Transfer your home to a Revocable Living Trust (RLT) for several reasons. First, doing so will prevent probate of your home when you die. Another reason is that, as of January 1, 2017, if you die after collecting Medi-Cal, the state cannot pursue recovery against your home if it is in your RLT. In this blog post, we examine what’s called the “Heggstad” Petition.
Some individuals, for various reasons, remove their home from their RLT. What’s more, they fail to transfer it back to their trust 
before they die. The reasons? One is that the home was removed from the trust for refinancing purposes. Some lenders require that homes to be outside of a trust before refinancing. As a result, the escrow company may prepare a deed to sign. This deed takes your home out of the trust. Escrow does not transfer the home back into the trust until after escrow closes. To do otherwise would violate the lender’s escrow instructions. As a result, transfer your home back into the trust after the close of escrow. That is, do so unless there is a good reason for you not to do so. When you make this transfer back to your trust, appraisers will not need to re-assess the value. What’s more, the transfer will not trigger the due-on-transfer clause in the deed of trust which secures the mortgage.
Probate of Your Home
Unfortunately, when you die, if the title to your home is not in the trust, probate of your home will begin. A probate can take up to a year to complete. What’s more, probate is a costly process. Fortunately, a shorter court process exists in California. We can obtain a court order transferring your home back into your trust after you die. This is called the “Heggstad” Petition, named for a court case. We will prove to the court (through the court petition and supporting declarations) that the trust-maker intended to keep his or her home in the trust. As a result, the court may grant an order. Such an order transfers the home back into the trust. Such an action eliminates the need for probate of your home.
Court Action Avoids Probate of Your Home
Unfortunately, however, this procedure is not a failsafe. Nevertheless, recently, the courts have been willing to grant the petition. As a result, whenever possible, if you remove your home from your trust, make sure you transfer it back into your trust.
Walnut Creek Elder Law
Please feel free to contact our office with estate planning and asset protection needs. We can also help you qualify for and apply for Medi-Cal. Do not take this information as legal advice. We encourage you to see an elder law attorney. At the Law Offices of Michael J. Young, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 925-256-0298, lawyoung1@gmail.com, we practice Elder Law and help Baby Boomers, seniors and families through the Elder Care Journey. We also help with long-term care planning, asset-protection plans, comprehensive estate planning, wills, trusts and powers of attorney. Finally, we assist older clients and their families get their “Ducks in a Row” so they can qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.