California Heggstad Petitions and Kucker v. Kucker

I recently had the following calendar note in a probate case in Alameda County. We had filed a Heggstad petition, pursuant to California probate code 850, to get two properties into a trust after death. I should clarify our firm had NOTHING to do with the case before death. We pride ourselves on helping our clients properly fund their trusts. However, this woman died without these two properties in the trust. The calendar note from the Alameda county probate court provided:

*For Judicial review: Note that the trust does not specifically identify the real property located in Redwood City . In Kucker v Kucker, it was confirmed that the statute of frauds applied to a trust in real property. As in Kucker, the trust has not specifically identified the property in question. PC 15206 provides that a trust in real property is not valid unless it identifies the real property with some specificity.

I had, of course, heard of Kucker but had not seen a court mention it. I thus looked it up. The entire case is below and is great reading… if you do a lot of Heggstad petitions. It goes through the laws at a much deeper level than most blog posts do. Check it out below. If you want to talk about your Heggstad case contact us. You can always reach us at www.heggstadpetition.com. Or if you are an attorney and want to associate us in to help you with your client’s case we can do that too in some situations. Again, contact us and let’s talk! -John
192 Cal.App.4th 90 (2011)

MEGAN KUCKER et al., as Trustees, etc., Plaintiffs and Appellants,
v.
MEGAN KUCKER, Respondent.

No. B225165.

Court of Appeals of California, Second District, Division Six.

January 26, 2011.

91*91 Ferguson Case Orr Paterson, Robert B. England, Sandra M. Robertson and David Shea for Plaintiffs and Appellants.
92*92 OPINION
YEGAN, J.—

Megan Kucker and Bonnie Alexander are successor trustees of the Mona S. Berkowitz Trust (the Trust). They filed a petition to confirm that shares of stock were an asset of the Trust. (Prob. Code, § 850, subd. (a)(3)(B); see also Estate of Heggstad (1993) 16 Cal.App.4th 943 [20 Cal.Rptr.2d 433].)[1] The shares had been owned by the deceased trustor, Mona S. Berkowitz (Trustor). Appellants appeal from the probate court’s order denying their petition. The probate court erroneously concluded that the Trustor’s general assignment to the Trust of her personal property was ineffective to transfer the shares of stock to the Trust. We reverse.
Background
On June 29, 2009, at the age of 84 years, Trustor signed a declaration creating a revocable inter vivos trust. On the same date, Trustor signed a general property assignment (the General Assignment) stating, “I … hereby assign, transfer and convey to Mona S. Berkowitz, Trustee of the [the Trust], all of my right, title and interest in all property owned by me, both real and personal and wherever located.” Trustor also signed a pour-over will leaving her entire probate estate to the Trust.

On October 29, 2009, Trustor signed an amendment and restatement of the Trust. On the same date, Trustor signed an assignment transferring to the Trust all of her shares of stock in 11 specified corporations and funds. The amendment and restatement designates appellants, Trustor’s daughter and niece, as successor trustees upon the death of Trustor.

Trustor died in November of 2009. In February 2010, appellants filed a petition to confirm that 3,017 shares of stock in Medco Health Solutions, Inc. (Medco), were an asset of the Trust. Medco was not mentioned in the assignment of stock signed by the Trustor on October 29, 2009. Appellants declared that the Medco shares “were not held in the Trust’s brokerage account at the time of the Trustor’s death.” Appellants further declared that the stock certificate for the Medco shares had been lost and that the shares had a market value in excess of $100,000. Appellants contended that, based on the General Assignment, “it was the intent of the Trustor that all stock owned by the Trustor, including the Lost Certificate Shares, be part of the Trust Estate of the Trust.” The record on appeal does not include any opposition to appellants’ petition, and we assume that none was filed.

