Orange County Heggstad Petition Lawyer
Upon death, assets that are properly titled to a trust (“funding the trust”) pass privately under the terms of the trust. The concept of transferring Orange County real estate and personal property to one's trust has always been a fly in the ointment: not because of the difficulty of transferring such assets, but the dramatic consequences of not having assets properly transferred into the trust on the death of the creator of the trust.
Assets properly titled to a trust will not be subject to probate administration. However, to be effective, when a trust is established, ownership of assets is required to be re-titled to the trustee of the trust. If title to assets is not transferred to the trust the terms of the trust will not dictate how the assets are distributed at death. The reason and the proverbial fly in the ointment is California Evidence Code § 662 which provides a presumption that the owner of the legal title to property is presumed to be the owner of the full beneficial title. This presumption may be rebutted only by clear and convincing proof.
Under certain conditions a "Heggstad Petition" (Petition under California Probate Code §850) can be utilized to rebut the presumption and cure the defect (see below analysis).Some Examples of Why Trusts are not Funded Properly
DYI Online Services. One of the most common mistakes people make with estate planning is that they try to "do it yourself" (DIY). Online services have spent millions trying to create the impression that their services are similar to those of an attorney. They put lawyers in their commercials, hire celebrities to promote them, and even tout stories of people who have successfully used their documents. Unfortunately those who rely on a DYI service fail to properly transfer assets to the trust. However, under particular fact situations rather than a full probate a Heggstad Petition may be available (see below analysis).
Sometimes people buy a trust from a paralegal or a salesman from a “Trust Company.” These services sometimes tell a person “how to” transfer the assets but the person never actually does the work of creating the proper deeds or notifying the financial institutions of the change. In those situations, the assets may end up going through probate. However, under particular fact situations rather than a full probate a Heggstad Petition may be available (see below analysis).
Schedule A to a trust (sometimes referred to as Exhibit A). Quite often many people are of the belief that a schedule of assets referred to in the trust and/or attached to a trust means that assets are in the trust. Listing assets on a schedule and attaching it to the trust document does not mean the trust now owns the assets. A schedule attached to a trust does not create a trust and has no legal impact on its own. One must still go through the procedure of transferring titles of all your assets into the name of your trust. However, under particular fact situations rather than a full probate a Heggstad/Ukkestad Petition may be available (see below analysis).
Refinancing. Even after properly funding a trust with assets, the creators of the trust may decide to refinance their home to get a lower interest rate on their mortgages. During the refinancing process, many lenders require that the title to the Orange County real property be transferred back into the individual names because the lender wants to legally bind the actual person who is the owner of the house. After the refinancing process is completed, the owner is allowed to transfer title of the home back into the living trust.
Unfortunately, after the refinancing is done, the trust creator often forgets to transfer ownership of the Orange County real property back into the trust. Then, when the trust beneficiary(ies) wants to sell the Orange County real property or transfer title to the Orange County real property to themselves, the question arises as to whether a probate is necessary since the Orange County real property was in the living trust before the refinance, but the Orange County real property is now outside the trust. Under particular fact situations rather than a full probate a Heggstad Petition may be available.Estate of Heggstad (1993) 16 Cal.App.4th 943
Heggstad was a San Mateo County case, where the settlor (creator of the trust) stated in his trust that he had transferred certain real property to his trust by attaching a schedule that described the real property. Unfortunately, when the settlor passed away record title remained in his name and not the name of the trust. During his life he failed to have deed prepared transferring the property to the trust.
The Heggstad court held that the settlor's written declaration that the property was held in trust was sufficient to create a trust in the subject real property, without the need of a formal conveyance of title to the settlor as trustee during the decedent's lifetime. Therefore, that property was held to be an asset of the trust and not subject to disposition through the decedent's will.What Happens if Orange County Real Property and/or Personal Property is not Formally Transferred to a Trust and no Reference to the Property is Found in the Trust Instrument or Attachments?
In Ukkestad v. RBS Asset Finance, Inc. (2015) 235 Cal.App.4th 156 the “grantor” (creator of the trust) was the owner of two real estate parcels. However, they were not formally transferred into the trust. As was the case in Heggstad, in Ukkestad there was no schedule mentioning either or both of the real estate parcels. However, the grantor by a written assignment, did assign ownership of all of his real property to the trustees of the Trust effective the date of the trust. The first court held that without the specific descriptions, a post-mortem transfer by using a Heggstad petition was impossible and the petition was denied. Upon appeal, the appellate court held that a properly written declaration (“assignment) in the trust was, in fact, sufficient to transfer the properties into the trust.Conclusion
If you have a situation where Orange County assets were not formally transferred into a trust before death that is where I can be of help. If you are not sure what to do please contact me.
If you wish to gain information on California probate or Heggstad/Ukkestad Petitions please contact me for a free consultation at (949) 243-0408 or through my online contact form. I will spend time with you to answer your questions.