Unpublished Appellate Opinions

A hallmark of our legal system is the establishment of precedent, or case holding, from appellate courts that bind future cases. That is, the prior case can be cited in a subsequent case to argue for a similar outcome, provided the facts are analogous. For example, probably the most well-known probate case of recent years is Estate of Heggstad (1993) 16 CA4th 943, 950. This decision was rendered by the First District of the California Court of Appeal and stemmed from a case in San Mateo County Superior Court. Heggstad established the holding that a formal transfer of real estate into a trust, i.e. through a deed, was not required for the trust to control the real estate if it was identified on the trust's schedule of assets. This holding has probably been cited thousands of times in probate courts throughout California involving unfunded trusts. 

Still, many appellate opinions rendered by the California Court of Appeal are not published. In effect, these cases are non-binding on subsequent cases. For instance, if Heggstad was an unpublished opinion, it would be improper to cite it.

The beginning of the unpublished appellate opinion will state something like the following "California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.115." Hence the determination of whether an appellate opinion can serve as precedent or not is quite clear.

The logical inference is that an attorney should not cite to an unpublished opinion to support a legal argument. 

A recent appellate opinion, unpublished ironically, discussed how an attorney cited to an unpublished opinion initially in a demand letter and then in a petition to compel a trust accounting. The respondent naturally objected to the petition's reliance on an unpublished opinion, inter alia, and sought sanctions against the petitioner for violating the California Rules of Court. Conversely, petitioner's attorney declared that he was unaware of the rule governing citation to an unpublished opinion and regretted any confusion or inconvenience over it. Still, the trial court awarded the respondent "$4,000 in sanctions under California Rules of Court, rules 2.30 and 8.1115, for Rudolph's reliance on and citation to the unpublished decision."

Koppl v. Zimmerman, San Francisco County Superior Court, Case  PTR15298735

Trust Administration - Principal Place of Administration

Santa Clara County Superior Court

When a trustee provides notice of a trust's existence to the beneficiaries, it must include where "the address of the physical location where the principal place of administration of the trust is located, pursuant to Section 17002." Prob C § 16061.7(g)(3). "The principal place of administration of the trust is the usual place where the day-to-day activity of the trust is carried on by the trustee or its representative who is primarily responsible for the administration of the trust." Prob C § 17002(a). While seemingly an irrelevant clause, the place of administration can be salient. Although, it should be mentioned why an address in California is even needed to be included in the first place. 

When a trustee designates a principal place of administration, this provides jurisdiction to the applicable county superior court in case judicial relief is needed. For example, if a trustee designates an address in Campbell, CA as the principal place of administration, then Santa Clara County Superior Court would be the appropriate venue for judicial relief. Each California county (there are 58 of them) has a county superior court located in it. Thus any address in CA will have a local county superior court. Just trust me on this.

From a legal perspective, county superior courts are not all the same. One county superior court may view probate matters differently than other county superior courts. For instance, Santa Clara County Superior Court is very receptive to Prob C § 850(a)(3)(B) petitions (commonly known as Heggstad petitions). In particular, Santa Clara County Superior Court allows for these petitions to be heard ex parte (which essentially means there is a minimal waiting period for the case to be heard by the judge) and does not hyper-scrutinize the evidence needed to have the petition be granted. The difference between having a Heggstad petition be granted or not is often enormously consequential. If granted, it typically avoids the necessity of probate for the petitioner. 

Conversely, other counties take a much more stringent approach in hearing Heggstad petitions, e.g. they require a noticed hearing (which means the case will be heard in 30-60 days) and certain evidence is needed to have the petition be granted.

In light of the foregoing, I designate my office as the principal place of administration for the client to ensure that they have access to Santa Clara County Superior Court, even if the client lives outside Santa Clara County (which has happened a few times).

Transferring Property into a Trust

When a person transfers real property, it is typically required that the person's appropriate title be listed on the deed. For example, if John Smith owned 123 Green Street as trustee of their trust, the deed would show that designation. Failure to denote John Smith's designation on the deed would normally invalidate the transfer. However, a recent appellate case surprisingly did not follow that line of thinking.

Carne v. Washington, Fourth District Court of Appeal, Case # D067756

In 1985, Mr. Liebler executed a revocable trust and funded it through a recorded deed, the Via Regla property. In 2009, Mr. Liebler executed an irrevocable trust. It stated, "I transfer to my Trustee the property listed in Schedule A, attached to this agreement." The Via Regla property was listed on Schedule A. However, Mr. Liebler never executed a deed transferring title for the Via Regla property to the 2009 Trust.