The probate court conducted a hearing on the petition. The record does not include a reporter’s transcript of the hearing. In its written ruling, the probate 93*93 court stated: “During oral argument …, counsel suggested that Probate Code section 15200 et seq. and 15207 [oral trust in personal property], in particular, provided a basis for granting the petition for order confirming assets in the trust estate. The Court has reviewed these code sections. The Court agrees that an oral trust can be created for personal property. If clear and convincing evidence is presented, the Court may conclude that an oral trust has been created. [¶] However, the Court believes that Probate Code section 15207 must be read in conjunction with Civil Code section 1624(a)(7). In those instances where the settler intends to transfer assets in excess of $100,000, a writing specifically describing the property is required. Accordingly, the petition confirming assets in the trust is denied.”
Standard of Review
“The [probate] court’s construction of the Probate Code is subject to our de novo review. [Citation.]” (Araiza v. Younkin (2010) 188 Cal.App.4th 1120, 1124 [116 Cal.Rptr.3d 315].) Because there is no conflicting extrinsic evidence as to the Trustor’s intent, we independently review the written instruments at issue. (Ike v. Doolittle (1998) 61 Cal.App.4th 51, 73 [70 Cal.Rptr.2d 887].) Since appellants have not provided a reporter’s transcript of the hearing on the petition, “we must treat this as an appeal `on the judgment roll.’ [Citations.] Therefore, … [o]ur review is limited to determining whether any error `appears on the face of the record.’ [Citations.]” (Nielsen v. Gibson(2009) 178 Cal.App.4th 318, 324-325 [100 Cal.Rptr.3d 335].)[2]
Discussion
The probate court’s reliance upon Civil Code section 1624, subdivision (a)(7), is misplaced. This section provides: “(a) The following contracts are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party’s agent: [¶] … [¶] (7) A contract, promise, undertaking, or commitment to loan money or to grant or extend credit, in an amount greater than one hundred thousand dollars ($100,000), not primarily for personal, family, or household purposes, made by a person engaged in the business of lending or arranging for the lending of money or extending credit. For purposes of this section, a contract, promise, undertaking or commitment to loan money secured solely by residential property consisting of one to four dwelling units shall be deemed to be for personal, family, or household purposes.” The probate court’s 94*94 construction of this section is an error that “`appears on the face of the record.’” (Nielson v. Gibson, supra, 178 Cal.App.4th at pp. 324-325.)

(1) “`When construing a statute, we must “ascertain the intent of the Legislature so as to effectuate the purpose of the law.”‘ [Citation.] `In determining such intent, a court must look first to the words of the statute themselves, giving to the language its usual, ordinary import and according significance, if possible, to every word, phrase and sentence in pursuance of the legislative purpose.’ [Citation.]” (State Farm Mutual Automobile Ins. Co. v. Garamendi (2004) 32 Cal.4th 1029, 1043 [12 Cal.Rptr.3d 343, 88 P.3d 71].)

(2) Civil Code section 1624, subdivision (a)(7), cannot be construed as applying to the transfer of shares of stock to a Trust. The plain meaning of the words of the statute manifests a legislative intent to limit the statute’s application to agreements to loan money or extend credit made by persons in the business of loaning money or extending credit.

The probate court’s error in construing Civil Code section 1624, subdivision (a)(7), does not mean that appellants’ requested relief on appeal must be granted. Appellants request that “the determination of the [probate] court … be reversed, and a determination made that the Medco Stock was effectively transferred by the General Assignment to the Trust prior to the death of the Trustor.” The probate court impliedly concluded that, irrespective of Civil Code section 1624, subdivision (a)(7), the General Assignment was ineffective to transfer the Medco stock to the Trust. Otherwise, in its ruling the court would not have made the following reference to an oral trust: “The Court agrees that an oral trust can be created for personal property. If clear and convincing evidence is presented, the Court may conclude that an oral trust has been created.”[3]

(3) The probate court erred by not ruling that the General Assignment was effective to transfer the Medco shares to the Trust. In construing the General Assignment, we must implement the Trustor’s intent. (Ike v. Doolittle, supra, 61 Cal.App.4th at p. 73.) The General Assignment and pour-over will show that the Trustor intended to transfer all of her personal property to the Trust. The Trustor’s omission of the Medco shares in the subsequent assignment of October 29, 2009, was an oversight caused by the misplaced stock 95*95 certificate. Appellants declared that the subsequent assignment provided “for the transfer of shares of stock for which certificates had been located.”

The General Assignment was ineffective to transfer the Trustor’s real property to the Trust. To satisfy the statute of frauds, the General Assignment was required to describe the real property so that it could be identified. (Sterling v. Taylor (2007) 40 Cal.4th 757, 772 [55 Cal.Rptr.3d 116, 152 P.3d 420]; King v. Stanley (1948) 32 Cal.2d 584, 589 [197 P.2d 321], disapproved on other grounds in Patel v. Liebermensch(2008) 45 Cal.4th 344, 351, fn. 4 [86 Cal.Rptr.3d 366, 197 P.3d 177]; Osswald v. Anderson (1996) 49 Cal.App.4th 812, 818 [57 Cal.Rptr.2d 23].) But the issue here concerns the Trustor’s transfer of shares of stock, not real property. The statute of frauds does not apply to such a transfer. (Civ. Code, § 1624.) There is no California authority invalidating a transfer of shares of stock to a trust because a general assignment of personal property did not identify the shares. Nor should there be.

