Guide to Probate Code 850 and Heggstad Petitions
What is an 850 Petition? What is a Heggstad Petition? What is the procedure for filing an 850/Heggstad Petition in California? What is the 850/Heggstad Petition statute of limitations? What is the procedure for objecting to a Probate Code 850 Petition? What options are available if an 850/Heggstad Petition is denied? Learn the answers to all of these questions and more from Keystone’s comprehensive guide to Probate Code 850 and Heggstad Petitions.
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When there is a property dispute surrounding a decedent’s estate or trust, or a guardianship or conservatorship estate, it may be possible to resolve it through the use of a procedure established by California Probate Code 850. Probate Code section 850 provides parties with the ability to resolve competing claims to property in the probate court.
Probate Code 850 Petitions enable parties to obtain court orders transferring property into or out of an estate, trust, conservatorship or guardianship estate when there are disputes surrounding the ownership or possession rights to a property. In the following section, we go over some examples for which Probate Code section 850 might apply.
What is Probate Code 850?
California Probate Code section 850 makes it possible for litigants to seek the transfer of property into or out of an estate, trust, conservatorship or guardianship estate as part of an expedited court proceeding. In some cases, Probate Code 850 Petitions can help litigants avoid formal probate.
What is an 850 Petition?
Because California Probate Code 850 deals with property disputes, it is important to understand what a property dispute entails. Consider the following examples for which Probate Code 850 Petitions might apply:
- At a time when the decedent was incompetent and/or susceptible to undue influence, one child had the decedent sign a deed transferring the family home over to that child, even though the decedent’s will and trust provide for all of the decedent’s assets to be split evenly among the children.
- A business partner of a conservatee embezzled money from the conservatee’s company. The conservator of the estate is seeking to recover the stolen funds as well as damages from the business partner on behalf of the conservatorship estate.
- A decedent had entered into a contract to sell their home to a third party but died prior to transferring the title to the property into the buyer’s name. The third party is seeking to enforce the terms of the contract and have the title to the property transferred into their name.
- A decedent had entered into a contract to purchase a real property but died prior to the title being transferred into their name. The executor is seeking to complete the transfer of property on behalf of the decedent’s estate.
- A decedent created a trust before they died and assigned all of their property to the trust, but they neglected to formally retitle their assets in the name of the trust prior to their death. The trustee is seeking to confirm the trust’s ownership of the assets and avoid a formal probate.
- A decedent had entered into an agreement to donate valuable art pieces belonging to their trust to a charity. The successor trustee is seeking to complete the transfer of property to the charity on the decedent’s behalf.
For all of the aforementioned examples, it may be possible to use what is known as an 850 Petition to resolve the adverse claim to property without a formal probate. A probate lawyer can offer guidance as to whether your matter can be successfully resolved through an 850 Petition.
What is Heggstad Petition?
A Heggstad Petition is a type of 850 Petition that can be used to complete the transfer of property into or out of a trust if the settlor died prior to completing it themselves. It is usually the successor trustee who files a Heggstad Petition; however, if the trustee is refusing to act, interested parties to the trust (i.e., trust beneficiaries and the decedent’s heirs) are also entitled to file a Heggstad Petition in California.
The name of this petition was derived from the landmark case Estate of Heggstad. In this matter, the decedent had titled a real property in the name of his trust. To refinance the property, he transferred the property back into his name, but before he was able to transfer it back into the name of the trust, he died. The decedent’s surviving spouse, who was entitled to a share of the estate, argued that the property should be distributed as part of the estate; however, the decedent’s son, who was the successor trustee of the decedent’s trust, argued that the decedent had clearly intended for the property to be a trust asset despite his having failed to title the property in the trust’s name. The son won the case. If he had not been successful, the property would have had to pass through a formal probate.
Because probate proceedings require court oversight, they can be a costly and cumbersome process. Trusts, on the other hand, avoid probate, which is why many people opt for their assets to be distributed through their trust. With trusts, beneficiaries and heirs generally have more privacy and can receive their trust fund distributions faster.
