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Heggstad Petition [California Probate Code 850]

What is a Heggstad Petition? California Probate Code 850, also known as a Heggstad petition, is a judicial proceeding used to avoid costly and time-consuming probate proceedings by petitioning the court to transfer property that should have been titled in the name of a trust (but was not) into said trust after the decedent has ... Read...

What is a Heggstad Petition?

California Probate Code 850, also known as a Heggstad petition, is a judicial proceeding used to avoid costly and time-consuming probate proceedings by petitioning the court to transfer property that should have been titled in the name of a trust (but was not) into said trust after the decedent has already passed away. Before attempting to file a Heggstad petition on your own, it is highly advisable to consult a trust, estate, and probate attorney in California. California’s probate laws are extremely complex, with little to no room for error. An experienced attorney can evaluate your unique circumstances to establish whether a Heggstad petition is an available option for you and what your chances of succeeding are.

Estate of Heggstad

In the namesake case, Estate of Heggstad, the decedent executed a valid, revocable trust naming himself as trustee and his son as successor trustee. Est. of Heggstad, (1993) 16 Cal.App.4th 943. The decedent included several real properties in his schedule. He then removed one particular property from the trust to refinance it but “there was no grant deed reconveying this property to himself as trustee of the revocable living trust.” Id. at 946. Failure to title a property to the trust would typically make the property subject to the time-consuming and expensive probate process. However, the court found that “[t]he issue of whether the property belonged to a living trust or whether it should be probated in decedent’s estate are opposite sides of the same coin, and it is a fruitless exercise in semantics for appellant to argue that the probate court may only decide this issue as part of its administration of the decedent’s estate.” Id. at 952. Indeed, the court allowed the excluded property to be transferred to the trust after death based on the fact that the decedent had clearly intended for the property to be a trust asset.

How Does a Heggstad Petition Work?

An experienced trust litigation attorney will first file an 850 petition with the probate court. The probate court will evaluate your particular scenario to see if it fits within the guidelines of a Heggstad petition. In particular, the court will be looking at whether the decedent intended for the assets or property to be included in the trust. Decedents may become incapacitated or passed away before retransferring the property into trust or they may have mistakenly believed that the property had been properly transferred into the trust. In these situations, the court will look for evidence suggesting that the property was intended to be included in the trust. For example, in Heggstad, the court found that the decedent’s schedule of assets listing the property as belonging to the trust was enough to prove intent. A successful Heggstad petition will then result in a judgment from the court establishing that the property in question is indeed part of the trust. A trustee may then manage the trust as usual without the need for probate.

What are the Requirements of a Successful Heggstad Petition?

Heggstad established that “there must be a competent trustor, trust intent, trust property, trust purpose, and a beneficiary” to create an express trust and went on to explain that there are two basic requirements for a Heggstad petition. . Est. of Heggstad, (1993) 16 Cal.App.4th 943, 947. First, a successful Heggstad petition requires “that the owner of real property is the settlor creating the trust with himself or herself as the trustee . . . Second, because a conveyance of real property is at issue, the other requirement for transferring real property to a trust is compliance with the statute of frauds.” Ukkestad v. RBS Asset Fin., Inc., (2015) 235 Cal.App.4th 156, 160.
To fulfill the first requirement, a “settlor can manifest his intention to create a trust in his property either by: (a) declaring himself trustee of the property or (b) by transferring the property to another as trustee for some other person, by deed or other inter vivos transfer or by will.” Est. of Heggstad, (1993) 16 Cal.App.4th 943, 947–48. The second requirement must be fulfilled by successfully complying with the statute of frauds.
If both of the requirements for a Heggstad petition are met, then “real property may be made part of a trust’s assets without a separate deed transferring property to the trust.” Ukkestad v. RBS Asset Fin., Inc., (2015) 235 Cal.App.4th 156, 160, citing Est. of Heggstad, (1993) 16 Cal.App.4th 943, 947–50. In other words, a Heggstad petition may be successful if both requirements are met.

Contact a California Trust, Estate, and Probate Attorney Today

Ensuring that all assets are transferred as intended by your loved one is of utmost importance. However, it is not uncommon for miscommunications to arise. The trust, estate, and probate attorneys at Talkov Law can help ensure that your loved one’s wishes are properly executed and in accordance with all applicable laws. The attorneys at Talkov Law can help you understand Probate Code 850, better known as a Heggstad petition. For a free, 15-minute consultation with the trust and probate administration attorneys at Talkov Law, contact us online or by phone at (844) 4-TALKOV (825568).