The practice guide, Drafting California Revocable Trusts (Cont.Ed.Bar 4th ed. & Sept. 2009 Supp.; hereafter practice guide), supports our conclusion that it was unnecessary for the General Assignment to identify the Medco stock. The practice guide says that such a general assignment of personal property is a commonly used estate planning tool: “Some practitioners have clients periodically assign all (or substantially all …) assets to the trust so that a Heggstad petition (Prob C § 850(a)(3)) can be used to capture any overlooked items.” (Id., § 21.15, p. 845, citation omitted.) A form provided by the practice guide “for use when the client has assumed full responsibility for funding the trust … can be modified to advise the client to return periodically to execute a general assignment of all or substantially all of their assets to the trust so that aHeggstad petition (Prob C § 850(a)(3)) can be used to capture any later acquired items not titled in the name of the trust.” (Id., § 21.5, p. 837.)

(4) In Estate of Heggstad, supra, 16 Cal.App.4th 943, the settlor stated in writing that real property was transferred to himself as trustee, but he never signed a deed. After the settlor’s death, the appellate court affirmed an order declaring that the real property was an asset of the trust. In concluding “that a transfer of title is not necessary when the settlor declares himself trustee in his own property,” the court relied in part upon an earlier edition of the practice guide. (Id., at p. 950.) The court noted: “While practice guides are not compelling authority, they are persuasive when there is an absence of precedent…. `Textbooks dealing with specialized areas of the law, and works on practice, are persuasive indications of what the prevailing law may be.’ (Witkin, Manual on Appellate Court Opinions (1977) § 69, p. 114.)” (Id., at p. 950, fn. 8.) (5) The Heggstad court also stated that the probate 96*96 court’s jurisdiction over trusts includes the “court’s inherent power to decide all incidental issues necessary to carry out its express powers to supervise the administration of the trust.” (Id., at p. 951.) This power includes the power to add shares of stock to the trust that were omitted because the shares were misplaced.
Disposition
The order denying appellants’ petition to confirm 3,017 shares of Medco stock as an asset of the Trust is reversed. The matter is remanded to the probate court with directions to enter a new order granting the petition. The parties shall bear their own costs on appeal.

Gilbert, P. J., and Coffee, J., concurred.

[1] All statutory references are to the Probate Code unless otherwise stated.

[2] No respondent’s brief has been filed. “[W]e do not treat the failure to file a respondent’s brief as a `default’ (i.e., an admission of error) but examine the record, [appellants'] brief, and any oral argument by appellant[s] to see if [they] support[] any claims of error made by the appellant[s]. [Citations.]” (In re Marriage of Riddle (2005) 125 Cal.App.4th 1075, 1078, fn. 1 [23 Cal.Rptr.3d 273].)

[3] Section 15207 provides for the creation of an oral trust in personal property. “Under section 15207, `[t]he existence and terms of an oral trust of personal property may be established only by clear and convincing evidence.’ (§ 15207, subd. (a).) `The oral declaration of the settlor, standing alone, is not sufficient evidence of the creation of a trust of personal property.’ (§ 15207, subd. (b).) According to the California Law Revision Commission comment of section 15207, subdivision (b), `delivery of personal property to another person accompanied by an oral declaration by the transferor that the transferee holds it in trust for a beneficiary creates a valid oral trust.’ [Citation.]” (Estate of Gardner (2010) 187 Cal.App.4th 543, 552 [114 Cal.Rptr.3d 16].)

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Lack of trust funding and the small probate estate

INTRODUCTION

It seems a day does not go by without speaking to a potential new client regarding their parent’s trust not being properly funded. There are different reasons this happened but the end result is they need to hire an attorney. This blog post focuses on the interplay of the small probate estate and funding a trust post-mortem.

HOW IT HAPPENS

A trust does not get funded for so many reasons. The most common are:

1) Client did trust themselves (or with on-line service or forms) and didn’t get assets into the trust;

2) Client hired a paralegal or inexperienced attorney and they didn’t properly take care of trust funding;

3) An asset was acquired after the trust was established;

4) The asset was an oddball thing that even a good attorney might miss.

IT SEEMS TO OBVIOUS

After death the lack of trust funding always seems so obvious. Of course, you have 20-20 hindsight and you can actually see the asset is NOT IN THE TRUST. However, it’s much harder during life. The most common problem is probably that clients, when they set their trust up, see the asset listed on a schedule of assets and thus assume that means the trust is funded. This is simply not the case. You have to take active steps to “fund” the trust.

WHY SMALL ESTATE

Why does this article focus on small estates?  Quite simply put the vast majority of trust funding omissions can be corrected by a procedure other than a full probate.  The most common choices are:

1) A Heggstad petition (probate code 850);

2) An Affidavit re: real property worth less than $50,000 (probate code 13200);

3) A Succession to real property petition for real property worth less than $150,000 (probate code 13150);

Using one of these three options can clear the vast majority of assets to a trust. NONE of these are full probates.  That’s a totally different thing.

