What Happens When Property is Not Titled in Your Trust?

by | Mar 17, 2023 | Estate Planning | 0 comments

The safeguards a trust provides do not apply to property not named in one. There are certain exceptions, but in most circumstances, the asset must go through probate. Continue reading to learn more about what happens to available property in California after your death.

What Does It Mean When Property Has a Trust Title?

A trust must be funded once it is established before use. The assets aren’t retained in the faith unless you do this, even if you expressly specify them when you create the trust. The deed must be modified to title real estate, such as a house, in the trust.

You can transfer the deed to real estate you own into a living trust if you’re setting one up during your lifetime. As a result, the property’s ownership rights are essentially divided.

The trustee is officially the one who has the legal title and ownership of the property. The beneficiary is the owner of the equitable rights to the title or the rights to the benefits of the property.
When you are still alive, you can designate yourself as the beneficiary of a living trust.

he equitable rights to the assets held in the trust pass to your succeeding beneficiaries at death. The advantages of the assets in the trust can then be transferred to those succeeding beneficiaries without any probate procedure. They are only transferred following the trust’s regulations.

These benefits—smooth transfer of benefits and avoiding probate—cannot be realized if the relevant property is not named in the trust.

How Would a Heggstad Petition Be Useful?

Nonetheless, California law acknowledges that sometimes, after a person’s passing, an asset properly intended for a trust is not included in the trust’s title. This might result from a mistake; perhaps the property is mentioned explicitly in the trust paperwork, but the transfer of ownership was overlooked. Another possibility is if the trust’s original creator—the individual who set up the trust—dies before the legal formalities to transfer the title are finished.

You can submit a Heggstad Petition if a property is excluded from a trust for whatever reason, even though it is obvious that it should have been included. During a trust dispute or probate, this petition may be submitted. The petition’s purpose is to show the court that, even though the property is not named in the trust, the asset is included on the trust’s Schedule of Assets and was unquestionably intended to be a component of the trust.

If a Heggstad Petition is successful, the title may be given to the trust. This indicates that the property is transferred as the trust intended instead of following regular probate procedures.

What Property Passes on Death?

You might not always have to worry about whether the assets in your trust are titled correctly. Assets that transfer immediately upon death to the beneficiary or a joint owner do not go through the probate process.

Checking and savings accounts are typical instances of transferable assets upon death. With most banks, you may complete the necessary paperwork to name a beneficiary for such assets. The money in the account automatically transfers to the beneficiary upon your death if you are the only account holder.

There are similarities between certain retirement accounts and life insurance plans. California transfer-on-death deeds can make it possible for you to automatically transfer ownership of a house or other real estate to a beneficiary when you pass away.

Be aware that when assets are owned jointly, one person can automatically get the total value of the assets upon the death of the other owner. For instance, if a husband and wife have a checking account and the husband dies, the woman will likely become the exclusive owner of the money without the need for probate. Nonetheless, reading and comprehending the tiny print on any account is crucial to know what can happen to it after your passing.

Why Planning is Crucial for Estate Management

Your assets are divided following California law if you die away without a will, trust, or other estate planning instruments in place. Transfer-on-death accounts are somewhat reliable, but they won’t guarantee that all of your assets will avoid probate or that your property will be distributed to your heirs according to your wishes.

By finishing an estate plan, you may be confident that your preferences are outlined and safeguarded by legal paperwork and procedures. A knowledgeable estate planning attorney can assist you in understanding your alternatives and the best estate planning strategies to safeguard your future interests, assets, and beneficiaries.

There is never a bad time to begin making plans for your legacy. Getting started as soon as possible lets you think about your intentions and speak with a barrister. It also helps to avoid problems that might arise from hasty estate preparation, such as placing the wrong properties’ titles in your trust.