Trust Funding Problem (the “Heggstad” Problem)

Both living trusts and irrevocable trusts are often unfunded during a decedent’s lifetime, or trust property is removed from the trust (e.g. for a refinance) and not moved back into trust ownership.  Newly acquired properties and accounts are often taken in the decedent’s individual name instead of the trust name.   The decedent may have intended the property to be in the trust, but for whatever reason it’s not in trust ownership when the decedent dies.

All of the above situations (and it’s not an exclusive list) will trigger the need for some kind of Probate Court action in order to get the decedent’s property into the trust for ultimate distribution according to its terms. In the past, this was accomplished by using a Pour-over Will that directed such property to be turned over to a decedent’s trust, using a full Probate procedure.