YOUR CASE

If you want to see which options might work for YOUR CASE let us know. We can generally offer a free analysis to make sure your case is done as efficiently and economically as possible.

Getting creative in a Heggstad petition

We have talked before about the basics of a Heggstad petition. You have assets outside of a trust, after death, and want to get them into the trust without a full probate petition.  A Heggstad petition, pursuant to California probate code 850, is an incredible way to achieve this goal.

The key with a Heggstad is showing INTENT!  That is, showing that the decedent really did intend for the assets to be in the trust. This is often established by an asset being listed on an attached schedule of assets, a mention of the asset specifically within the trust, or a separate general transfer document.

However, what else can you look for?  Certainly mentioning the pour over will is a good idea as it shows intent. Another idea I was able to employ recently in a Heggstad petition was looking at the decedent’s written wishes given to the estate planning attorney. The attorney, unfortunately, failed to follow those written wishes. However, luckily the widow has hired me to clean up the mess left behind by the former attorney.

I am liking the chances of success as the decedent wrote his wishes in his own handwriting. It clearly shows written INTENT to get the assets into the trust.

If you want to discuss your post-mortem trust funding situation with a qualified Heggstad attorney call me!  -John

 

Hire experience not off a list

I often clean up other attorneys work after death.  I have one right now that is very typical of what I see.  Couple in their early 40′s find out the husband has terminal cancer so they immediately seek out an estate planning attorney to protect the wife and young child. The husband’s employer has some list of attorneys available for a discounted fee.  Well, you can already see where this is going but read on please.

The attorney does a capable job of putting the documents together. There are certainly things in the trust I would do different but the trust is fine.  However, the attorney didn’t even attempt to get any assets into the trust except for the house.  Again, let me remind you the husband has TERMINAL CANCER.

The husband has now died and this young widow has hired me to get the assets into the trust as she knows I am an expert at Heggstad petitions.  We look for two things before filing a Heggstad: 1) were assets listed on a schedule of assets and 2) was there a general transfer document. In this case the answer is NO to both questions.  The attorney didn’t contact the financial institutions and didn’t even list the assets on the schedule of assets.

My client and I agree a written declaration by this attorney acknolweding the deceased’s intent would be valuable in supporting a Heggstad petition. I prepared the document and we emailed the document to the drafting attorney to sign.

This is not a joke what I type next.  He set up a trust for a man with terminal cancer and didn’t even try to find the trust.  He then has the gall to suggest to the young widow that he will charge her for signing the declaration.  Sadly this is why lawyers have a bad name.

Don’t let your family fall victim to this kind of work. Hire an experienced estate planning attorney!

-John

Assigning note and deed of trust to a trust

I am working on a case right now which reminds one of the importance of fully funding your trust. The decedent was owed money (i.e. a promissory note) but failed to transfer that to their trust. They died.  After death the people stopped making payments on the note. The family wants to foreclose but guess what?  They need to go to probate Court to get that power.  The problem is since the note and deed of trust are not in the trust the surviving family members, the successor trustees, do not have the legal authority to initiate foreclosure.  It’s possible that a Heggstad petition will work and it’s possible a full probate will be required. In any event it’s a great reminder about the need to FUND YOUR TRUST FULLY!

Heggstad for Non-California Assets

I was recently brought in to consult on a Nevada trust litigation case. It was a hotly contested case where one side was attempting to use the California Heggstad law to move NEVADA real estate.  As an expert on the California Heggstad laws I was brought in to advise. In fact, my blog was quoted in Court papers in that case!

Subject to appeal the Nevada Court accepted the California Court order derived from the Heggstad petition.  The Judge said he had to give full faith and credit to the California Court order.

I am not saying Heggstad is the answer to move out of state real estate. The other state’s probate rules might be easier. However, it’s an option to keep in mind for the right case.

Should you need to move real estate, after death, into a trust in California or another state talk to me about a California Heggstad Petition!

-John

3 Keys to a Successful Heggstad Petition

Heggstad petitions are a special petition that require great precision. They are not to try on your own or even without the counsel of a very experienced California probate lawyer.  This is simply not an area to dabble in as an inexperienced attorney has little chance of success.  There are a lot of important elements to include in your petition but here are 3 key elements to increase your chances of success:

1) Asset specifically listed on the schedule of assets and signed by the decedent – This is what the Estate of Heggstad case provided so it’s easiest if your facts align with THE case.

2) Other written intent – The case provides for a writing on the schedule of assets but any other specific writing, showing intent, should also work. The best is if it’s in the trust and not a separate document.

3) Make it easy for the Judge – If everybody with potentially adverse interests consent and there is a pour over will the Judge is more likely to agree to it.

Let’s talk about your case and see if you have what is needed for a successful California Heggstad petition.

