By Jana Hagekhalil, Esq., TLD Law

The Heggstad petition, stemming from the landmark case of Estate of Heggstad (1993) 16 Cal. App. 4th 943, serves as a valuable mechanism for transferring assets into a trust posthumously. This legal maneuver becomes essential when a settlor passes away without having transferred all assets into the trust during their lifetime.

Without the Heggstad petition, the alternative route often involves navigating the probate process, which is not only time-consuming but also entails significant costs for clients in terms of fees. This process typically entails petitioning for the probate of the pour-over will, stipulating that all property be transferred to the trust. While the end result remains the same—property inclusion in the trust—the Heggstad petition offers a more efficient and cost-effective alternative, particularly when specific circumstances warrant its use.

Technically authorized under Probate Code 850, the Heggstad petition provides the legal framework to petition for the inclusion or removal of assets from a trust. Often referred to as a Heggstad petition after the pivotal case, it allows for a streamlined process of demonstrating the settlor’s intent to include certain assets in the trust.

Crucial to the success of a Heggstad petition is establishing the settlor’s “specific intent” to include the property in the trust, despite any inadvertent omissions during their lifetime. This intent can be demonstrated through documentation such as the Schedule A attached to the trust, which lists the trust’s assets. If the property in question is identified within this schedule, it typically serves as compelling evidence of the settlor’s intentions, facilitating a smoother approval by the court.

For instance, consider the case of Joan and Jose Chavez (pseudonyms used for client confidentiality), who had established a trust. Unfortunately, Jose overlooked transferring all his own separately titled bank accounts into the trust during his lifetime. Following Jose’s passing earlier this year, these accounts— various bank accounts valued at over $250,000 —now require inclusion in the trust to avoid complications. Jose’s surviving spouse was not able to obtain access to her husband’s accounts following his death. These accounts are duly listed on the Schedule A, accompanied by relevant documentation including Jose’s death certificate, the trust instrument, and his pour-over will. A Heggstad petition avoids the need for a Spousal Property Petition and Probate in this situation.

In essence, the Heggstad petition offers a practical solution for rectifying inadvertent omissions in trust planning, ensuring a smoother transition of assets and minimizing legal complexities for beneficiaries. Its utilization underscores our commitment at TLD Law to providing effective estate planning strategies tailored to our clients’ unique needs and circumstances. Contact us at jhagekhalil@tldlaw.com for more information.