is critical that you avoid distributing funds. Otherwise, you could be personally liable to pay that money back.
Addressing creditor claims
If the probate estate is insufficient, the assets of the trust may be subject to the claims of your loved one’s creditors. Before beneficiaries get their share, the law requires the creditors to receive theirs first.
The general statute of limitations for creditors to file a claim is one year. While optional, you may file a formal Notice to Creditors and shorten the period for creditors to submit claims. After publishing and serving the notice, creditors must file by the later of four months after the first date of publication or 60 days after the notice was mailed to them.
Fulfilling your duties
Trustees have a fiduciary duty to manage trust assets according to the trust document. Moreover, they must act in the best interests of beneficiaries. Assuming this responsibility can be overwhelming, especially when you consider the specific probate laws you must follow.
A single misstep can lead to family friction or personal debt. Seeking legal guidance can offer the clarity you need to uphold your duty as a trustee.