Heggstad Petition Explained: Guidance for the Process

You may have heard that once you create an irrevocable trust - it cannot be changed. The trust document is designed to be permanent.

But, think of a situation where the deceased person had real property or other trust assets they intended to add to the trust but had failed to include them before their death; either due to

Fortunately, California probate law has a provision that allows beneficiaries to add assets their loved one intended to include in the living trust but never got to do it. This legal process is called a Heggstad petition.

However, specific conditions must be met to prove the desire and plan of the deceased to include property or items in the trust. This article examines various aspects of the Heggstad petition, the laws governing it, how and when to file it, and your options if you don't succeed the first time.

The Heggstad petition, also known as the 850 petition, is a legal process made to the probate court. Its primary purpose is to include an asset in a trust that wasn't originally specified in the estate planning documents.

This petition derives its name from a 1993 California court case. Halvard L. Heggstad aimed to add real property to his revocable living trust but didn't manage to do so before his death. However, he had drafted a schedule of assets, both tangible and intangible.

Recognizing this schedule as sufficient evidence of intent, the Superior Court of San Mateo County ruled in favor of including the property title in the trust, sparing the family from probate proceedings. The Heggstad petition is an essential tool in estate law, ensuring that a loved one's intentions for their trust after death are fully realized, even if certain assets were initially omitted.

An 850 petition serves to rectify mistakes in a trust. For instance, if a homeowner wishes to refinance, the mortgage lender might remove the home from the trust.

If the property isn't returned to the trust post-refinancing, it could lead to a probate hearing upon the homeowner's death. To prevent this, beneficiaries can utilize an 850 petition.

This petition provides a legal avenue for beneficiaries to address discrepancies or uncertainties inadvertently introduced by the trust's creator. It ensures assets are distributed as per the deceased's wishes and resolves conflicts over property ownership.

Probate Code 850: The Governing Statute

Probate Code 850 is a segment of California probate law that allows the court to correct or adjust errors concerning assets or property ownership in an estate or trust.

This code provides an exception to the general rule that an irrevocable trust cannot be altered once established. Unlike other probate codes focusing mainly on trust and estate administration, Probate Code 850 specifically addresses mistakes related to asset ownership. For context:

• Probate Code 17200 delves into the internal affairs of a trust or its validation.
• Probate Code 13050 details the property transfer process upon death.
• Probate Code 15403 lists the conditions for modifying or terminating a trust.

Imagine a scenario where your deceased mother had vintage artwork and jewelry, which can be considered personal property, she acquired in the recent past and never got to add them to the trust.

A Heggstad petition can ensure these items are included to prevent disputes over which beneficiary gets what.

In another situation, a father with three children acquired new investment accounts, and in an unfortunate car crash, he died before he could add it to the trust. The three beneficiaries can file a Heggstad petition to include the property in question in the trust and divide it as per their dad's request.

Regardless of the situation at hand, filing the Heggstad petition in a timely manner attracts the following benefits:

• Preserves and maintains clear evidence of the trustor's original intent
• Prevents conflict and enables early resolution of disagreements
• Avoids asset confusion about ownership and distribution as memories fade over time
• Enhances faster asset distribution while reducing legal costs

Filing a Heggstad petition is a relatively straightforward process involving the following steps:

1. Collect information about the trust. Get the original trust documents and asset transfer records that showed the intent to include them in the trust.
2. Create the petition giving a detailed trust history and explaining the situation of the assets you would like returned into the trust—as per the Estate of Heggstad court case (cite it).
3. Attach supporting documents, such as a schedule of assets, trust documents, declaration of trust administrations, and the proposed order.
4. File the 850 petition with the Superior Court in the city where the trust is located. You will pay the court fees when you file the petition.
5. Send a notice to the California Attorney General's Office and all the trust beneficiaries.
6. Attend the hearing once the court schedules it. Remember to carry and provide any information the judge asks about the asset transfer and trust.

If the court approves the request, you will receive an order to transfer the assets back into the trust. If the judge denies the request, you have several options, such as appealing, filing a new petition with different terms, or seeking a settlement.

The following table lists the forms you require at different stages in the filing process:

A Heggstad petition can be denied for various reasons, such as insufficient evidence, procedural errors, objections from beneficiaries, and lack of legal basis. You may feel stuck once the court denies your petition. But do not despair. You still have options you can explore. They include:

• File a second time and change your approach to fit the judge's concerns
• Appeal the ruling with substantial new evidence and strong legal provisions
• Negotiate and seek settlement with the parties involved
• Ask the judge to reconsider by availing additional documentation

However, if the Heggstad petition is denied, the asset in question may result in entering the probate process.

The Heggstad petition timeline varies depending on court availability, the case complexities, and jurisdiction. Generally, it takes 4–6 months from preparation until the judge issues a verdict. The following is a breakdown of the timeline:

• Gathering information, consulting an estate planning expert or lawyer, creating the petition, and filing with the court (7–14 days)
• Serving the notice to relevant parties. The court gives 30 days for the parties to respond or give objections
• The pre-hearing preparation, where you or your lawyer addresses the objections or gathers more evidence (7–14 days)
• Depending on the court schedule, the hearing may be set 45–60 days after filing the petition.
• Waiting for the verdict takes another 30 days.
• Updating the trust and including omitted assets can take 10–14 days or more.

Prepare for delays resulting from court scheduling, potential disputes, and response time.

The cost of filing a Heggstad petition varies depending on jurisdiction and each court's fee structure. Generally, the filing fee for an 850 petition in all California superior courts is $435.

However, additional fees apply for documents such as court orders ($25) and proof of notice ($40 for each). If you hire an attorney to handle the entire process, the cost may rise to $2,000–$5,000.

Fee reductions and waivers are available for people who meet specific criteria, such as low-income earners. Besides, legal aid organizations in California can assist you with representation if you cannot afford lawyer fees.

Anyone can file a Heggstad petition on their own with the proper knowledge and documents. However, the petition process has various challenges that a non-legal professional may find stressful and almost impossible to navigate. When you work with an experienced lawyer, they will be able to:

• Deal with the immense legal paperwork
• Abide by the strict procedural rules
• Use and quote complex probate laws
• Give convincing legal arguments

Estate planning professionals also offer an all-rounded approach to dealing with a Heggstad petition. At ClearEstate, we help our clients develop the best approach to file a successful Heggstad petition. Book a free consultation and let us put everything into perspective.