Almost 4 years ago a family member was involved in a moving vehicle accident with a person on a bicycle. This family member had a living trust with my mother as the trustee. The family member recently died and now my mother has the responsibility of distributing the trust. However now, just under the 4 year statute, the person on the bicycle has filed a lawsuit against the estate. I've heard differing opinions on this, but since the suit was filed against the estate, can the lawsuit also go after the trust? Or is my mother okay to distibute the assets as it is laid out in the trust? Being the trustee, what responsibilities would fall on her if the trust was distributed but then a lawsuit went after some of the assets? Would my mother be responsible?
Estate Planning Attorney
Was Probate begun and was the lawsuit / claim filed within 4 months of publication? One of the advantages of Probate in Michigan is a short statute of limitations (the Trust mills never talk about how this works!)
Is there a possibility that the litigant may 'pierce the veil' and go after trust assets or was the car owned by the trust, for example?
It IS possible for a sufficiently enterprising plaintiff to attach trust assets so it would not be wise to make a distribution yet. I assume you've contacted the auto insurance company to provide defense of the lawsuit. That attorney can provide you better advice on what to do with the Trust, and I do strongly recommend you consult with that attorney so you don't do something that will come back to bite.
If you have questions, please contact me. I've been in practice in Livingston County since 1986 and may be able to clarify things for you. Good luck.
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