While trusts have many benefits from an estate planning standpoint, they might end up being useless if the settlor does not take steps to transfer assets into them, which — either due to forgetfulness or oversight — they do all too often. Before Heggstad, if a settlor failed to transfer assets into their trust before dying, the assets would have needed to pass through probate before being distributed to their intended beneficiaries; however, there is now a good chance these assets can be transferred into the trust by means of a California Probate Code 850/Heggstad Petition so long as the decedent clearly established their intent, preferably in writing, to hold the property as a trust asset.
Double Damages, Attorneys’ Fees and Punitive Damages
If a California Probate Code 850 Petition is being used to recover property that had been wrongfully taken (e.g., by means of undue influence or fraud) from or by a decedent’s estate, trust, or conservatorship or guardianship estate, the court can not only issue orders for the misappropriated property to be returned to the party from whom it was taken, but also award the party attorneys’ fees and double damages under Probate Code section 859.
There were two cases that took on the issue of how to calculate double damages under Probate Code section 859. The Fourth District Court of Appeal held in the Conservatorship of Ribal (2019) that double damages amounts to the recovery of the asset plus the value of the asset; however, the Fifth District Court of Appeal in Ashlock v. Carlson (2020) held that double damages amounts to recovery of the asset plus twice the value of the asset. Because of the split in authority, this issue may not be resolved unless the California Supreme Court decides a case relating to this issue.
Disinheritance Under Probate Code Section 259
To discourage elder financial exploitation, Probate Code section 259 — known informally as the “treat ‘em like they’re dead” remedy — provides that a perpetrator of elder abuse (whether physical abuse or financial abuse) who acts in bad faith and acts recklessly, maliciously, oppressively or fraudulently in the commission of the abuse cannot recover anything they obtained through the abuse and shall be deemed to have predeceased the decedent, so long as the abuse has been proven.
For example, say a decedent’s son, who was named as a beneficiary of the decedent’s estate, was found to have defrauded the decedent out of their home prior to the decedent’s passing. If the executor of the decedent’s estate successfully filed an 850 Petition seeking return of the home, double damages against the son, and disinheritance under Probate Code section 259, the son would not be able to inherit any of the home originally left to him as part of the decedent’s estate, or any of the damages recovered as part of the 850 Petition.
When considering whether filing a Probate Code 850 Petition is the right approach for you, remember that the decedent’s intentions are important. For example, is it clear from the provisions of the decedent’s will or trust that they intended to title a real property in their or the trust’s name, respectively? Is it clear from the signed agreement between the decedent and a third party that the decedent had intended to transfer property into or out of their estate or trust? Is there evidence showing a conservatorship estate is holding property to which another party entitled? Is it clear an abuser had misappropriated property that belonged to a minor’s guardianship estate? Is there an enforceable document substantiating the claim to property?
If the evidence and facts surrounding the case support your property claim, then you can proceed to the first step of the 850/Heggstad Petition procedure. We go over the steps below.
1: Gather supporting documentation.
When transfers of property are involved, there is almost always a paper trail. For instance, there may be a will or trust instrument, or some other kind of agreement. If the property at issue is a real property, then there will likely be a deed as well, or, in the case of a real property transaction, a binding purchase and sale agreement. If the asset at issue is a bank or retirement account, there may be documents designating beneficiaries to inherit the assets, or bank statements showing money improperly leaving the decedent’s bank accounts.
2: Take supporting documentation to an experienced probate attorney.
To avoid the 850/Heggstad Petition cost, you may be inclined to look up sample 850 Petitions and Heggstad Petition samples to try and draft the petition yourself; however, by going this route, you would be doing yourself a disservice, as an experienced probate attorney has the knowledge and skills to present your case in the best light possible to the court.