-John

California Probate Code 850 Petition

I have personally filed, and successfully completed, more Heggstad petitions than any attorney I know of.  I know the nuances.  I know what Judges like to see. I know what the Heggstad case says. I also know to use California probate code 850 and not California probate code 17200 for a Heggstad petition. Ask your probate attorney which probate code section they would use for their Heggstad petition.  PC 17200 does a lot but it’s not the foundation, or the law, for a Heggstad petition.  In a Heggstad petition you need to establish intent to hold assets in the trust that is in line with the Heggstad case. Once that intent is established California Probate Code 850 is what “moves” the asset into the trust, retroactively, to the date of death. Know the code!  Let’s talk about YOUR Heggstad case!  -John

P.S. Yes, I am happy to associate in with other attorneys to help them complete their Heggstad petition successfully.

 

PROBATE CODE SECTION 850-859

850. (a) The following persons may file a petition requesting that
the court make an order under this part:
(1) A guardian, conservator, or any claimant, in the following
cases:
(A) Where the conservatee is bound by a contract in writing to
convey real property or to transfer personal property, executed by
the conservatee while competent or executed by the conservatee’s
predecessor in interest, and the contract is one that can be
specifically enforced.
(B) Where the minor has succeeded to the interest of a person
bound by a contract in writing to convey real property or to transfer
personal property, and the contract is one that can be specifically
enforced.
(C) Where the guardian or conservator or the minor or conservatee
is in possession of, or holds title to, real or personal property,
and the property or some interest therein is claimed to belong to
another.
(D) Where the minor or conservatee has a claim to real or personal
property title to or possession of which is held by another.
(2) The personal representative or any interested person in any of
the following cases:
(A) Where the decedent while living is bound by a contract in
writing to convey real property or to transfer personal property and
dies before making the conveyance or transfer and the decedent, if
living, could have been compelled to make the conveyance or transfer.
(B) Where the decedent while living binds himself or herself or
his or her personal representative by a contract in writing to convey
real property or to transfer personal property upon or after his or
her death and the contract is one which can be specifically enforced.
(C) Where the decedent died in possession of, or holding title
to, real or personal property, and the property or some interest
therein is claimed to belong to another.
(D) Where the decedent died having a claim to real or personal
property, title to or possession of which is held by another.
(3) The trustee or any interested person in any of the following
cases:
(A) Where the trustee is in possession of, or holds title to, real
or personal property, and the property, or some interest, is claimed
to belong to another.
(B) Where the trustee has a claim to real or personal property,
title to or possession of which is held by another.
(C) Where the property of the trust is claimed to be subject to a
creditor of the settlor of the trust.
(b) The petition shall set forth facts upon which the claim is
based.

 

851. (a) At least 30 days prior to the day of the hearing, the
petitioner shall cause notice of the hearing and a copy of the
petition to be served in the manner provided in Chapter 4 (commencing
with Section 413.10) of Title 5 of Part 2 of the Code of Civil
Procedure on all of the following persons where applicable:
(1) The personal representative, conservator, guardian, or trustee
as appropriate.
(2) Each person claiming an interest in, or having title to or
possession of, the property.
(b) Except for those persons given notice pursuant to subdivision
(a), notice of the hearing, together with a copy of the petition,
shall be given as provided in Section 1220 if the matter concerns a
decedent estate, as provided in Section 1460 if the matter concerns a
conservatorship or guardianship, or as provided in Section 17203 if
the matter concerns a trust to all of the following persons:
(1) Each person listed in Section 1220 along with any heir or
devisee whose interest in the property may be affected by the
petition if the matter concerns a decedent estate.
(2) Each person listed in Section 1460 if the matter concerns a
conservatorship or guardianship.
(3) Each person listed in Section 17203 if the matter concerns a
trust.
(c) The court may not shorten the time for giving the notice of
hearing under this section.
852. An interested person may request time for filing a response to
the petition for discovery proceedings, or for other preparation for
the hearing, and the court shall grant a continuance for a
reasonable time for any of these purposes.

 
853. A person having or claiming title to or an interest in the
property which is the subject of the petition may, at or prior to the
hearing, object to the hearing of the petition if the petition is
filed in a court which is not the proper court under any other
provision of law for the trial of a civil action seeking the same
relief and, if the objection is established, the court shall not
grant the petition.

 

854. If a civil action is pending with respect to the subject
matter of a petition filed pursuant to this chapter and jurisdiction
has been obtained in the court where the civil action is pending
prior to the filing of the petition, upon request of any party to the
civil action, the court shall abate the petition until the
conclusion of the civil action. This section shall not apply if the
court finds that the civil action was filed for the purpose of delay.

 

855. An action brought under this part may include claims, causes
of action, or matters that are normally raised in a civil action to
the extent that the matters are related factually to the subject
matter of a petition filed under this part.