On October 3, 2012, Mr. Liebler passed away.

A dispute then arose regarding ownership of the Via Regla property, i.e. was its disposition controlled by the 1985 Trust or the 2009 Trust? Since the beneficiaries for each trust differed, litigation ensued.

A beneficiary of the 1985 Trust argued that no valid conveyance had occurred because Mr. Liebler never transferred the property out of the 1985 Trust. Mr. Liebler transferred the property to his 1985 Trust in that same year and title remained in the 1985 Trust until his death in 2012. Therefore, the 1985 Trust should control according to the 1985 Trust beneficiary.

Conversely, the beneficiary of the 2009 Trust argued that Mr. Liebler "only failed to execute a deed of transfer through ignorance, oversight or negligence." Thus, the 2009 Trust should control according to the 2009 Trust beneficiary.

The trial court agreed with the 1985 Trust beneficiary, finding that a unilateral declaration regarding the Via Regla property was insufficient to transfer title to the 2009 Trust. A deed transferring title from the 1985 Trust to the 2009 Trust was needed.    

On appeal, the appellate court reversed finding that Galdjie v Darwish (2003) 113 CA4th 1331 permits a conveyance involving a revocable trust even if the individual did not state their title, i.e. trustee, on the document provided the individual has the power to transfer real property. Since the 1985 Trust was revocable and Mr. Liebler had the power to transfer real property, his declaration in the 2009 Trust was sufficient to convey title of the Via Regla property to his 2009 Trust.

Of note, the opinion made multiple references to Estate of Heggstad (1993) 16 Cal.App.4th 943, albeit to note that this published decision was inapposite to Heggstad.

From my perspective, it seems as if the appellate court wanted to elevate substance over form. Mr. Liebler's form in handling the transfer of the Via Regla property was poor. Any competent estate planning attorney would've insisted that Mr. Liebler execute a deed transferring title to the 2009 Trust from the 1985 Trust. Still, it is rather easy to see what Mr. Liebler wanted to accomplish, i.e. title to the Via Regla property be vested in the 2009 Trust. The proof being that Mr. Liebler clearly expressed in the 2009 Trust that he wanted the Via Regla property to be part of the 2009 Trust (see Schedule A).          

Ukkestad v. RBS Asset Finance, Inc. - Heggstad Petition

A Heggstad petition is a commonly filed probate petition in California. The petition is filed under Probate Code § 850. The purpose of the Heggstad petition is to obtain a court order confirming that a particular piece of property, typically real estate, is part of the trust estate. 

The common reason to file a Heggstad petition is because the settlor failed to formally transfer the property into the trust. For example, in the case of real estate, the settlor failed to execute a deed which transferred their interest in the property to their trust. Recently, a California Court of Appeal decision clarified the specificity needed in terms of real estate when filing a Heggstad petition.

Ukkestad v. RBS Asset Finance, Inc., __ Cal.App.4th __ (2015) 

Just prior to his death in 2012, Larry Gene Mabee executed a restatement of his trust. However, Mr. Mabee unfortunately did not execute trust transfer deeds for two parcels of real estate which he owned in his individual name. Thus when Mr. Mabee passed away, title to the two parcels was not in the trust's name. One of the successor co-trustees, Daniel Ukkestad, petitioned the probate court in San Diego County to have the two parcels be confirmed as trust assets. The trial court denied the petition and Mr. Ukkestad appealed.

According to the opinion, a key fact in the case was that "the Trust Instrument does not describe the Two Parcels by reference to any specific identifying information unique to those properties, such as the address or legal description of the Two Parcels." Conversely in the Estate of Heggstad (1993) 16 Cal.App.4th, the trust there did describe the property with some particularity. The trust's schedule of assets referred to the property in question as “Partnership interest in 100 Independence Drive, Menlo Park, California.” Id. at 946. Still, the Court of Appeal opined that a sufficient description had been made by Mr. Mabee given that the trust stated: 

"The Grantor [i.e., Mabee], by the execution of this instrument, hereby assigns, grants and conveys to the Trustees of this instrument all of the Grantor's right, title and interest in and to all of his real and personal property, including all Tangible Personal Property, stocks, bonds, cash, mutual funds and promissory notes, all amounts on deposit from time to time at any bank, savings and loan association or investment institution, real property, leases on real property, interests in business entities and all other property owned by the Grantor, wherever situated. . . . The Grantor intends this assignment to be effective as of the date of this instrument even though other documents may be necessary to perfect title to such property in the name of the Trustees."

