The Heggstad Petition: How to Rescue Forgotten Assets

What if you forget to re-title all your assets into the name of your living trust?  Will your heirs necessarily be going through the probate process?  Well, thanks to a 1993, your family might be able to back-door any such forgotten assets into your trust by using the Heggstad Petition. 

The Heggstad Petition refers to a legal process in California that allows for the transfer of assets into a living trust after the trust creator's death, even if those assets were not initially included in the trust. The petition takes its name from the California appellate case, In re Estate of Heggstad, which established the legal precedent for this type of petition.

The Heggstad case, decided in 1993, involved the estate of a man named Gunnar Heggstad who had created a living trust but failed to transfer a specific piece of real estate into the trust before his death. The court ruled that the property should be included in the trust based on the decedent's intent and the surrounding circumstances, even though the formal transfer had not occurred.

Following the Heggstad decision, California Probate Code Section 850 was amended to provide a procedure for filing a Heggstad Petition. This petition allows a trustee or interested party to ask the court to confirm the inclusion of assets that were not properly transferred to the trust but were intended to be included.

To have a successful Heggstad Petition in California, the following components are typically required:

1. A valid living trust: The decedent must have established a living trust during their lifetime.
   
2. Intent to include the asset in the trust: There should be evidence demonstrating that the decedent intended to include the specific asset in the trust, even if the formal transfer did not take place.  This is why having a solid schedule of assets (usually called "Schedule A") is very important to have and to maintain.  What better evidence of your intention other than an actual signed schedule of all trust assets?
   
3. Documentation of the asset: Any available documentation, such as deeds, titles, or ownership certificates, should support the claim that the asset should have been part of the trust.
   
4. Substantial compliance with trust formalities: The decedent's actions must show a clear intent to transfer the asset to the trust, even if there was a technical or procedural error in completing the transfer.
   
5. Filing a petition with the court: A formal Heggstad Petition needs to be filed with the appropriate California court, requesting the inclusion of the asset in the trust.
   
6. Notice to interested parties: Notice of the petition must be given to all interested parties, such as beneficiaries and heirs, allowing them an opportunity to contest or object to the petition if they have valid grounds to do so.
   
7. Court approval: The court will review the petition, supporting documentation, and any objections raised by interested parties. If the court determines that the requirements for a Heggstad Petition have been met, it may grant the petition and confirm the inclusion of the asset in the trust.
   

It's important to note that while a Heggstad Petition can be a useful tool to correct omissions in a trust, it is generally advisable to consult with an attorney experienced in estate planning and probate matters to ensure compliance with the legal requirements and maximize the chances of a successful petition.