 
856. Except as provided in Sections 853 and 854, if the court is
satisfied that a conveyance, transfer, or other order should be made,
the court shall make an order authorizing and directing the personal
representative or other fiduciary, or the person having title to or
possession of the property, to execute a conveyance or transfer to
the person entitled thereto, or granting other appropriate relief.

 
856.5. The court may not grant a petition under this chapter if the
court determines that the matter should be determined by a civil
action.
857. (a) The order is prima facie evidence of the correctness of
the proceedings and of the authority of the personal representative
or other fiduciary or other person to make the conveyance or
transfer.
(b) After entry of an order that the personal representative,
other fiduciary, or other person execute a conveyance or transfer,
the person entitled thereunder has the right to the possession of the
property, and the right to hold the property, according to the terms
of the order as if the property had been conveyed or transferred in
accordance with the terms of the order.

 

858. If a proceeding has been brought under this part by a
conservator on behalf of a conservatee, or by a guardian on behalf of
a minor, and the conservatee or minor dies during the pendency of
the proceeding, the personal representative of the conservatee or
minor’s estate or other successor in interest may proceed with the
matter and the existing proceeding shall not be dismissed on account
of the death of the conservatee or minor.

 

859. If a court finds that a person has in bad faith wrongfully
taken, concealed, or disposed of property belonging to the estate of
a decedent, conservatee, minor, or trust, or has taken, concealed, or
disposed of the property by the use of undue influence in bad faith
or through the commission of elder or dependent adult financial
abuse, as defined in Section 15610.30 of the Welfare and Institutions
Code, the person shall be liable for twice the value of the property
recovered by an action under this part. The remedy provided in this
section shall be in addition to any other remedies available in law
to a trustee, guardian or conservator, or personal representative or
other successor in interest of a decedent.

 

 

PROBATE CODE  SECTION 17200-17211

17200. (a) Except as provided in Section 15800, a trustee or
beneficiary of a trust may petition the court under this chapter
concerning the internal affairs of the trust or to determine the
existence of the trust.
(b) Proceedings concerning the internal affairs of a trust
include, but are not limited to, proceedings for any of the following
purposes:
(1) Determining questions of construction of a trust instrument.
(2) Determining the existence or nonexistence of any immunity,
power, privilege, duty, or right.
(3) Determining the validity of a trust provision.
(4) Ascertaining beneficiaries and determining to whom property
shall pass or be delivered upon final or partial termination of the
trust, to the extent the determination is not made by the trust
instrument.
(5) Settling the accounts and passing upon the acts of the
trustee, including the exercise of discretionary powers.
(6) Instructing the trustee.
(7) Compelling the trustee to do any of the following:
(A) Provide a copy of the terms of the trust.
(B) Provide information about the trust under Section 16061 if the
trustee has failed to provide the requested information within 60
days after the beneficiary’s reasonable written request, and the
beneficiary has not received the requested information from the
trustee within the six months preceding the request.
(C) Account to the beneficiary, subject to the provisions of
Section 16064, if the trustee has failed to submit a requested
account within 60 days after written request of the beneficiary and
no account has been made within six months preceding the request.
(8) Granting powers to the trustee.
(9) Fixing or allowing payment of the trustee’s compensation or
reviewing the reasonableness of the trustee’s compensation.
(10) Appointing or removing a trustee.
(11) Accepting the resignation of a trustee.
(12) Compelling redress of a breach of the trust by any available
remedy.
(13) Approving or directing the modification or termination of the
trust.
(14) Approving or directing the combination or division of trusts.
(15) Amending or conforming the trust instrument in the manner
required to qualify a decedent’s estate for the charitable estate tax
deduction under federal law, including the addition of mandatory
governing instrument requirements for a charitable remainder trust as
required by final regulations and rulings of the United States
Internal Revenue Service.
(16) Authorizing or directing transfer of a trust or trust
property to or from another jurisdiction.
(17) Directing transfer of a testamentary trust subject to
continuing court jurisdiction from one county to another.
(18) Approving removal of a testamentary trust from continuing
court jurisdiction.
(19) Reforming or excusing compliance with the governing
instrument of an organization pursuant to Section 16105.
(20) Determining the liability of the trust for any debts of a
deceased settlor. However, nothing in this paragraph shall provide
standing to bring an action concerning the internal affairs of the
trust to a person whose only claim to the assets of the decedent is
as a creditor.
(21) Determining petitions filed pursuant to Section 15687 and
reviewing the reasonableness of compensation for legal services
authorized under that section. In determining the reasonableness of
compensation under this paragraph, the court may consider, together
with all other relevant circumstances, whether prior approval was
obtained pursuant to Section 15687.
(22) If a member of the State Bar of California has transferred
the economic interest of his or her practice to a trustee and if the
member is a deceased member under Section 9764, a petition may be
brought to appoint a practice administrator. The procedures,
including, but not limited to, notice requirements, that apply to the
appointment of a practice administrator for a deceased member shall
apply to the petition brought under this section.
(23) If a member of the State Bar of California has transferred
the economic interest of his or her practice to a trustee and if the
member is a disabled member under Section 2468, a petition may be
brought to appoint a practice administrator. The procedures,
including, but not limited to, notice requirements, that apply to the
appointment of a practice administrator for a disabled member shall
apply to the petition brought under this section.
(c) The court may, on its own motion, set and give notice of an
order to show cause why a trustee who is a professional fiduciary,
and who is required to be licensed under Chapter 6 (commencing with
Section 6500) of Division 3 of the Business and Professions Code,
should not be removed for failing to hold a valid, unexpired,
unsuspended license.
17200.1. All proceedings concerning the transfer of property of the
trust shall be conducted pursuant to the provisions of Part 19
(commencing with Section 850) of Division 2.

