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Did you know?  Revocable Trust Property is Subject to Claims of Creditors!

They say the only constant in this world is change!  Nowhere is that more evident than in the practice of law.  To that end, did you know about Mississippi Senate Bill 2851, which became effective July 1, 2020?  This new law, among other things, created a new Section 91-8-504, Mississippi Code of 1972, to provide for creditors’ claims against settlors of trusts.  It provides that real property of a revocable trust is subject to claims of the settlor(s) creditors and provides a process when no separate estate is pending for the trustee to give actual notice to known creditors, notice by publication to unknown creditors and then provides a bar to claims not made with the trustee within 90 days.  If an estate is pending, and claims are barred as a result of proceeding with the estate procedure, then those claims are also barred as against the trust property.  If you haven’t read the new statute, we encourage you to check it out in its entirety.  However, the most pertinent parts of Miss. Code Ann. § 91-8-504 relating to claims of creditors and revocable trusts are as follows:

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(6) After the death of a settlor, and subject to the settlor’s right to direct the source from which liabilities will be paid, the property of a trust that was revocable immediately preceding the settlor’s death is subject to claims of the settlor’s creditors, costs of administration of the settlor’s estate, and the expenses of the settlor’s funeral and disposal of remains subject to the following:

(A) With respect to claims, expenses, and taxes in connection with the settlement of the settlor’s estate, any claim of a creditor that would be barred against the fiduciary of a settlor’s estate, the estate of the settlor, or any creditor or beneficiary of the settlor’s estate shall be barred against the trust property of a trust that was revocable at the settlor’s death, the trustee of the revocable trust, and the creditors and beneficiaries of the trust.

(B) Unless a personal representative of the settlor’s estate has been appointed or an application or petition for appointment of a personal representative of the settlor’s estate is pending, the trustee at any time may give notice to any person the trustee has reason to believe may have a claim against the settlor at death, at the claimant’s last known address. The notice shall contain the name and address of the trustee to whom the claim must be presented and provide information that failure to present the claim to the trustee within ninety (90) days of the date of the notice will forever bar the claim. If the person fails to present the claim in writing within ninety (90) days from the date of the notice, then the person is forever barred from asserting or recovering on the claim from the trustee, the trust property and the creditors and beneficiaries of the trust. A person who presents a claim on or before the date specified in the notice may not later increase the claim following the expiration of the ninety-day period.

(C) Unless a personal representative of the settlor’s estate has been appointed or an application or petition for appointment of a personal representative of the settlor’s estate is pending, a trustee may also publish in some newspaper in the county of the decedent’s last residence a notice requiring all persons having unknown claims against the settlor to present their claims to the trustee, which notice shall state that failure to present the claim to the trustee within ninety (90) days of the date after the first publication of the notice will forever bar the claim. The notice must be published for three (3) consecutive weeks, and proof of publication must be maintained with the books and records of the trust. If a person fails to present a claim in writing within ninety (90) days from the date of first publication, that person shall be forever barred from asserting or recovering on the claim from the trustee, the trust property and the creditors and beneficiaries of the trust. A person who presents a claim on or before ninety (90) days from first publication may not later increase the claim following the expiration of the ninety-day period.

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Miss. Code Ann. § 91-8-504(a)(6). 

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Charles Greer
Charles is a knowledgeable and customer-focused title professional and has over 15 years of industry experience. He uses this expertise and knowledge to provide underwriting guidance and assistance to our valued agents in Tennessee and Mississippi. You can count on him to provide the highest level of personalized customer service that ensures peace of mind for homebuyers and sellers and the professionals that serve them. Charles joined First American as Senior Underwriting Counsel in September 2021. His diverse background includes handling residential and commercial real estate closings, general business transactions, representing clients in sales and leasing of retail and office properties, title curative litigation, foreclosures, estate planning and probate, and general civil litigation. Charles attained his Bachelor’s degree from the University of Southern Mississippi in 1997. While at Southern, Charles also attained his Masters in Business Administration in 2000. Upon graduation from the MBA program, Charles enrolled in law school at Mississippi College School of Law, where he earned his Juris Doctor in 2003. Charles was associated with an insurance defense law firm right out of law school and represented a multitude of different insurers and their insureds on matters ranging from premises liability to personal injury claims. In 2006, he started his own law firm where he focused in the areas of residential and commercial real estate closings, general business transactions, representing clients in sales and leasing of retail and office properties, title curative litigation, foreclosures, estate planning and probate, and general civil litigation. Charles operated this firm until September 2021 when he joined First American. In 2014, Charles was given an “AV - Preeminent” rating by Martindale-Hubble for his work in Real Estate Law. Charles was a member of the inaugural Title Standards Board appointed by the Real Estate Section of the Bar that promulgated the Mississippi Title Examination Standards that were approved by the Real Estate Section of the Bar and became effective August 1, 2019, and continues to serve on that Board. Charles serves as President and Board Member of the Land Title Association of Mississippi and previously served as Chairman of the Executive Committee for the Real Estate Section of the Mississippi Bar Association. Charles is a member and former Mississippi Director for the Southeast Land Title Association. Every day First American delivers timely, accurate information with expertise and integrity while adhering to the highest standards of financial stability and professional responsibility. Becoming an agent of First American gives you the necessary tools to be successful in this ever-changing real estate market. Please contact Ken today to find out how First American’s nationwide strength, local expertise and friendly service can work for you.