Both living trusts and irrevocable trusts are often unfunded during a decedent’s lifetime, or trust property is removed from the trust (e.g. for a refinance) and not moved back into trust ownership. Newly acquired properties and accounts are often taken in the decedent’s individual name instead of the trust name. The decedent may have intended the property to be in the trust, but for whatever reason it’s not in trust ownership when the decedent dies.
All of the above situations (and it’s not an exclusive list) will trigger the need for some kind of Probate Court action in order to get the decedent’s property into the trust for ultimate distribution according to its terms. In the past, this was accomplished by using a Pour-over Will that directed such property to be turned over to a decedent’s trust, using a full Probate procedure.
The Estate of Heggstad decision in 1993 changed the mandatory requirement that a full Probate proceeding is necessary to get the decedent’s assets into the decedent’s trust after death. This Court decision held that “the settlor’s written declaration stating that he holds this property as trustee was sufficient to create a revocable living trust,” thus affirming the Probate Courts previous order declaring that decedent’s interest in real property was, in fact, an asset of decedent’s living trust.
The Heggstad decision was codified by the Legislature in Probate Code Section 850(a)(3)(B), which provided that the trustee of the trust or “any interested party” may file a petition with the Probate Court “where the trustee has a claim to real or personal property, title to or possession of which is held by another.”
Using this approach, it is possible to avoid the Probate process and more quickly gather loose property of the “settlor” or “trustor” into the trust.
I created “Heggstad Help” as a service to assist the following:
1. Successor trustees of trusts who discover that assets of a living or deceased Settlor or Trustor (i.e. creator of the trust) are not properly titled in the trust ownership even though intended by the Settlor;
2. Fellow local Estate planning attorneys and their clients who make the same discovery as successor trustees above;
3. Local Real estate brokers who make the same discovery as above for property just listed when a preliminary title report discloses that the new listing is not properly titled in the ownership of a trust;
4. Local title companies that make the same discovery when a preliminary title report discloses the defect in title, and don’t know how to correct the problem.
In all of the above cases, interested parties may wish to pursue noticed or ex parte (i.e. without a formal hearing) Heggstad petitions under Probate Code Section 850 through the Santa Clara County Superior Court.
To schedule a free consultation about a Heggstad Petition, use the following link:
After scheduling, please use the following link to download consultation paperwork to complete and submit prior to your appointment.
Attorney Robert P. Bergman, Board Certified Specialist in Estate Planning, Trust and Probate Law, assists families in the San Francisco Bay Area with Estate Planning, Special Needs Planning for children and adults, special planning for retirement plan assets, and trust administration.