Heggstad v. Heggstad
20 Cal. Rptr. 2d 433, 16 Cal. App. 4th 943 (1993)
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Rule of Law:
A settlor's written declaration stating that they hold real property as trustee for a revocable living trust is sufficient to create a trust in that property, without requiring a separate deed transferring title to themselves as trustee. Furthermore, a probate court has subject matter jurisdiction to determine the existence and validity of a trust when a trustee petitions for instructions regarding property disposition.
Facts:
- On May 10, 1989, Halvard L. Heggstad executed a will naming his son, Glen P. Heggstad, as executor.
- Concurrently, Halvard L. Heggstad executed a valid revocable living trust, naming himself as the trustee and Glen P. Heggstad as the successor trustee.
- Schedule A, attached to the trust document, listed an item mislabeled as 'Partnership interest in 100 Independence Drive, Menlo Park, California,' although Halvard L. Heggstad actually held an undivided 34.78 percent interest in that property as a tenant in common.
- The 100 Independence Drive property remained titled in Halvard L. Heggstad's name as an unmarried man, and no separate grant deed was executed to reconvey this property to himself as trustee of the revocable living trust.
- Approximately one month after executing the will and trust documents, Halvard L. Heggstad married Nancy Rhodes Heggstad.
- Halvard L. Heggstad died on October 20, 1990.
Procedural Posture:
- Halvard L. Heggstad died on October 20, 1990, and his son, Glen P. Heggstad, was appointed executor of his estate and successor trustee under the Heggstad Family Trust.
- Glen P. Heggstad, as successor trustee, petitioned the probate court (a division of the superior court) for instructions regarding the disposition of the 100 Independence Drive property, claiming it was trust property and not part of the decedent's estate.
- Nancy Rhodes Heggstad (appellant) objected, arguing that the property was not properly transferred to the trust and that the probate court lacked jurisdiction to determine the property's legal status in a petition for instructions.
- The probate court concluded that the trust document, specifically Article 1, was sufficient to create a trust in the subject property.
- Nancy Rhodes Heggstad appealed the probate court's order.
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Issue:
Does a settlor's written declaration that they hold real property as trustee for a revocable living trust sufficiently create a trust in that property without a separate deed of conveyance, and does the probate court have jurisdiction to determine the existence of such a trust in a petition for instructions?
Opinions:
Majority - Phelan, J.
Yes, a settlor's written declaration that they hold real property as trustee for a revocable living trust sufficiently creates a trust in that property without a separate deed of conveyance, and yes, the probate court has jurisdiction to determine the existence of such a trust in a petition for instructions. The court reasoned that to create an express trust, five elements must be present: a competent trustor, trust intent, trust property, trust purpose, and a beneficiary. A settlor can manifest intent to create a trust by either declaring themselves trustee of the property or by transferring the property to another as trustee. California Probate Code section 15200 codifies these two methods. For real property, the declaration must be in writing and signed by the trustee (Prob. Code § 15206). The court cited the Restatement (Second) of Trusts, which explicitly states that if an owner declares themselves trustee of property, a trust may be created without a transfer of title to the property. This principle holds that a declaration of trust does not require a grant deed transfer of real property, as the settlor already possesses legal title. On the jurisdictional issue, the court affirmed that Probate Code sections 17000 and 17200 grant the superior court, sitting in probate, exclusive jurisdiction over internal trust affairs and concurrent jurisdiction to determine the existence of trusts. This allows the probate court to decide the merits of third-party challenges to property inclusion in a trust, promoting judicial economy and recognizing the court’s inherent power to decide all incidental issues necessary for trust administration. The court noted that the same relief could have been obtained through a petition for an order to convey property under section 9860, emphasizing that determining if property belongs to a trust or an estate are two sides of the same issue.
Analysis:
This case significantly clarifies the requirements for establishing a self-declared revocable living trust in California, particularly for real property, by eliminating the perceived necessity of a redundant transfer deed when the settlor also acts as the trustee. It reinforces the principle that the settlor's clear, written intent is paramount. Additionally, the decision strengthens the probate court's role by affirming its broad jurisdictional authority to adjudicate all aspects of disputes concerning trust property, including third-party claims, thereby promoting judicial efficiency and preventing fragmented litigation across different court departments.