The Trusts, Estate, & Probate Litigation Attorneys at Talkov Law practice in the areas of:


Can a Mother Withhold a Child From the Father in California?

Family Code § 3010 provides that without court orders saying otherwise, both legal parents are equally entitled to custody of their child. The important missing piece of the puzzle is that this only applies to legal parents. So what rights do fathers have before they have established their legal...

Mother Withhold Child California Paternity Visitation Alienation Father's Rights Attorney

What Can I Do If the Mother Won’t Let Me See My Child in California?

When a parent seeks help from a family law attorney because the other parent is withholding their child, the first question is always whether there is a custody order in place.

If there is already a current custody order, then the parent withholding the child is likely violating the court order. There are several remedies available for enforcing or modifying a custody court order under these circumstances.

In the event that the parties do not have a child custody order, however, the withholding parent is not in violation of any court orders by refusing to allow the other parent to see the child, and there is no court order to modify.

So are parents without a court order SOL until they get one? This is California child custody law we are talking about, so naturally, the answer is: not exactly, it depends, sometimes, kind of, not necessarily, and maybe.

Who Has Custody of a Child if There is No Court Order?

Nearly every article tells you that if there is no child custody order in place, both parents have an equal right to custody of the child if you Google: Who has custody of a child when there is no court order in California?

That sounds very promising for parents searching for answers about whether there is anything they can do about having their child withheld from them without a court order. However, this general premise that both parents have an equal right to their child is not the whole story.

Family Code § 3010 provides that without court orders saying otherwise, both legal parents are equally entitled to custody of their child. The important missing piece of the puzzle is that this only applies to legal parents.

Under California child custody law, mothers don’t have to do anything to establish their rights to their child. The law is different for fathers.

Mother Withhold Child California Paternity Alienation Visitation Father's Rights Attorney

Can a Mother Withhold a Child From the Father in California?

Fathers must first establish their parental rights (i.e. father’s rights), before they are entitled to make any decisions or have any say in the life of their child. This is because a father who is not married to the mother when a child is born is not automatically the legal father of that child.

Persons (other than the biological mother) who may be a parent to a child are put into three different groups:

  1. Alleged parents,
  2. Biological parents, and
  3. Presumed parents.

Alleged parents have the fewest rights and presumed parents have the most rights.

Alleged Fathers

Most fathers start off as alleged fathers. A father is an “alleged father” if the mother of the child has told someone (i.e. the court or a social worker) that he is the father of a child.

Biological Fathers

If a DNA test has been conducted and shows that a man is the biological parent of a child, he is the biological father of a child. Biological fathers have the right to show that they are a “presumed father.”

Presumed Fathers

A father can qualify as a presumed parent in several different ways. The most common ways to qualify as a presumed parent are:

  1. The father is named on the child’s birth certificate, or
  2. The father has acted as though the child is his own and raised the child as his own (i.e. held the child out as his).

Once the father can establish his legal rights to his child through a paternity action, he has equal rights to the child, even in the absence of a court order.

There are steps a father, or someone who believes he may be the father, can take to protect his parental and custodial rights. Examples of these steps are as follows:

  1. Sign a Voluntary Declaration of Paternity and submit it to the Department of Child Support Services through the Parentage Opportunity Program (POP).
  2. File a Petition to Establish Parental Relationship in the family court.
  3. Request genetic testing to prove that you are the father of the child. This can be done via court order or agreement of the parties.

Oftentimes, unreasonably withholding a child from the father is the event which prompts the father to seek judicial intervention. Taking the child away without the father’s consent can be held against the mother in court if that action was not reasonable.

California’s family law procedures are complex and trying to navigate them without help of a California family lawyer can be frustrating. If you have questions about family law procedures, contact our accomplished and dedicated family law, divorce, and child custody lawyers by calling (844) 4-TALKOV (825568) or contact us online for a free consultation with our experienced family law attorney, Colleen Sparks, who can guide you through the court process in a prompt and clear manner.

Our knowledgeable attorneys can also help if you have questions about any of the following:


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Can a Parent Stop a Child From Seeing the Other Parent in California?

Can a Parent Stop a Child From Seeing the Other Parent? Whenever parents are separating, one parent is often asking this question. It often comes up in the following situations. The parents (whether married or unmarried) are no longer together and the child resides with one of the parents. The parent with whom the child ... Read...

