Heggstad Petition

Creating a Revocable Living Trust is one of the best ways to protect your family from the time and expense of probate court. However, a trust only protects assets that are funded inside it.

A common and frustrating mistake happens when someone sets up a trust but forgets to officially change the title of an asset, especially for large assets like a house or a brokerage accounts, in the name of the trust. This is known as an "unfunded" or "out-of-trust" asset.

Historically, if a loved one passed away leaving a major asset outside of their trust, families were forced into full probate court. Fortunately, California law provides a special legal rescue tool known as a Heggstad Petition, which is a specialized court request that asks a judge to officially declare that an asset belongs in a trust, even though the paperwork was never finalized before the person died.

If successful, the judge issues a court order that retroactively "funds" the trust. This allows the successor trustee to manage and distribute the asset according to the trust's instructions, and to avoid the need for formal probate proceedings.

A judge will not grant a Heggstad Petition simply because you ask. You must provide clear written evidence that your loved one intended for the asset to be in the trust. To prove intent, there a petitioner must show documents evidencing the decedent’s intent that an asset or assets be part of a trust but for some mistake or inadvertence with titling pre-death.

An example of documentation a court likes to see for purposes of intent is a "Schedule A" or "Schedule of Trust Assets" often found at the back of a revocable living trust, specifically listing the assets not properly funded into the trust at death.

Another example may be incomplete transfer where the decedent may have initiated a title change prior to death with a bank account or for a piece of real property but passed unexpectedly before it was completed.

Another example is previously having a parcel of real property titled in the trust, which was later re-financed and never re-titled into the trust after the loan process. This is all too common and something to be mindful of. Prior deeds may be able to prove that a property should have been part of a trust, but for a mistake in lack of re-titling after an event like a re-fi.

And yet another could be that the decedent left behind separate written notes, letters, or estate planning questionnaires explicitly stating their belief or desire that the specific asset was part of their trust.

If your situation qualifies, a Heggstad Petition is vastly superior to a standard probate administration because it is typically resolved in one court hearing, which typically is set out 60 to 90 days from the petition filing date, depending on the county court's schedule.

Additionally, this route will save tons of money for the beneficiaries. Traditional probate requires you to pay statutory fees to an attorney and executor based on a percentage of the asset's gross value. A Heggstad Petition bypasses these high mandatory percentages, saving your family significant money, leaving more to each named beneficiary.

Discovering that a house or account was left out of a trust can be a stressful surprise during an already difficult time for a successor trustee. Our legal team specializes in navigating California probate courts to correct these funding errors quickly and cost-effectively.

Contact our office today to schedule a consultation. We will review the trust documents and help you determine if a Heggstad Petition is possible.