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If the trust owns a house, for example, the mortgage normally must be paid off before any distributions to trust beneficiaries, even if this requires the sale of the house.
If the trust was created under your will, state governments generally require the executor to issue public notice of the probate of the estate -- through a newspaper ad, for example -- and allow creditors a statutory period of several weeks to make claims against assets.
The trustee will also need to collect any debts owed to the trust.
The assets of a living trust normally do not have to go through probate, but the assets of a trust created by your will always do.
If the trust document specifies that its assets are to be distributed upon your death, your trustee must methodically liquidate trust assets – she must terminate the trust by paying off all of its creditors and distributing any remaining assets to its beneficiaries.
She must list all titled property in a living trust that is still held in your name and turn it over to the probate court through the estate executor, because it is likely to be subject to probate.
If you created the trust and it was revocable until your death, the trustee needs the value of all your assets, including the value of trust property, to find out if its total value exceeds the estate tax exemption, which is $5,250,000 as of 2013.
Only then can the trustee distribute the trust property.