Can a Parent Stop a Child From Seeing the Other Parent in California?

Can a Parent Stop a Child From Seeing the Other Parent?

Whenever parents are separating, one parent is often asking this question. It often comes up in the following situations.

  1. The parents (whether married or unmarried) are no longer together and the child resides with one of the parents. The parent with whom the child lives is limiting contact between the child and the other parent, but there is no current court order.
  2. The parents have an existing custody and visitation order, and one parent is violating the court order by interfering with the other parent’s parenting time.
  3. The parents have an existing child custody and visitation order, but the child refuses to see one parent. Essentially, one parent is stopping a child from seeing the other parent when a parent claims it is the “child’s choice.” For more information about the role of a child’s preference in custody cases, refer to our article entitled, The Role of a Child’s Preference in California Custody Cases.

Can a Parent Stop a Child from Seeing the Other Parent by Refusing to Follow a Court Order?

The short answer is no; a parent cannot lawfully stop the child from seeing the other parent in violation of a court order.

Court orders are not suggestions; they direct parents to comply with them.

A parent who refuses to comply with a child custody order and stops a child from seeing the other parent violates the court order. A parent who violates a child custody order may be held in contempt of court for such conduct.

Is it Ever Proper for A Parent to Stop a Child from Seeing the Other Parent?

Withholding a child from the other parent is commonly referred to as “gate-keeping.” Gate-keeping generally falls into two categories:

  1. Protective Gate-Keeping.
  2. Restrictive Gate-Keeping.

Protective Gate-Keeping: Are There Situations When a Parent Should Stop a Child From Seeing the Other Parent Despite a Court Order?

Parents who have reasonable concerns about the other parent may engage in protective gate-keeping. They stop a child from seeing the other parent but not because of nefarious reasons, they do so because of reasonable concerns arising out of the facts. The key is always the facts.

If there is child abuse or other conduct by the other parent that endangers the child’s health or safety, a parent may take lawful steps to prevent the visitation. However, absent extreme circumstances, a parent usually has the option of contacting the proper authorities including the police or child protective services. Also, if there is an immediate threat of harm to the child, a parent may seek emergency child custody relief.

Parent Stop a Child From Seeing the Other Parent in California Custody Attorney Alienation

Restrictive Gate-Keeping: When a Parent Unjustifiably Withholds a Child From the Other Parent

A restrictive gate-keeper is a parent who, without justification, prevents the child from seeing the other parent. The parent is usually scorned about the breakup and seeks his or her revenge by using a child as leverage to hurt the other parent. This type of restrictive parent may also make false allegations of abuse or neglect against the other parent.

Restrictive gate-keepers are not necessarily terrible parents. The issue is that despite their parenting skills, they have little respect for the other parent’s role in the child’s life. They rarely co-parent without unreasonable conditions that satisfy their need for control.

Such parents often engage in disparagement of the other parent or the other parent’s family or friends to the child. This kind of behavior often snowballs into parental alienation.

For this reason, when a restrictive parent stops the child from seeing the other parent, court action often becomes necessary. If the restricted parent does not take immediate court action, that parent may be empowering the restrictive parent to continue.

A parent without a court order cannot technically stop a child from seeing the other parent. However, he or she may still have concerns such as the following:

  1. Substance abuse,
  2. Lack of anger management, or
  3. Lack of parenting skills.

It is important to remember that in California, there is no perfect parent standard.

What if the mother believes the father does not have her level of parenting skill? However, the father is otherwise capable of caring for the child without endangering the child. Is the mother’s basis to stop the child from seeing the father unjustified? Yes, it is.

Justification, however, still does not give a parent a legal basis to stop a child from seeing the other parent. The concerned parent should immediately seek appropriate child custody and visitation orders and bring his or her concerns to the court’s attention.

Likewise, the parent whose parenting time is unreasonably prevented or limited should not stand idly by and do nothing either. If he or she does nothing, that parent may unwittingly establish a status quo. The status quo may make it more difficult for the court to change the visitation schedule moving forward.

That parent should also seek immediate child custody and visitation orders.

Setting forth the restrictive gate-keeper’s misconduct may justify asking the court for a modification of visitation or even sole custody. Until the restrictive parent shows a willingness to co-parent and put the best interests of the child first, this may be the only reasonable option.

