Heggstad petitions are named after the California court case, Estate of Heggstad. Mr. Heggstad created a living trust and identified the assets he wanted in the trust by filling out a schedule of assets attached to his trust. Unfortunately, Mr. Heggstad died before he could retitle those assets into the name of his trust. Wanting to avoid a full probate of his estate, his family petitioned the court, arguing that because he filled out the schedule of assets with his trust, Mr. Heggstad intended for those assets to be included in his trust. The court agreed and ruled that the assets listed on a schedule attached to a trust was sufficient evidence of intent to include those assets in the trust. This case paved the way for a regularly used petition to the court, called a Heggstad petition.
Why would I need a Heggstad petition?
Let’s say that Sally created a trust and named Tommy as her trustee. Sally is a single woman who is leaving her assets to her siblings, Tommy and Christina. Sally has a house and three bank accounts worth $1 million. Sally did not retitle her home or bank accounts into the name of her trust. All assets are titled as Sally Smith. Now that Sally has died, her accounts are frozen, and the county will not speak to Tommy because the house is only in Sally’s name. The county and the banks are requesting a court order that says Tommy is allowed to legally manage Sally’s estate. Because Sally’s assets are worth more than $184,500 (and the real estate is worth more than $50,000), Tommy cannot complete a small estate affidavit in order to transfer the assets to Sally’s trust. You can learn more about small estate affidavits here: https://absolutetrustcounsel.com/using-small-estate-affidavits-to-transfer-assets/.
The initial option would be to probate Sally’s will, which, as her pour-over will, leaves everything to Sally’s trust. You can read more about pour-over wills here: https://absolutetrustcounsel.com/basic-estate-plan-contents/. This would result in a court order transferring all assets from Sally’s name into her trust with Tommy as trustee, thus giving him access and the ability to administer the trust.
However, Tommy sees that Sally listed the exact same three bank accounts and house on the Schedule A attached to her trust. Because the assets in question were listed on a schedule of assets, Tommy can file a Heggstad petition rather than open a whole probate.
What does the process look like?
To file a Heggstad petition, hiring an experienced attorney is recommended, as there are many procedural components to the petition. The trustee will need to provide as much information as they can about the assets, a copy of the will and trust, and names and addresses for all of the people who are entitled to notice. The attorney will draft the petition and have the trustee review it and sign it, and then it will be filed with the court of the appropriate county. The trustee must give all people entitled to notice at least 30 days’ notice before the hearing. This means that a Heggstad petition could be completed in as little as two months, depending on how far out the particular court is scheduling hearings.
At the hearing, all noticed parties will have a chance to object. They can also do so in writing before the hearing. If an objection is filed or made verbally at the hearing, there will likely be a second hearing with further instructions from the judge. If there are no objections, the judge may grant the petition at the hearing, and the Heggstad petition is complete. The judge will sign an order that the trustee can present to the banks, and the same order can be recorded with the county to show that any real estate is transferred into the trust.
Why wouldn’t I just open a probate?
First, there are several more steps to probate than there are to a Heggstad petition. A probate requires at least two hearings, each with their own notice time requirements, and at least four months must pass between those hearings. A probate typically takes at least a year, if not longer, if the courts are backed up.
In addition, probate fees are statutory, meaning the attorneys get a percentage of the value of the entire gross probate estate, and do not take into consideration debts such as mortgages or medical bills. A probate also has two filing fees (currently, each filing fee is approximately $435), publication in the newspaper is required (and not free), and there is a probate examiner appointed by the court to appraise the estate’s assets, and they must be paid. On the contrary, a Heggstad petition would be done at the attorney’s customary rates, which may be hourly or even a flat fee charged by the attorney; there would only be one filing fee with the court, and most likely only one hearing. See more about the probate process here: (there are several probate posts on the ATC site).
While there may be situations in which filing a probate is the more appropriate answer, if all the assets in question are listed on a schedule of assets in the trust, a Heggstad petition might be the more efficient and cost-effective way to administer the trust. As always, it is recommended to get the advice of an attorney as all of these post-death administrations are very fact and situationally-specific.
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