When clients come to my office to create a Trust, one common concern is what happens if they forget to transfer an asset, such as their home, bank accounts, or other property, into the Trust. This is a frequent issue, especially for individuals who are pressed for time, such as those preparing for surgery or dealing with urgent family matters.

While I always recommend transferring real property and other significant assets into the name of the Trust as soon as possible, there are situations where this isn't immediately practical. In these cases, an essential safeguard is to include a "Schedule of Trust Assets" in your Trust documents.

What is a Schedule of Trust Assets?

A Schedule of Trust Assets is essentially a detailed list of all the assets the grantor intends to include in their Trust. The list can cover various types of property, such as:

• Real Property: For example, "Personal residence located at 123 Elm Street, identified by Assessor's Parcel Number XYZ."
• Financial Accounts: For instance, "Charles Schwab Account Number 54321 with an approximate balance of $XYZ."
• Personal Property: This might include vehicles, collectibles, or other significant items of value.

The goal is to provide as much specificity as possible about each asset to make it clear that the grantor intended for those items to be part of the Trust.

The Role of a Pour-Over Will

In addition to a Schedule of Trust Assets, I always recommend drafting a "Pour-Over Will." A Pour-Over Will acts as a safety net, ensuring that any assets not formally transferred to the Trust during the grantor's lifetime are directed into the Trust after death.

If, for example, you fail to record a deed transferring your Elm Street property into the Trust before you pass away, the Pour-Over Will ensures that the property can still be included in the Trust.

What Happens If You Forget to Transfer Assets?

If assets are not formally transferred to the Trust, California law provides a streamlined process to confirm the Trust's ownership of these assets. This process is known as a Heggstad Petition, named after the court case that established it.

A Heggstad Petition allows the court to recognize the intent of the grantor, as expressed in the Trust and the Schedule of Trust Assets, and transfer assets into the Trust without requiring probate. This can save your beneficiaries time, money, and the stress of navigating probate court.

As a personal note, early in my legal career, I had the privilege of working with the attorney who pioneered Heggstad Petitions. Since then, I have assisted many families in successfully using this process to transfer assets into their Trust.

The Bottom Line

Including a detailed Schedule of Trust Assets in your Trust is a critical step to ensure that your property is handled according to your wishes. Combined with a properly drafted Pour-Over Will, this safeguard can provide peace of mind knowing that even if you forget to transfer certain assets to your Trust during your lifetime, there is still a way to ensure they are distributed according to your estate plan.

However, the best practice is always to work with an experienced estate planning attorney to ensure your Trust and other estate planning documents are properly drafted and executed.

Legal Disclaimer

This article is for general informational purposes only and does not constitute legal or professional advice. Transmission of this information does not create an attorney-client or confidential relationship. You should consult with a qualified attorney or other professional advisor for advice regarding your individual situation. Choosing a legal professional is an important decision and should not be based solely on advertisements or blog posting.