Even if the court does not grant the modification request, the restricted parent will have at least set a precedent for it. Therefore, if custody is revisited later, the court can be reminded that this was the concern the restricted parent shared earlier, and it remains a concern.

California’s family law procedures are complex and trying to navigate them without help of a California family lawyer can be frustrating. If you have questions about family law procedures, contact our accomplished and dedicated family law, divorce, and child custody lawyers by calling (844) 4-TALKOV (825568) or contact us online for a free consultation with our experienced family law attorney, Colleen Sparks, who can guide you through the court process in a prompt and clear manner.

Our knowledgeable attorneys can also help if you have questions about any of the following:


Motion for Attorney’s Fees in Bankruptcy Adversary Proceedings Under Contract [California CCP 1021]

While the general rule in American courts is that each party pays their own attorney’s fees, parties in bankruptcy adversaries and contested matters in California may be entitled to file a motion for attorney’s fees if a contract provides for such a recovery under California Code of Civil Procedure 1021. This pertains to prevailing parties ... Read...

Contract Attorneys Fees Bankruptcy Litigation California Code Civil Procedure 1021

While the general rule in American courts is that each party pays their own attorney’s fees, parties in bankruptcy adversaries and contested matters in California may be entitled to file a motion for attorney’s fees if a contract provides for such a recovery under California Code of Civil Procedure 1021. This pertains to prevailing parties in various matters in California bankruptcy courts, including nondischargeability for fraud.

The American Rule: Each Party Must Pay Their Own Attorney’s Fees Except Where a Statute or Contract Provides Otherwise

Known as the American Rule, the law in California is that “[e]ach party to a lawsuit must pay its own attorney fees except where a statute or contract provides otherwise. (Code Civ. Proc. § 1021.)” Dell Merk, Inc. v. Franzia, 132 Cal.App. 4th 443, 450 (Cal. 2005).  Indeed, California Code of Civil Procedure Section 1021 [CCP 1021] provides that: “Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties; but parties to actions or proceedings are entitled to their costs, as hereinafter provided.” California Code of Civil Procedure Section 1032(b) provides the opposite rule for costs: “Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.”

Motion for Attorney’s Fees in Bankruptcy Adversary Proceedings and Contested Matters Under California Code of Civil Procedure 1021

Bankruptcy disputes fall into two categories: adversary proceedings, such as fraudulent transfer actions, nondischargeability complaints, and preferential transfers in Chapter 7 bankruptcy, as well as contested matters, such as motions to dismiss, automatic stay violations, and objections to a homestead exemption in California. When those matters are over, there may be a prevailing party. In the context of adversary proceedings, attorney’s fee motions are governed by Federal Rule of Bankruptcy Procedure, Rule 7054 (FRBP 7054), which in turns refers in large part to Federal Rules of Civil Procedure, Rule 54 (FRCP 54).

The law is that “a prevailing party in a bankruptcy proceeding may be entitled to an award of attorney fees in accordance with applicable state law if state law governs the substantive issues raised in the proceedings.” In re Bertola, 317 B.R. 95, 99 (B.A.P. 9th Cir. 2004). California law also provides for recovery under California Code of Civil Procedure § 1021. In re Davison, 289 B.R. 716, 724 (B.A.P. 9th Cir. 2003). Specifically: “Section 1021 permits recovery of attorney’s fees by agreement between the parties, and does not limit recovery of attorney’s fees to actions on the contract.” In re Chen, 345 B.R. 197, 200 (N.D. Cal. 2006).

As a bankruptcy court in California recently explained: “Section 1021 allows the parties to agree that the prevailing party in litigation may recover attorney’s fees, whether the litigation sounds in contract or in tort.” In re Zarate, 567 B.R. 176, 182 (Bankr. N.D. Cal. 2017) (citing 3250 Wilshire Blvd. Bldg. v. W.R. Grace & Co., 990 F.2d 487, 489 (9th Cir. 1993). Indeed, the California Supreme Court also explained that “[p]arties may validly agree that the prevailing party will be awarded attorney fees incurred in any litigation between themselves, whether such litigation sounds in tort or in contract.” Santisas v. Goodin, 17 Cal. 4th 599, 608 (Cal. 1998).

As such, the prevailing party in bankruptcy litigation can file a motion for attorney’s fees so long as the prevailing party has a contract with the non-prevailing party that covers the the issue in the bankruptcy litigation.