While there is not officially an 850/Heggstad Petition statute of limitations, there may be a statute of limitations that applies to the underlying claim entitling you to relief on your adverse property claim. For example, if a trustee is alleging that a decedent’s trust is entitled to property fraudulently obtained by a third party, then the four-year statute of limitations for fraud would likely apply to the 850 Petition. You will want to work with a lawyer early in the estate administration or trust administration process to avoid any potential 850/Heggstad Petition statute of limitations issues.
After reviewing the facts of your case and the supporting documentation, your probate attorney will be able to determine the best route forward for your case. If they believe your claim is enforceable, they will likely proceed with filing the 850 Petition. If they believe the matter is too complex to be resolved with an 850 Petition, they may suggest alternative remedies.
3: Work with a probate lawyer to draft and file the 850/Heggstad Petition forms California requires.
What are the elements of a Heggstad Petition/850 Petition? Your lawyer will draft an 850 Petition that contains the facts of the claim as well as the names and addresses of the parties who are entitled to receive notice about the petition. Once the petition is prepared, it must be verified by the petitioning party under penalty of perjury. The court will schedule a date for the hearing after the petition has been filed.
4: Attend 850/Heggstad Petition hearing with your lawyer.
Because all interested parties to the claim are entitled 30 days’ notice, the matter will not be heard by the court for at least 30 days. If no objections are filed, it is possible for the entire 850/Heggstad Petition process to only take around two to three months, which is substantially shorter than the time it takes for probate to be completed. However, if an interested party does object to the granting of the 850 Petition, its potential approval could be delayed. We discuss objections to 850 Petitions in a forthcoming section.
5: Appeal or abide by the court’s 850/Heggstad Petition order.
The court will decide either to grant or deny the 850/Heggstad Petition. If the court’s 850/Heggstad Petition order grants the petition to transfer property into or out of a decedent’s estate, trust, or conservatorship or guardianship estate, then the fiduciary in charge of the asset or an interested third party will be authorized to complete the transfer. If the 850/Heggstad Petition is denied, then the litigant who is adversely affected can either file a probate appeal or abide by the decision.
Recording a Lis Pendens
California requires litigants with real estate claims to record a Notice of Pendency of Action, formerly known as a “lis pendens.” It is a written document that is filed with the County Recorder and provides notice of pending litigation that affects the title to, or possession of, real property.
If any party subsequently acquires an interest in a real property with a Notice of Pendency of Action, they will be bound to the judgment entered in the underlying court action, even if they acquired their interest in the property prior to the judgment being entered. While a lis pendens does not actually prevent the sale of real estate, the cloud created on title from a recorded lis pendens does usually prevent the issuance of title insurance, which may preclude a willing buyer or lender from completing the transaction.
Probate attorneys often use Notices of Pendency of Action as tools for securing their clients’ potential interests in an opposing party’s real estate. This is because lis pendens are easy to record but complex to remove.
Notices of Pendency of Action can only be recorded by a party to an action involving a real property claim and only once the claim is pending in the appropriate court. It is a good idea to work with a probate attorney to record the Notice of Pendency of Action, since lis pendens that are not recorded properly can be removed or expunged.
Objections and Trial
An opposing party has a right to object to a California Probate Code 850 Petition. In fact, if an 850 Petition is contested, the matter transforms into active litigation with discovery and trial; the only catch is that certain procedures must be followed by the opposing party.
Opposing parties can either file a written objection prior to the initial hearing date or attend the initial hearing to object orally. If you plan to object to an 850 Petition, it is advisable to file a written objection prior to the hearing date with help from a lawyer to ensure not only that your objection is preserved but also that you do not miss your chance to object in court by being late or absent.
When there are no objections, the probate court is generally entitled to grant the petition, issue orders and/or take other actions. While the probate court can also overrule objections, if there is evidence to support the objection, the court will generally resort to resolving the dispute through a trial.
In sum, if you fail to file a written objection prior to the hearing or arrive on time to the hearing to object orally, it will become much more difficult to overturn the court’s ruling, if it can be overturned at all.