 

17201. A proceeding under this chapter is commenced by filing a
petition stating facts showing that the petition is authorized under
this chapter. The petition shall also state the grounds of the
petition and the names and addresses of each person entitled to
notice of the petition.

 

17202. The court may dismiss a petition if it appears that the
proceeding is not reasonably necessary for the protection of the
interests of the trustee or beneficiary.

 

17203. (a) At least 30 days before the time set for the hearing on
the petition, the petitioner shall cause notice of hearing to be
mailed to all of the following persons:
(1) All trustees.
(2) All beneficiaries, subject to Chapter 2 (commencing with
Section 15800) of Part 3.
(3) The Attorney General, if the petition relates to a charitable
trust subject to the jurisdiction of the Attorney General.
(b) At least 30 days before the time set for hearing on the
petition, the petitioner shall cause notice of the hearing and a copy
of the petition to be served in the manner provided in Chapter 4
(commencing with Section 413.10) of Title 5 of Part 2 of the Code of
Civil Procedure on any person, other than a trustee or beneficiary,
whose right, title, or interest would be affected by the petition and
who does not receive notice pursuant to subdivision (a). The court
may not shorten the time for giving notice under this subdivision.
(c) If a person to whom notice otherwise would be given has been
deceased for at least 40 days, and no personal representative has
been appointed for the estate of that person, and the deceased person’
s right, title, or interest has not passed to any other person
pursuant to Division 8 (commencing with Section 13000) or otherwise,
notice may instead be given to the following persons:
(1) Each heir and devisee of the decedent, and all persons named
as executors of the will of the decedent, so far as known to the
petitioner.
(2) Each person serving as guardian or conservator of the decedent
at the time of the decedent’s death, so far as known to the
petitioner.

 

17204. (a) If proceedings involving a trust are pending, a
beneficiary of the trust may, in person or by attorney, file with the
court clerk where the proceedings are pending a written request
stating that the beneficiary desires special notice of the filing of
petitions in the proceeding relating to any or all of the purposes
described in Section 17200 and giving an address for receiving notice
by mail. A copy of the request shall be personally delivered or
mailed to the trustee or the trustee’s attorney. If personally
delivered, the request is effective when it is delivered. If mailed,
the request is effective when it is received. When the original of
the request is filed with the court clerk, it shall be accompanied by
a written admission or proof of service. A request for special
notice may be modified or withdrawn in the same manner as provided
for the making of the initial request.
(b) (1) An interested person may request special notice in the
same manner as a beneficiary under subdivision (a), for the purpose
set forth in paragraph (9) of subdivision (b) of Section 17200. The
request for special notice shall be accompanied by a verified
statement of the person’s interest.
(2) For purposes set forth in paragraphs (2), (4) to (6),
inclusive, (8), (12), (16), (20), and (21) of subdivision (b) of
Section 17200, an interested person may petition the court for an
order for special notice of proceedings involving a trust. The
petition shall include a verified statement of the creditor’s
interest and may be served on the trustee or the trustee’s attorney
by personal delivery or in the manner required by Section 1215. The
petition may be made by ex parte application.
(3) For purposes of this subdivision, an “interested person” means
only a creditor of a trust or, if the trust has become irrevocable
upon the death of a trustor, a creditor of the trustor.
(4) This section does not confer standing on an interested person
if standing does not otherwise exist.
(c) Except as provided in subdivision (d), after serving and
filing a request and proof of service pursuant to subdivision (a) or
paragraph (1) of subdivision (b), the beneficiary or the interested
person is entitled to notice pursuant to Section 17203. If the
petition of an interested person filed pursuant to paragraph (2) of
subdivision (b) is granted by the court, the interested person is
entitled to notice pursuant to Section 17203.
(d) A request for special notice made by a beneficiary whose right
to notice is restricted by Section 15802 is not effective.