“To determine whether a prevailing party may recover attorney’s fees for non-contractual claims under Section 1021, a court must look to the language of the agreement.” In re Chen, 345 B.R. 197, 201 (N.D. Cal. 2006) (citing 3250 Wilshire Blvd. Bldg. v. W.R. Grace & Co., 990 F.2d 487, 489 (9th Cir. 1993)). “The basic goal in contract interpretation is to give effect to the parties’ mutual intent at the time of contracting. When a contract is reduced to writing, the parties’ intention is determined from the writing alone, if possible. Cal. Civ. Code § 1639. The words of a contract are to be understood in their ordinary and popular sense. Cal. Civ. Code § 1644.” In re Zarate, 567 B.R. 176, 183 (Bankr. N.D. Cal. 2017).

The examples below explain how courts have determined whether certain contractual attorney’s fee provisions apply to bankruptcy matters.

Motion for Attorney’s Fees as the Prevailing Party in Nondischargeability Adversary Complaint for Fraud under 11 U.S.C. 523(a)(2)(A)

While some bankruptcy creditors allege nondischargeability under Section 523(a)(6) for willful and malicious injury, the most commonly alleged basis for nondischargeability is fraudulent misrepresentation under Section 523(a)(2)(A).

“In cases under § 523(a)(2) . . . ‘the determinative question . . . is whether the successful [party] could recover attorney’s fees in a non-bankruptcy court.’” In re Bertola, 317 B.R. 95, 99-100 (B.A.P. 9th Cir. 2004). As a bankruptcy court explained: “California law also permits recovery of attorneys’ fee by agreement for tort claims such as a § 523 action.” In re Tran, 301 B.R. 576, 584 (Bankr. N.D. Cal. 2003). The Tran court found that: “Pursuant to the agreements and California law, [the prevailing party on the § 523(a)(2)(A) claim] is also entitled to recover its reasonable attorneys’ fees for litigating both the contract and the dischargeability claims.” In re Tran, 301 B.R. 576, 585 (Bankr. N.D. Cal. 2003).

Addressing a fraud nondischargeability complaint, another bankruptcy court in California recently ruled in favor of a prevailing defendant’s right to attorney’s fees in noting that: “The Settlement Agreement clearly provides that ‘[i]n the event any action is necessary to enforce any of the terms, covenants or conditions of this release, the prevailing party shall, in addition to any other recovery, recover his, its, or their reasonable attorneys’ fees and costs.’” Soares v. Lorono, No. 12-CV-05979-WHO, 2015 WL 151705, at *21 (N.D. Cal., Jan. 12, 2015).

In 2020, the Ninth Circuit Bankruptcy Appellate Panel affirmed an award of attorney’s fees to the debtor, as the owner of a contractor company, who defeated a subcontractor’s § 523(a)(2)(A) claim, on the basis that the subcontract provided that: “In the event that Contractor prevails in any reference proceeding or court action . . . brought against Subcontractor by third parties in which Contractor is joined as a party or interpleads . . . Subcontractor agrees to pay Contractor reasonable attorneys’ fees.” In re Davis, No. 1:10-AP-01354-VK, 2019 WL 2931668, at *1 (B.A.P. 9th Cir. July 3, 2019), aff’d, 809 F. App’x 415 (9th Cir. 2020).

The California Civil Code 1717 Limitation that the Action Must be “On the Contract” Does Not Bar Attorney’s Fees in Bankruptcy

The most commonly cited basis for attorney’s fees in California is California Civil Code 1717, which provides for attorney’s fees to a prevailing party in litigation “on the contract.” However, this limitation does not bar a motion for attorney’s fees in bankruptcy in an action that is not on the contract, such as a tort (fraud) claim, under the separate California Code of Civil Procedure 1021. In re Davison, 289 B.R. 716, 724 (B.A.P. 9th Cir. 2003).

As one court explained:

There is no independent right to attorney’s fees in an adversary bankruptcy proceeding. In re Baroff, 105 F.3d 439, 441 (9th Cir.1997). A prevailing party may be awarded attorney’s fees, however, if attorney’s fees would have been awarded under substantive state law. Ibid. (citing In re Johnson, 756 F.2d 738, 741 (9th Cir.1985)). California law permits recovery for attorney’s fees under two separate provisions. Section 1717 allows a party to recover attorney’s fees incurred in the litigation of a contract claim. See In re Davison, 289 B.R. at 726 (citing Santisas v. Goodin, 17 Cal.4th 599, 615, 71 Cal.Rptr.2d 830, 951 P.2d 399 (1998)). Section 1021 permits recovery of attorney’s fees by agreement between the parties, and does not limit recovery of attorney’s fees to actions on the contractId. at 724. Attorney’s fees for fraud claims may be recovered if the contract so provides.

