In the intricate world of California trusts and estates law, few tools offer as much relief and efficiency as the Heggstad petition. Named after the landmark case Estate of Heggstad (1993) 16 Cal.App.4th 943, this legal maneuver allows assets to be confirmed as part of a trust—even if they weren’t formally transferred before the settlor’s death. For practitioners and families alike, understanding the mechanics and strategic value of a Heggstad petition can mean the difference between a streamlined trust administration and a costly probate detour.
What Is a Heggstad Petition?
A Heggstad petition is a probate court filing under California Probate Code § 850 that seeks to confirm that certain assets are part of a decedent’s trust, even though title to those assets was never formally transferred into the trust during the decedent’s lifetime.
Key Elements:
- Existence of a valid trust: The decedent must have executed a trust document.
- Schedule of assets: The trust should include a schedule or exhibit listing the assets intended to be part of the trust.
- Intent to transfer: The petition hinges on demonstrating the settlor’s intent to include the asset in the trust.
The Legal Foundation: Estate of Heggstad
In Estate of Heggstad, the decedent had created a living trust and listed a piece of real property in the trust schedule, but never executed a deed transferring title to the trust. The court held that the property was still part of the trust because the settlor’s intent was clear. This decision carved out a path for successors to avoid probate for such assets by petitioning the court to confirm their inclusion in the trust. While the trust schedule played a central role in Estate of Heggstad, the court considered more than just that to establish the settlor’s intent. The trust instrument itself declared that the settlor was transferring all listed assets into the trust. This declaration functioned as a written assignment. Halvard Heggstad was also the sole owner of the property interest in question, so he had the authority to transfer it by declaration. Further, there was no evidence suggesting Heggstad intended to exclude the property or that he had changed his mind. The court emphasized that a written declaration by the owner—especially when combined with a clear trust schedule and trust language—can be sufficient to transfer property into a trust without a separate deed. So yes, the trust schedule was key, but it was bolstered by the trust’s operative language and the context of ownership.
Common Use Cases
Heggstad petitions are especially useful when:
- A settlor listed real estate in the trust schedule but failed to record a deed.
- Bank accounts or brokerage accounts were not retitled in the name of the trust.
- Business interests (e.g., LLCs or partnerships) were referenced in the trust but not formally assigned.
When a Heggstad Petition Might Fail
While powerful, Heggstad petitions aren’t foolproof. Courts may deny them if:
- The trust document lacks a clear schedule of assets.
- There’s ambiguity about the settlor’s intent.
- The asset in question was acquired after the trust was created and never added to the schedule.
Practical Tips for Estate Planners
- Always include a detailed schedule of assets in the trust document.
- Use assignment documents for business interests and intellectual property.
- Record deeds promptly for real property transfers.
- Review and update the trust regularly, especially after major acquisitions.
Conclusion
The Heggstad petition is a testament to California’s flexible approach to trust administration. By honoring the settlor’s intent, it offers a pragmatic solution to common oversights in trust funding. For attorneys and fiduciaries, mastering this tool can save clients time, money, and the headache of probate.
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