 
17205. If a trustee or beneficiary has served and filed either a
notice of appearance, in person or by counsel, directed to the
petitioner or the petitioner’s counsel in connection with a
particular petition and proceeding or a written request for a copy of
the petition, and has given an address to which notice or a copy of
the petition may be mailed or delivered, the petitioner shall cause a
copy of the petition to be mailed to that person within five days
after service of the notice of appearance or receipt of the request.

 

17206. The court in its discretion may make any orders and take any
other action necessary or proper to dispose of the matters presented
by the petition, including appointment of a temporary trustee to
administer the trust in whole or in part.

 

17209. The administration of trusts is intended to proceed
expeditiously and free of judicial intervention, subject to the
jurisdiction of the court.
17210. In a case involving a charitable trust subject to the
jurisdiction of the Attorney General, the Attorney General may
petition under this chapter.
17211. (a) If a beneficiary contests the trustee’s account and the
court determines that the contest was without reasonable cause and in
bad faith, the court may award against the contestant the
compensation and costs of the trustee and other expenses and costs of
litigation, including attorney’s fees, incurred to defend the
account. The amount awarded shall be a charge against any interest of
the beneficiary in the trust. The contestant shall be personally
liable for any amount that remains unsatisfied.
(b) If a beneficiary contests the trustee’s account and the court
determines that the trustee’s opposition to the contest was without
reasonable cause and in bad faith, the court may award the contestant
the costs of the contestant and other expenses and costs of
litigation, including attorney’s fees, incurred to contest the
account. The amount awarded shall be a charge against the
compensation or other interest of the trustee in the trust. The
trustee shall be personally liable and on the bond, if any, for any
amount that remains unsatisfied.

Heggstad Petitions Advanced Studies

You hopefully have read my last two posts about Heggstad petitions. Though brief I think they provide a nice overview of what a Heggstad petition is. I have many other blog posts on the topic though. Just check the box on the right and find the other ones!

Today we are talking about complexities with Heggstad petitions. Or what I am calling today the advanced course of study.  A graduate level program if you will!

Let’s say your case does not have any of the basics we look for in a Heggstad petition. There is no schedule of assets or the asset is not listed there. There is no general transfer. Then what?  I have performed many dozen Heggstad petitions over the years.  Some more complex than others. I remember one that was approved where I told the client it was less than a 50% chance of success… but I guess the Judge woke up on the right side of the bed that day!? The fact is if your attorney drafts the petition right it can paint the picture clearly for the Judge to show them that nobody is harmed, that attorney fees are reduced and that the procedure will be much quicker than a full probate.  This saves the family money and alleviates the busy court docket. It’s a true win-win situation!

So what can you look for to show the intent to fund the trust with the asset in question? The best evidence is something in WRITING. It can be anything but the written word is much better than the oral word in Court!  Maybe mom sent you a letter, in her handwriting, that says, “sonny, all of my assets are in  my trust.”  That could be good evidence.

On the other hand maybe we can show why the asset was taken out of the trust.  The most common situation is for a re-finance of the home mortgage. A letter from the mortgage company saying that they required it be removed from the trust to complete the re-fi is usually good evidence in a Heggstad situation; though I did have one recently like that which was denied.

What else? Let your mind wander and think, think, think!  Maybe dad contacted the stock broker about putting the assets in the trust?  Maybe dad had an appointment at the bank but was unable to make it?  Maybe dad signed letters with the drafting attorney which the drafting attorney mailed out but the banks ignored?  There are so many possibilities.  The key is thinking and doing some research. Oh ya, and hiring a really experienced attorney!

Let’s talk about YOUR Heggstad case!  Contact me with questions.  -John

Heggstad Petitions 201

As stated in my last post a Heggstad petition is simply a petition to show the decedent’s intent for their assets to be in a trust.  Or, as some say it, to be held in trust.  The Heggstad case established the principle that an asset listed on the schedule of assets, attached to a trust, is a showing of that intent.  What else?

How about a mention in the trust? That usually works.  For example, “I give my house, located at 1234 Main Street, to my niece.”  Well, if you mention the house in the trust you clearly intended for it to be in the trust.

How about the signing of a deed that was never recorded? Likewise, intent is clear.

What about some external writing that specifically mentions the asset is in a trust?  Yes, I think that’s good but it starts to become a tougher case.

What about a generic written document, like a “general transfer” that says all future assets acquired should be in the trust?  That works for personal property in most courts. However, it will only work with real property in some courts.

Lastly, what about a property that was in trust and then removed for any reason?  We are on the slippery slope now.  We will answer this one in our next post!

Contact me with your Heggstad questions and how we can help you avoid a full probate by getting assets into a trust after death.  -John