It’s not uncommon for a decedent to fail to formally transfer all of their assets into a 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 $166,425 would usually require a full probate process.
Fortunately, California law allows for a shortened and much less expensive option for those in this situation. Sometimes, filing a Heggstad petition in California can even transfer the property directly to the beneficiaries without being fully probated.
History of the Heggstad Case
In the Estate of Heggstad case of 1993, Glen Heggstad had executed his trust and identified the items he intended to transfer, including his house, in a Schedule of Assets. However, Mr. Heggstad failed to formally transfer the house into his trust with the execution and recording of a grant deed prior to his death.
In response, the court ruled that having the assets listed on a Schedule of Assets attached to the trust would be sufficient proof that decedent Heggstad intended to include those assets in his trust.
Today, this rule of law has been expanded to include assets that may not necessarily be listed on a Schedule of Assets, assuming that the decedent has created other forms of written intent to include them in a 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 the 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 goal of filing a California Heggstad petition is to obtain a court order declaring that property listed on a trust schedule is a trust asset, despite that it was not formally transferred to the trust.
Heggstad Petition Procedure – The Process
A petition under Probate Code §850 is commenced with filing a verified petition stating the facts of the claim and the names and addresses of each person entitled to notice of the petition. After filing 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. Typically a Heggstad Petition can be prepared, filed and heard by a judge and finished within approximately 60 days, which is substantially shorter than the 7-10 months of a typical probate.
A Heggstad Petition must be filed with documentation that supports the petition and proves the unquestionable intent of the settlor to transfer the property into the trust as an asset. This is typically satisfied by attaching a signed Schedule of Assets that specifically identifies the property as inadvertently excluded from the trust.
Ultimately, the Heggstad petition seeks to obtain a court judgment that an asset 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 that a trust was created and 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.
Pros and Cons of Filing a Heggstad Petition
A Heggstad petition is never guaranteed to work, so parties should explore a detailed comparison of preparing a petition and a full probate.
There is substantially less cost associated with Heggstad petitions than full probates. Therefore, if the court approves the petition request, the estate has not only saved thousands of dollars, but property can also be distributed quickly.
On the other hand, if the court denies the Heggstad petition, the estate loses the costs of filing and will incur additional costs to proceed with a full probate, as well as a 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 petition typically includes the following:
- Information about the acting trustee and the trust document.
- The date of death of the trustor and confirmation of intent by the trustor upon date of signing.
- A description of the assets to be confirmed as part of the trust.
- 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.
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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