Therefore, the Court of Appeal reversed the trial court's ruling as it stated "that because the Trust Instrument states that all of Mabee's "right, title and interest" to "all of his real . . . property" is included in the Trust's assets, and it is possible by resorting to extrinsic evidence to determine that Mabee held title to the Two Parcels, the statute of frauds creates no bar to Ukkestad's petition for an order confirming that the Two Parcels are part of the Trust's assets." 

Heggstad Petition

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.

Heggstad Petition - Is an Attorney Required?

A very common trust administration procedure is a Heggstad petition. See Probate Code § 850. Many unrepresented people who write a trust often forget to transfer the home they own to the trust. When the person passes away and the trustee seeks to sell the home, they encounter the fact that the home is still in the settlor's name and not in the trust's name. Herein the Heggstad petition comes into play.

A Heggstad petition seeks to obtain a court-order that finds that the home is a trust asset. The best piece of evidence to include in a Heggstad petition is a declaration of trust stating that the home is a trust asset. This is customarily found at the end of the trust document, i.e. Schedule A or Exhibit A. As mentioned, if the petition is granted, the home becomes part of the trust and the trustee may dispense of the property as the trust dictates. If the petition is not granted, the home will likely have to be probated which is a costly and lengthy legal process in California.

A person is free to act as his own lawyer. Famous court cases have involved litigants who acted as their attorney, e.g. Gideon v. Wainwright, 372 U.S. 335 (1963) involved an indigent prisoner successfully appealing his criminal conviction to the United States Supreme Court.  Although there is the old adage that goes "a self-represented attorney has a fool for a client."

However, a person is not free to act as a lawyer for somebody else. A California court held that a trustee, who was not an attorney, could not represent the trust in regards to a lawsuit involving the sale of a mobile home to the trust. Ziegler v. Nickel (1998) 64 CA4th 545. The court found that the trustee would be representing the interests of other parties, i.e. the beneficiaries.  Since representing others constituted the practice of law, he was required to have a law license. Bus & P C § 6125. Whereas the trustee did not have a law license, the lawsuit was dismissed.

In regards to a Heggstad petition, since the trustee would be representing the interests of others, rather than themselves, arguably they are required to have a law license to file the petition.

Lawyer Guarantees - A Myth

Unicorns are not real despite whatever you see, hear or read

When I have been retained by a client, a common question I receive is whether I can guarantee a result or particular outcome. The short answer is no, I cannot guarantee a result. Cal Rules of Prof Cond 1-400.

Many clients are dismayed to hear that attorneys cannot guarantee results. Their rationale is that why pay an attorney an appreciable sum of money yet receive no certainty that the attorney will achieve the desired result. In today's society results matter and that notion affects the mindset of clients whether they are buying a home, selling a car or retaining an attorney. Clients want the legal system to be linear whereby if they follow the perceived right steps the desired result will come. Unfortunately the legal system does not work that way.

One common example in estate planning of where clients would like for the legal system to be linear is in regards to a Heggstad petition. 

A Heggsad petition is where the trustee seeks a court-order to have a home be transferred into a trust because the deceased settlor (the person who wrote the trust) failed to appropriately transfer it, i.e. through a deed, when the settlor was still living. 

What typically occurs is that the successor trustee is told that they are now in charge of the trust. The trustee then begins to look for trust assets to distribute. The trustee will see that title, i.e. the deed, to the settlor's home is listed in the decedent's name. In order to sell the home, a title company will customarily insist that title be held in the name of the trust in order for the successor trustee to sell it. Thus, instead of title being held by John Doe, the title company would want title to be held as John Doe, trustee of the Doe 2012 Revocable Trust. 

The solution to this problem is for the trustee to file a petition under Prob C § 850(a)(3) in hopes that a judge will order that the home is in fact a trust asset. The best evidence to support the petition is the listing of the home on a schedule of trust assets. The schedule of assets is almost always attached as an appendix to the trust. The term "Heggstad petition" is the common method to describe a Prob C § 850(a)(3) petition. 

So over the years, various people have come to me with a Heggstad issue. Their deceased parent wrote a trust but never formally transferred the home into the trust. They then tell me that the schedule of assets lists the home. I tell them that this is a solid evidence of the parent's intent to hold the home in trust. However, I make it explicitly clear that a judge is not obligated to grant a Heggstad petition despite the evidence at hand. In other words, I cannot, much like any other ethical California attorney, guarantee that the Heggstad petition will be successful. Naturally this disappoints clients who sometimes make the reflexive response that a good attorney should be able to guarantee results. Well that is not the case suffice to say.

