Setting up a Trust requires careful planning and execution. It involves setting up the Trust document, listing out your terms and instructions, and naming trustees and beneficiaries. Further, assets and property must be properly transferred to the Trust. However, what if it’s discovered after the fact that intended property wasn’t transferred, and the trustor has passed away? Is there anything that can be done? If you live in California, a Heggstad petition might be just the solution you’re looking for. Keep reading to learn how the Heggstad estate case paved the way for this unique scenario.
What is a Heggstad Petition?
A Heggstad petition is a legal tool used when a piece of real property or an asset is excluded from the Trust of a person who passed away. The property or asset must have been intended for inclusion in this Trust, but for some reason didn’t make its way into inclusion.
Usually, any asset or property not included in a Trust would have to pass through the probate process. However, California Probate Code 850 sometimes allows the option of skipping this tedious and costly process using a Heggstad petition.
If the petition is filed successfully, then the petitioner will receive a court order verifying that the property is a Trust asset. Despite the title not being formally transferred to the Trust, there is sufficient evidence proving that the asset was intended for inclusion in the Trust.
Why File a Heggstad Petition?
When an individual passes away, their estate executor and trustee respectively have the duty of ensuring that the decedent’s final wishes are carried out in full. The loved ones of the decedent also have a vested interest in the manner in which the estate is distributed.
If one or more persons related to the estate discover that a property or asset intended for inclusion in a Trust has been excluded, then they have the option of filing a Heggstad petition in California. This intention may have been communicated verbally or in writing by the decedent.
Any property excluded from a Trust is considered a part of a decedent’s estate and therefore must pass through the probate process. This legal procedure is costly and can take several months to several years to complete. This is often tedious and painstaking for beneficiaries who would have otherwise inherited property automatically through the Trust.
In other words, avoiding probate is typically the key reason behind filing a Heggstad petition.
When Can I File a Heggstad Petition?
According to California Probate Code 850, you can file a Heggstad petition if you believe that the decedent intended to transfer property into a Trust. If the petition, sometimes called the 850 petition, is accepted, then the property can be transferred into the Trust retroactively.
Here are some common reasons why a piece of property can unintentionally get excluded from a Trust:
The decedent experienced extenuating circumstances that prevented them from transferring the property.
The transfer process was initiated but the decedent passed away before it could be completed.
The decedent believed that the property was properly transferred when in reality the transfer mechanism failed due to flawed documentation or mislabeling.
The decedent simply forgot or did not understand how to properly transfer assets into a Trust.
We’re all human, and mistakes can happen. When it comes to Trusts, oversights and misunderstandings can happen and aren’t all that rare. Luckily, these can often be addressed in the court of law. If you live in California, then the Heggstad petition provides an easier solution to bypass probate altogether.
How Long Does a Heggstad Petition Take?
On average, the Heggstad petition process takes between two and four months. If you think this is long, compare this timeline with the average probate length in California, which is currently eighteen to twenty-four months on average. If you have the option of filing the Heggstad petition for your case, it can help you avoid the time and cost of going through probate.
How Do I File a Heggstad Petition?
California Probate Code 850 oversees the Heggstad petition process. There is no formal document or petition form to fill out; rather, you must gather sufficient documents and information to include in your case.
The key to creating a successful Heggstad petition case is providing proof that the property in question was intended for inclusion in the Trust. For instance, the inclusion of the property in a schedule of assets is strong evidence. Other documentation can be helpful, such as the language of the Trust declaration
Here are some examples of documents and pieces of information to gather:
A copy of the Trust document including the schedule of assets
Relevant information about the decedent and the beneficiary
Legal descriptions of the asset(s) in question
Any information or documentation regarding the decedent’s original intent to include the property or properties in the Trust
A written request detailing how you would like for the situation to be resolved
Before you file for a Heggstad petition, you are required to submit a 30-day notice to all interested parties. If the court confirms that the property should have been included in the Trust, the petition is approved. The Trustee is then authorized to manage and distribute the asset(s) in question per the terms of the Trust. Filing a Heggstad petition is complex and often requires the assistance of a probate or estate planning attorney.
Other Common Questions About Heggstad Petitions
So far, we’ve covered the basics of what a Heggstad petition is, how it works, and why someone may want to pursue this legal option. If you live in California and are interested in pursuing the Heggstad petition, then you likely have a number of follow-up questions.
Here, we’ve answered some of the most popular questions about Heggstad petitions.
How much does a Heggstad petition cost?
The filing fee for a Heggstad petition is currently $495. The process of filing this petition is complex, and thus it is typically recommended working with a probate attorney. Attorney fees typically range between $2,500 and $4,000. Depending on the size of the estate, these fees are often well worth it when it means avoiding the costs of a full probate process.
Why is it called a Heggstad petition?
The Heggstad petition was created after the 1993 California Probate court case regarding the estate of Halvard Heggstad. He executed a Revocable Living Trust that included a Schedule A document identifying all of his property. However, one of his properties was mislabeled and therefore was not transferred properly. After Heggstad’s death, his wife successfully petitioned for the property to be included in the Trust. The court ruled that the inclusion of the property in the Schedule A document was sufficient, which created legal precedence for the Heggstad petition that can now be used in similar cases.
What is an 850 in probate?
In California, a reference to 850 in probate is a synonym for the Heggstad petition. California Probate Code Section 850 oversees the Heggstad petition process, which is used to resolve any property disputes surrounding a decedent’s Trust.
What happens if a Heggstad petition gets denied?
If a Heggstad petition is denied, the court decision is not necessarily the end of the road. If your Heggstad petition is denied, then you can work with your attorneys to file a probate appeal. To learn more about this, be sure to read our full guide on, “What if my Heggstad Petition is denied?”
Update your estate plan today
Human error is pervasive, and estate planning is no exception. Although it may surprise you, the accidental exclusion of property from an intended Trust is not uncommon. A Trustor may simply forget to transfer property or is otherwise prevented from taking action due to a sudden decline in health. It’s also common for an individual to not thoroughly understand how to properly transfer property using the correct legal mechanisms. These are just a few examples demonstrating how a Trust property transfer may fail.
If you discover that a deceased loved one did not transfer an intended property into their Trust, California probate code provides a remedy called the Heggstad petition. Named after a California court case that created precedence, the Heggstad petition allows a claimant to file a petition if they can prove that a property or asset intended for inclusion in a Trust was excluded. If approved, this property is declared by the court to be a part of the Trust. It can be distributed by the Trustee per the Trust terms. Moreover, this property does not have to go through the probate process. Because the probate process is tedious and costly, California residents who have the option to file the Heggstad petition will often do so.
This guide explaining the Heggstad petition highlights a critical aspect of the estate planning process: the costliness of human error. When an individual plans their estate, they must be sure that their desired outcomes survive the legal process. Oversights and errors happen, but they can unintentionally create additional expense, stress, and conflict amongst beneficiaries. This also often takes place after the individual passes away and the situation cannot be easily remedied.
Creating a sound and inclusive Living Trust so that your beneficiaries won’t have to utilize tools such as the Heggstad petition should be top of mind. Consider partnering up with Trust & Will, your estate planning experts, so that you can create your bulletproof estate olan today! Discover how our Trust-based estate plan covers everything so that you can have peace of mind. Take our free quiz to see where you should get started, or compare our different estate planning and settlement options today!
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