For many recently appointed trustees, a common question is whether the probate court will be involved in the proceedings. In some cases, the answer to that question is no. Assets held in trust prior to the decedent’s passing are not subject to formal probate administration proceedings. Trustees generally do not have to seek court oversight to be formally appointed trustee or to have the trust approved the way that a will must be approved. Administration of the trust can proceed without involving the court.
Despite the fact that trusts are often created to avoid probate, there are times during trust administration that the court may be needed. Three of the most common types of court proceedings are outlined below.
Probate Proceedings to Transfer Assets and Limit Creditor Claims
If some of the assets intended for the trust were not moved into the trust prior to the decedent’s death, probate proceedings may be necessary in order to move the asset. Further, in some cases, the trustee may want to file formal probate proceedings in order to limit the claims of creditors against the estate. Using the formal probate procedure bars creditor claims after a certain period of time.
In some cases where an asset was not moved into a trust prior to the decedent’s death, a Heggstad Petition can be used. This Petition is presented to the court, and, if approved, the court will issue an order declaring the property as trust property. This type of Petition is typically used when the property in question was listed on a schedule to the trust. Trustees may face opposition to this Petition if the beneficiaries of the trust differ from the beneficiaries of the estate. Regardless, trustees may have a legal obligation to pursue the Petition since it may be in the best interest of the trust.
Section 17200 Petitions
This type of Petition is a tool that can be utilized by trustees and beneficiaries to resolve issues that may arise during trust administration. Examples of such issues include:
- Ruling on the sufficiency of a trustee’s accounting
- Determining the trustee’s compensation
- Ruling on the trust’s liability for debts of the decedent
To learn more about updating your Orange County estate plan, call our office today for a consultation.