(a) 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 at the settlor’s death is subject to claims of the settlor’s creditors, costs of administration of the settlor’s estate, the expenses of the settlor’s funeral and disposal of remains, and statutory allowances to a surviving spouse and children to the extent the settlor’s probate estate is inadequate to satisfy those claims, costs, and expenses.

(b) A trustee may:

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(1) If the trustee has knowledge of a creditor or potential creditor, provide written notice to the creditor or potential creditor at their last known address, advising the creditor that a claim may not be paid if the creditor fails to present a claim within sixty days of the date of such notice; and

(2) For all unknown creditors and all creditors which the trustee, in good faith, is unable to locate, publish notice to such creditors once a week for three successive weeks in a legal newspaper in the county:

(A) Where the settlor was last a resident if the deceased settlor was a resident of South Dakota; or

(B) Where the principal administration of the trust takes place if the deceased settlor was a nonresident of South Dakota.

The published notice shall state that creditors of a deceased settlor must present their claim within four months after the date of the first publication of the notice or any claim or collection efforts which otherwise could have been asserted or enforced against the trust or assets thereof may be barred.

For purposes of this section, a trustee has knowledge of a creditor or potential creditor if the trustee is aware that the creditor has demanded payment from the settlor or the settlor’s estate.

(c) Creditors of the deceased settlor who are given written notice or receive notice by publication are barred if no claim is filed within the applicable period.

(d) Claims by a creditor of a deceased settlor may be presented to the trustee by any of the following three methods:

(1) The creditor may deliver or mail to the trustee a written statement of the claim indicating its basis, the name and address of the creditor, and the amount claimed;

(2) If the trust is court-supervised, the creditor may file a written statement of the claim with the clerk of courts and mail or deliver a copy thereof to the trustee. The claim is deemed presented on the first to occur of the receipt of the written statement of claim by the trustee, or the filing of the claim with the clerk of courts; or

(3) The creditor may commence a proceeding against the trust in any court where the trustee may be subject to jurisdiction, to obtain payment of the claim. Such a claim is deemed presented on the date the proceeding is commended.

(e) If a claim is not yet due, the date when it will become due shall be stated in the written statement of the claim. If the claim is contingent or unliquidated, the nature of the uncertainty shall be described. If the claim is secured, the nature of the security shall be described. Failure to describe correctly the nature of the security or uncertainty, or the due date of a claim not yet due, does not invalidate the presentation.

(f) No presentation of claim is required in regard to matters claimed in proceedings against a settlor which were pending at the time of the death of the settlor in any court.

(g) No trustee may incur liability for a nonnegligent or nonwillful failure to give notice to a particular creditor.

(h) If the applicable assets of the trust that are otherwise subject to the claim of an unbarred creditor are insufficient to pay the claim in full, the trustee shall make payment in the following order: