In years past, a probate *estate* was all that creditors could generally make a claim against. The laws have changed to become more creditor friendly. The first line of attack is still through a probate estate. If there is not an estate, however, such as is likely the case in your situation, the trustee is supposed to file a notice to creditors on behalf of the trust. If a creditor does not make a claim within 4 months of publication of the notice, then their claim is barred. The failure to publish extends the creditor's right to make a claim. Since the trust is not a part of the public record, however, it can be difficult for a creditor to even learn of its existence.
Of course, even though there may be no legal recourse for a creditor, or it may be difficult or expensive for them to proceed, there is still a moral obligation to pay off the decedent's debts, as long as you can verify that they really were his debts. There is nothing wrong with negotiating with the creditors to see if they will accept less than the amount owing. Some of what is owed is certainly penalties and interest. If you were to fail to pay, ultimately, the loss is past on to consumers who are forced to pay for someone else's debt, in the form of higher interest and other charges.
I would suggest you try to negotiate with them. Best of luck to you!
James FrederickAsk a similar question
In hind site, I'm sure it seems that it would have been best to have the insurance policy payable to a named beneficiary so that it did not become an estate asset or an asset of the trust. Perhaps there was a reason to do so that is not obvious.
You are allowed to negotiate with the debtors, but typically a revocable trust does not protect against creditors. if it is an irrevocable trust, it would be a different outcome.
You should seek the advice of an attorney who is well-versed in these matters in your home state.you may also wish to consult with the attorney who drafted the revocable trust.
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Robert L. Brenna, Jr.
Brenna Brenna &Boyce PLLC
Rochester New York
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The law in Michigan requires a trustee of a trust to pay claims against the grantor of the trust if he has no probate estate or his estate is in sufficient to do so and the trust has funds with which to pay the claims. In fact, if the estate has no funds or insufficient funds, a trustee is obligated to advise known claimants of the opportunity to file a claim and to publish a claims notice providing information as to who the trustee is and where to file claims. If such a notice is published in a paper of general circulation in the community where the decedent resided, claimants must file their claims within 4 months or their claims will be barred. If a claim is filed, a trustee has the right to reject or contest the claim. If the creditor does not respond, the claim is deemed to be disallowed. The Michigan Trust Code provides rules for this process.
It will be useful for you to consult with an attorney on this process.
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As the first commenter stated, credit card companies are usually willing to negotiate once the account holder has passed away. The trustee has the responsiblity to pay any creditors prior to making distirbutions to beneficiaries (if the trust was a revocable trust). You should have your attorney negotiate with the credit card company on your behalf and get that balance cut down.
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