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Posted on July 14, 2021 in estate planning
Most estate plans will include a pour-over will in which assets not titled in the name of the trust will be bequeathed to the trustee of the trust and then distributed in accordance with the terms of the trust. However, that requires the expensive and time consuming process of opening a probate case, which is one of the reasons for creating the trust in the first place. In the California case, In re Haggstad, 16 Cal. App. 4th 943 (1993), the court recognized that the law does not require a separate deed transferring property to a trust when it was the settlor’s clear intent to do so.
Mr. Heggstad created a trust but failed to execute the necessary paperwork to transfer his interest in certain real property into his trust. The successor trustee argued that Mr. Heggstad had intended that the asset be transferred to the trust by the fact that it was included in the schedule of assets attached to the trust. The court agreed, finding that that a written declaration of trust by the owner of real property, in which he names himself trustee, is sufficient to create a trust in that property. The law does not require a separate deed transferring the property to the trust.
In Nevada, the Heggstad case is not binding law, but a Heggstad type petition is provided for in NRS 164.015(1), as amended in 2015, which allows “petitions for a ruling that property not formally titled in the name of a trust or its trustees constitutes trust property pursuant to NRS 163.002.” Therefore, pursuant to Nevada law, an omitted asset can be placed into the trust without a probate proceeding.
While this does require one to petition a Nevada court to assume jurisdiction of the trust and issue an order that the property is, in fact, trust property, this type of petition is less expensive and less time consuming than a probate case. In addition, unlike a probate case, creditors will not be able to file claims to be paid out of assets of the estate.