In a previous blog focusing on trusts created in California, we discussed the importance taking the final step of funding your trust once you have created the trust. So what happens if you forget to fund your trust or if you tried to fund your trust during your life but you made mistakes which prevented the real or personal property from going into your trust? Well, there may be solution for your successor trustee to still avoid probate of your estate by showing that your property should have been in the trust at your death. That solution is a Heggstad Petition.
So what are the general things a Heggstad Petition does?
A Heggstad Petition is typically filed by the successor trustee with the Probate Court asking the Court to do the following: First, determine and confirm the existence of the trust, including all attached schedules of property; Second, determine and confirm that the successor trustee is the currently acting trustee of the trust; and Third, determine and confirm that the particular property referred to or listed in the trust documents are in fact a part of the trust (and not of the deceased person’s estate or other), despite the fact that there is no formal retitling of the property or proper “funding of the trust” with the property. In essences, the Heggstad Petition asks the Court to obviate the need for a formal probate of the estate, which would otherwise be necessary because the trust was either never funded or was improperly funded.
So if a Heggstad Petition is allowed in California and is a fix to either not funding the trust or failing to properly fund the trust, then why even fund your trust? The answer is, like most things in life, it is all about time and money. A Heggstad Petition should be thought of as a last resort, not as an alternative to funding your trust. Heggstad Petitions are filed in Probate Court. As such, it can take several months before the Court will decree or order that the property is in fact that of the trust and not in the estate. Heggstad Petitions are complicated. They require various evidence that must meet certain burdens of proof, meaning it is usually necessary to hire legal counsel. Because attorneys and the Court are involved, Heggstad Petitions can be expensive. On the flip side, properly funding the trust is as simple as a few steps and generally doesn’t cost very much. So, the logical answer is to make sure you properly fund the trust upon its creation and also later as more assets are acquired.
But be careful when attempting to fund a trust on your own. It is important to note that not all assets should be put in your trust. As noted in a previous blog, certain types of property funded into a trust will result in unintended tax consequences. Funding a trust is not something to be taken likely so before you fund your trust in California, make sure to consult a California attorney that focuses on estate planning before any steps are taken to fund the trust. Additionally, anyone facing the problem of an unfunded trust, successor trustee or otherwise, should contact a California attorney who practices in the areas of estate planning, trust administration, and probate for more information.
Authored by Greg Chilina and Co-Authored by Karen Chilina
Chilina Law Firm, a Professional Corporation, is a full-service estate planning, probate, trust administration, business law, and real property law firm that provides a wide-range of advising, transactional, and litigation services to its clients from its office located in Atascadero, California. The firm’s attorneys represent individuals and business entities in an assortment of transactional and litigation matters involving estate planning (including trusts, wills, powers of attorney, and medical directives), probate, trust administration, as well as general business law, contracts, corporate governance, land use, and real property. Chilina Law can be contacted by telephone at (805) 538-5038 or by email at firstname.lastname@example.org or visit the Chilina Law Firm at www.chilinalaw.com. Chilina Law Firm is based in Atascadero, California and serves North San Luis Obispo County communities, including Santa Margarita, Atascadero, Templeton, Paso Robles, and San Miguel.
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