But what happens when the settlor and trustee are the same person? That’s where Heggstad comes in. Under Heggstad, no formal transfer of the property by deed is needed. Instead, a written declaration of trust by the owner of the property is enough, provided the owner names themself as the sole trustee. (Carne v. Worthington (2016) 246 Cal.App.4th 548, 559.)
Nonetheless, a successful Heggstad petition still requires proper planning and execution. A faulty property description, for instance, can doom the action from the outset. At Underwood Law firm, our attorneys know how tough a situation like this can be. Thankfully, our attorneys are well-versed in estate planning, and we know the best ways to tackle the disputes that accompany property in probate. Our team has the legal acumen and skills necessary to help you achieve your litigation goals.
What happened in the Estate of Heggstad?
The Heggstad petition owes its namesake to the 1993 case, Estate of Heggstad (1993) 16 Cal.App.4th 943. There, a man named Halvard Heggstad owned roughly a third of an estate as a tenant in common. Shortly before his death, he decided to execute a revocable living trust, naming himself as sole settlor and trustee. But while he listed the property within this document, he never executed or recorded an actual deed conveying his interest in the property into the trust.
When Heggstad died, his son brought a petition in probate court for instructions regarding the disposition of the property as the named successor trustee. Heggstad’s ex-wife (and his son’s stepmother) objected to the petition, arguing that the property was never properly transferred into the trust.
On appeal, the Court carved out an express exception to the general rule that requires a deed to transfer a property into the trust. Because Heggstad owned the interest on his own and because he was both the settlor (the one placing the property into the trust) and trustee (the one managing the trust), a separate deed demonstrating a conveyance was simply unnecessary. Since this decision was issued, “Heggstad” petitions have sprung forth for cases involving similar facts, that is, transfers of property into a trust without deeds.
What’s required for a valid Heggstad petition?
A Heggstad petition is relatively straightforward. Under the Probate Code, a person can show a trust exists by evidencing a declaration by the owner of the property that the owner actually holds the property as trustee. (Prob. Code § 15200 (a).) The only requirement for this declaration is that it be written and signed by the owner/trustee themself. (Heggstad, 16 Cal.App.4th at 949.)
While this may not seem like a large evidentiary showing, that’s precisely the point. Normally, if a party wants to prove to the court that a trust exists, they will need to produce a deed, property schedule, record of conveyance by deed, trust agreement, and any other relevant items.
With a Heggstad petition, however, it’s the petitioner’s argument that a trust exists despite the lack of a deed or formal transfer. Thus, provided the declaration wasn’t later revoked (through a will or some other instrument), it can stand as the sole piece of evidence necessary to show the probate court that the property is in trust.
How specific does the Heggstad declaration need to be?
Just because a property can be placed into trust with a simple declaration does not mean that every declaration will automatically be enough to win the day in court. To the contrary, the statute of frauds (a legal contract defense mechanism) requires all property-related documents to “describe the land with reasonable certainty.” (Ukkstad v. RBS Asset Finance, Inc. (2015) 235 Cal.App.4th 156, 161.)
“Reasonable certainty” is, admittedly, a somewhat flexible term. But even a durable rubber band can snap, so to speak. Take, for instance, the following example. “James” has three properties and wants to place one into trust. He writes up a document that states his undisputed intention and desire to place into trust “my main property.”
As one might expect, this probably won’t get the job done in a court of law. And even if James’ heirs come to testify as to the words’ meaning, who is to say that they would all ultimately adopt the same interpretation? This is why it’s best to instead describe the property with a description that is both “definite” and “certain.” (Id.)
Does Hegstaad apply to joint trusts?
The answer to this question is unclear, and that’s unfortunate because many couples who wish to create a trust do so as co-settlors and co-trustees. To complicate matters, not all couples are married and so have different interests in perhaps multiple properties.
Heggstad provides some guidance, stating, “we hasten to note, however, that to be effective as to strangers, the declaration of trust must be recorded.” (Heggstad, 16 Cal.App.4th at 950, fn. 7.) This signals that the court was trying to narrow its holding to only those situations where it was clear that the settlor and trustee were the same person so that no conveyance was necessary. As such, Heggstad suggests that its holding does not apply where a couple, especially an unmarried couple, attempts to create a joint trust with a declaration, despite owning multiple properties or separate property interests.
How can the attorneys at the Underwood Law Firm assist you?
Probate proceedings are as inevitable as they are difficult to handle, often flaring up old wounds or damaging family dynamics. Alternatively, even if all parties involved are on good terms, it can nonetheless be an expensive and time-consuming process that delays other life events, such as a pre-agreed sale by the property’s inheritors.
As each case is unique, property owners would be well-served to seek experienced counsel familiar with estate planning. At the Underwood Law Firm, our knowledgeable attorneys are here to help. If you are trying to execute a trust declaration, wondering whether you can fight a Heggstad petition, or if you just have questions, please do not hesitate to contact our office.
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