What do you do if a friend or family member created a Trust, but forgot to fund it before passing away? If you have evidence that the friend or family member intended to fund the Trust, you bring a Heggstad petition (derived from the 1993 case, Estate Of Heggstad 16 CA 4th 943). The problem that you face with assets owned outside the Trust is that you might have to bring a Probate petition in the Courts.
Probates are expensive and time consuming. The Probate can take months to finalize and the Court might potentially require distribution of the assets in a manner different from the Trust’s instructions.
This problem arises when people create Trusts and fail to actually re-title their assets in the name of the Trustee of the Trust. For example, the house might be left titled as “Joe Smith” instead of “Joe Smith, Trustee of the Joe Smith Trust.” This difference means that after Joe Smith dies, some interested party must petition the Court to be appointed as Personal Representative of the Estate to distribute the house and other non-Trust assets.
However, if that interested party brings a Heggstad petition, they can have the Court confirm the decedent’s assets as part of the Trust. The Court will be looking for clear evidence that the decedent intended to transfer the assets into the Trust. They could will also look for evidence that it was merely a mistake or oversight that the assets were never transferred.
This evidence can come in the form of oral or written communications from the decedent to friends or family. However, the most common form of evidence is a document entitled “Schedule A” generally attached to the back of most trusts. This document lists the property that the person executing the Trust intends to be Trust property. Having a Schedule A is an easy and clear way to list all Trust property. It will put the Court in an easy position to approve a Heggstad petition confirming certain property as Trust property were one to be filed.
So, if you are going to create a Trust, make sure a Schedule A is drafted with all of your assets that you want to be in the Trust. It could save a lot of time and money later.
The intersection of Trust and Probate law can be complicated. The Talbot Law Group is here to help assist you during what can be a trying time. Please call us at 925 322 1795 to set up a consultation. Matthew Talbot is an Estate, Trust and Probate Attorney in Walnut Creek, CA.