October 9, 2014
A Heggstad petition is a tool used to judicially transfer real estate into a revocable trust when the settlor failed to do so during their lifetime. That is, the settlor created a trust but never formally transferred their real estate into the trust via a deed.
A Heggstad petition is a common procedure for a number of reasons.
First, many people engage in do-it-yourself estate planning and fail to appreciate the finer details of funding their trust. Simply because you declare real estate to be a trust asset does not formally make it a trust asset. Instead one must transfer title from themselves to themselves as trustee of their trust to do so.
Second, many lenders will not do a re-finance if title is held in the name of the trust. The lender will insist that the borrowers transfer title out of their trust and into their own names before the lender will extend credit. The problem is that borrowers occasionally forget to transfer their home back into the trust once the re-finance is complete. The borrowers then pass away with title being in their names instead of the trust's name.
The Heggstad petition needs to be filed in the county where the principal place of administration of the trust is located. Prob C § 17005. For instance, if the trustee lists Campbell, CA as the principal place of administration, Santa Clara County Superior Court is the appropriate court. A common practice is for attorneys to put down their office address as the principal place of administration. This allows the attorney to file a Heggstad petition in their "home" county. By filing in the attorney's home county, it is more convenient for the attorney because of reduced travel time and the probate judge is arguably more familiar with the attorney if they appear in their courtroom regularly. I always utilize this practice given the benefits of doing so and wonder why all attorneys do not.
In order to file a Heggstad petition, the petitioner must cite the relevant probate code section that authorizes the probate court to have jurisdiction over the matter. The relevant probate code section is Prob C § 850(a)(3)(B). It reads in relevant part:
(a) The following persons may file a petition requesting that the court make an order under this part:
(3) The trustee or any interested person in any of the following cases:
(B) Where the trustee has a claim to real or personal property, title to or possession of which is held by another.
Once the petition is filed and the order granted, the attorney has a certified copy of the order recorded in the county where the real estate sits. The recorded order serves as proof of the transfer of title to the settlor's trust.