Granted a lawyer will zealously advocate for a client, but they should be aware that guaranteed results do not exist in law. If they have this knowledge before meeting with an attorney, this will foster a better relationship because the client is already aware of the lawyer's limitations.   

Online Legal Documentation Services

Using an online site is an automated process, just like bottling beer

People who are cost-conscious or short on time, often resort to self-directed websites to draft estate planning documents. The most popular website where people can create legal documents is probably Legalzoom.  

My main critique of using websites to create documents is that the client is given no legal advice when completing the process. These websites have explicit disclaimers stating that the website is offering no legal advice whatsoever. Hence, the client is left with figuring out the legalities themselves. 

In terms of estate planning, figuring out the legalities yourself is not the ideal circumstance.

One of the principal reasons why a person with a home writes a trust is to avoid probate. Probate is quite expensive and lengthy so most people try to avert it. The key step is to transfer the settlor's home to the trust. Herein lies the problem of using an online document-drafting site, it cannot personally advise you to transfer the home into the trust nor can it actually effect transferring the home into the trust, i.e. a trust transfer deed. Both of these would constitute rendering legal advice, which it is prohibited from doing. Ultimately, the client has a trust but not funded with the home. When the client passes away, the home will need to be transferred through probate or via a Heggstad petition if certain facts are present. The upshot is that the client's goal of having a fluid transfer of assets from themselves to their beneficiaries has not been achieved. In terms of real-world application, the following example has occurred to a couple of client I have had over the years.

My non-attorney friends occasionally ask me if I am threatened by Legalzoom and other online document drafting sites, that is it is a competitor of mine. I tell them that these sites are actually beneficial to attorneys, albeit in a perverse way. Usually clients that use these sites botch the estate planning process because they are not given competent legal advice. When they come to me, I have to rectify the shortcomings so that the person's original intentions are met. Whereas, if they had just come to me in the first place, they start anew so there is less work involved that dictates a lower fee.

On a side note, Legalzoom does recognize my work. An article I wrote about modifying irrevocable trusts is cited in a Legalzoom article on the topic. While I appreciate the recognition, I am not about to give a ringing endorsement of Legalzoom because it mentioned an article I wrote.

California Estate Tax and other Topics

The following are the most common search terms for 2012 that have yielded results for my blog. I thought I would write about this because readers might be curious as to what other people commonly research. The following terms are in order of most frequency.

1. California Estate Tax

This search term strikes me as odd because there is no California estate tax. Furthermore, California has not had an estate tax since 2004. In other words, people are looking for something that does not exist, e.g. Bigfoot, a unicorn, etc.

Unfortunately the amount of legal misinformation on the Internet is expansive. It should not come as a surprise then that people cannot be sure about what they read. Hence, they do some Internet research to see what is true and what is not.

2. Heggstad Petition

This might be the most common probate petition. 

Essentially, a Heggstad petition is where a successor trustee of a trust seeks a court order to transfer property, commonly a home, into the trust because the settlor, the person who originally wrote the trust, never formally did so when they were alive.

3. Small Estate Affidavit California

If a person's estate is small enough, less than $150,000 gross in 2012, a person may collect such assets through the use of an affidavit rather than formal probate.

The valuation amount was increased to $150,000 from $100,000 starting January 1, 2012.

A common erroneous perception of many clients I have spoken to is that real property may be transferred this way. Real property transfers require an abridged probate procedure.

4. California Estate Tax 2012

See # 1

5. California Inheritance Tax 2012

The term used for the at-death tax imposed by the government is called the "estate tax." The "inheritance tax" is presumably a more informal method of saying it. Of note, opponents of the estate tax like to use the term "death tax" when describing it. All three terms: (1) estate tax, (2) inheritance tax and (3) death tax have the same meaning.

6. California Small Estate Affidavit

This proves that not every mind thinks alike. Some Internet users like to lead with California while others like to trail with California.

7. California Inheritance Tax

See # 5

8. CUTMA

This is the acronym for "California Uniform Transfers to Minors Act." 

A CUTMA is a hybrid between a trust and a guardianship where a custodian has control over a minor's assets to utilize for the minor's benefit until they reach a certain, at most 25 in California.

9. Special Needs Trust California

A SNT is an irrevocable trust designed to maintain government resource eligibility for a disabled individual while simultaneously allowing the trustee access to trust funds to benefit the beneficiary, i.e. the disabled individual, for specific purposes.

This is a technical type of trust that requires much more planning and administration than a regular living trust.   

10. Inheritance Tax California

Apparently most people use the term "inheritance tax" when they think of the estate tax.