What is a Heggstad Petition and when can this process be used? First, be aware that is not uncommon for a decedent who executed a Trust prior to their death accidentally fail to formally transfer all of their assets into their trust prior to dying. This may occur for a number of reasons.
In order to clear title to the property so that it can be sold, refinanced or transferred to the rightful beneficiary, properties valued over $150,000 would usually have to go through a full probate process. Fortunately, California law allows for a shortened and much less expensive option for those caught in this situation. Sometimes, the filing of a California Heggstad petition can work to transfer the property to the beneficiaries rather than the estate having to be fully probated.
History of the Heggstad Case
In the Heggstad case, Mr. Heggstad had executed his trust and identified in a Schedule of Assets the items he intended to transfer and include in his trust. This Schedule of Assets included his house, however, unfortunately, Mr. Heggstad failed to formally finalize his intentions with the execution and recording of a grant deed to formally transfer the house into his trust. The Court ruled that having the assets listed on a schedule of assets attached to the trust was sufficient to show that decedent Heggstad intended to include those assets in his trust. This rule of law has been expanded to include assets that may not necessarily be listed on a Schedule of Assets when the decedent has shown other forms of written intent to include in the trust.
Heggstad Petition Definition
Under California Probate Code §850(a)(3), a trustee or any interested person may file what is now known as a Heggstad petition when:
- The trustee is in possession of, or holds title to, real or personal property, and the property, or some interest, is claimed to belong to another;
- The trustee has a claim to real or personal property, title to or possession of which is held by another; and
- The property of the trust is claimed to be subject to a creditor of the settlor of the trust.
A Probate Code §850 petition may also include claims, causes of action, or matters that are normally raised in a civil action to the extent that the matters are related factually to the subject matter of the §850 petition.
The filing of a California Heggstad Petition is a court process used to get a court order declaring that property listed on a trust schedule is nevertheless a trust asset, despite the fact that title to the property was not formally transferred to the trust. Probate Code Section 850 incorporates the court’s ruling in the Estate of Heggstad (1993) 16 CA4th 943, 20 CR2d 433. In that case, the court held that a written declaration of trust by the owner of real property that included an attached schedule listing a specific property was sufficient to create a trust in that property, and a transfer of title was unnecessary when a settlor declares himself or herself to be a trustee in his or her own property
Heggstad Petition Procedure – The Process
A Petition under Probate Code §850 is commenced with the filing of a verified petition which states the facts on which the claim is based and includes the names and addresses of each person entitled to notice of the petition. After the filing of the Petition, the clerk will set the matter for hearing.
A Heggstad Petition filed under Probate Code 850 requires 30 days notice to all interested parties. This 30 day notice requirement is longer than the normal 15 day requirement of most other probate court petitions. Typically a Heggstad Petition can be prepared, filed and heard by a judge and finished within approximately 60 days. This is substantially shorter than the 7-10 months that a typical full probate takes.
When the Heggstad Petition is filed, it must be supplemented with documentation which support the Petition. This documentation must show the unquestionable intent of the Settlor to transfer the property into the trust as an asset. This is typically satisfied by attaching the signed schedule of assets that specifically identifies the property inadvertently not transferred into the trust.
Filing Heggstad Petition is a Gamble – The Pros and Cons
A Heggstad Petition can never be guaranteed to work, so a detailed review of both options should be explored before preparing a Petition. The costs associated with filing a Heggstad Petition are substantially less than that of a full probate. Therefore, if the court approves the California Heggstad Petition request, the estate has not only saved thousands of dollars, but is also ready to be distributed quickly. On the other hand, if the court denies the Heggstad Petition, the estate has lost the fees and costs associated with the filing and further, will incur additional costs to proceed with a full probate, and further delay of distribution for an additional 7-10 months.
Heggstad Petition Form
There is no official Heggstad Petition form, however, the content of the Heggstad Petition typically includes the following information:
- Information about the acting trustee and the trust document.
- The date of death of the trustor and the confirmation of the intent of the trustor when it was signed.
- A description of the assets to be confirmed as part of the trust that were not formally titled into the trust prior to death.
- A copy of the death certificate of the Trustor.
- Information concerning the decedent’s residence.
- The names, addresses and ages of all beneficiaries.
- A detailed description of the relief being requested.
Approved Heggstad Petition Establishes Asset as Part of Trust
The Heggstad Petition seeks to obtain a Court judgement that confirms that an asset held in the deceased person’s name is actually owned by the trust, and therefore controllable by the acting Trustee. In the end, the Heggstad Petition process verifies, among other facts, that a trust was created and that the creator of the trust was in the process of transferring title of his or her property into the name of the trust before his or her death.
For assistance in filing a California Heggstad Petition, contact A People’s Choice. We have helped many estates successfully complete the Heggstad Petition process.
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