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.