Heggstad for non-California assets part deux

In homage to the great American movie starring Charlie Sheen and Lloyd Bridges among others, Hot Shots Part Deux, I bring you part deux on Heggstad petitions for non-California assets. This is a question I get asked about it a lot.  Since it was almost 6 years ago that I put up a post on this topic I thought I should update.

I consulted with Joseph J. Powell, the Nevada attorney who I originally worked with on this matter, to confirm some details. Here are his words on the matter:

What the situation was was that the trustee for the Trust, a CA trust, had gotten a Heggstad order issued by the CA court in regard to NV property, located in Las Vegas.  The trustee then acted on that order and had the title changed in NV, through the Clark County recorder’s office, to the Trust, again a CA trust.  I represented a creditor of the estate and moved to have the transfer undone and was successful . . . . . initially.  My end goal was to have the NV property subject to an NV estate matter so that it would be easier access by my creditor client by requiring it to go through the NV estate administration.  Ultimately, I was not successful as the NV probate court did, eventually, allow it to get into the trust and bypass probate.   I will explain what occurred.

Based on my objection, our probate court undid the transfer to the Trust based on the CA Heggstad order, thus putting it back into the Decedent’s name as it was held prior to the Decedent’s death.  The ruling was based on the fact that CA had no jurisdiction over NV property to render the order in the first place.  However, negating that transfer to the Trust just lasted a short time.  The trustee then brought the equivalent of his Heggstad petition here in Nevada, under the NRS (Nevada Revised Statutes) statute which is the functional equivalent, and contains nearly verbatim language of that found in CA Probate Code 850.  Over my objection, the NV petition was granted.  The basis for my argument was the existence of the creditor’s claim having already been filed.  My argument, in its most boiled down form, was that the transfer to the Trust, skipping probate, would be fine when there is not a creditor’s claim pending, but shouldn’t be allowed when there is an existing claim filed against the Estate.  In other words, a Heggstad petition should only be granted in NV when there is not a creditor issue which would then not allow the creditor to make a claim to the property through the Estate proceeding.  The argument was that a creditor should not have to try to collect against a trust asset, which was technically not a trust asset at death.  In other words, a probate avoidance should not be allowed in the case of a pending claim against the person’ estate, as obviously a creditor cannot bring a claim against the Decedent’s Trust, straight out of the box, unless there was some contractual right to do so.  In NV, a trust asset can only be touched, absent a contractual claim, if the Estate is otherwise insolvent, and there are some other hoops to jump through as well.  In any event, my argument lost and the equivalent of the Heggstad petition was granted by our court and thus allowed the NV house to get into the trust, thus skipping probate.   We could have appealed, but the client determined that it was not worth the hassle as there were, at the time, other avenues to seek collection.

The Los Angeles county case was In the Matter of the HARRY ROSS AND ANNA ROSS REVOCABLE TRUST DATED JULY 9, 1987, AS RESTATED ON MAY 10, 1993 AND AMENDED AS TO THE SURVIVOR’S TRUST ONLY ON AUGUST 31, 2000, with the case number being P-12-074607-T. The Clark County, Nevada, case number was GP016315.  It should be pointed out that the attorney in the LA County matter referred to 17200(b) which, as many know, has similarities to California PC 850. That will be a blog post for another day!

I think the most important take-away from this is that Nevada has a law similar to Heggstad so if you have a Nevada asset outside of a trust just file in Nevada. Contact Mr. Powell (702-255-4552), or other experienced Nevada counsel, to work with them on your Nevada/California cross-over cases. I should add that Mr. Powell is licensed in both California and Nevada.

Until next time….

-John

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