In re Chen, 345 B.R. 197, 200 (N.D. Cal. 2006).

For example, the Ninth Circuit Bankruptcy Appellate Panel (BAP) decided a motion for attorneys fees under “CCC § 1717 and approved attorney’s fees only if the action involves a contract claim. See Santisas v. Goodin (1998) 17 Cal.4th [599,] 615. Here, the Complaint did not contain a breach of contract claim. Rather, the only claim asserted was a nondischargeability claim based on fraud. Therefore, CCP § 1717 is not applicable. See Santisas, 17 Cal.4th at 615.” In re Davison, 289 B.R. 716, 724 (B.A.P. 9th Cir. 2003).

Contact an Experienced Bankruptcy Litigation Attorney in California

Prevailing parties should consider whether they are entitled to a motion for attorney’s fees in bankruptcy nondischargeability actions in consultation with an experienced bankruptcy litigation attorney in California. For a free consultation, contact Talkov Law online or at (844) 4-TALKOV (825568).

The bankruptcy attorneys at Talkov Law are skilled in the areas of:


CCP 704.965 – Automatic Homestead Exemption Defeats Outdated Limits on Declared Homestead Exemption in Bankruptcy

Debtors Can Still Claim California’s Increased, Automatic Homestead, Despite California Code of Civil Procedure § 704.965 Effective January 1, 2021, the California homestead exemption increased to $300,000 to $600,000 depending upon the median sales price in the county of residence, up from a meager $75,000 to $175,000 the year before. In turn, creditors have looked ... Read...

CCP 704.965 Automatic Homestead Exemption California Declared Homestead Exemption

Debtors Can Still Claim California’s Increased, Automatic Homestead, Despite California Code of Civil Procedure § 704.965

Effective January 1, 2021, the California homestead exemption increased to $300,000 to $600,000 depending upon the median sales price in the county of residence, up from a meager $75,000 to $175,000 the year before. In turn, creditors have looked for ways around this increased homestead exemption by arguing that the debtors should not be permitted to claim the increased homestead exemption in California if the judgment was recorded before 2021.

Specifically, creditors in bankruptcy have cited California Code of Civil Procedure § 704.965, which provides that:

If a homestead declaration is recorded prior to the operative date of an amendment to Section 704.730 which increases the amount of the homestead exemption, the amount of the exemption for the purposes of subdivision (c) of Section 704.950 and Section 704.960 is the increased amount, except that, if the judgment creditor obtained a lien on the declared homestead prior to the operative date of the amendment to Section 704.730, the exemption for the purposes of subdivision (c) of Section 704.950 and Section 704.960 shall be determined as if that amendment to Section 704.730 had not been enacted.

As explained below, debtors in bankruptcy can defeat this argument by citing to the automatic homestead exemption as defeating any limits on the declared homestead exemption.

Ninth Circuit BAP Rules that Declared Homestead Exemption is Irrelevant if Automatic Homestead Exemption Allows for a Larger Exempt Amount

Numerous cases have rejected this theory advanced by creditors that a debtor is limited to a lower, pre-2021 homestead if the declared homestead was recorded before 2021. As the Ninth Circuit Bankruptcy Appellate Panel explained in In re Zall, No. BAP.EC-05-1476-MOSB, 2006 WL 6811022, at *4 (B.A.P. 9th Cir., Sept. 5, 2006):

Creditor relies primarily on two cases to make its argument. In In re Morgan, 157 B.R. 467 (Bankr.C.D.Cal.1993), the bankruptcy court relied on state court decisions and language in CCP § 704.965 to hold that the debtor was only eligible for the lesser, earlier declared homestead exemption amount. Id. at 469, 470. The second case, Bernhanu v. Metzger, 12 Cal.App. 4th 445 (Cal.Ct.App.1992), does not address the application of the section 522 exemption laws. In Bernhanu, the court limited the debtor to the lower exemption amount that was in effect at the date the judgment lien was fixed, relying also on CCP § 704.965. Id. at 448.
Unlike the present case, neither In re Morgan nor Bernhanu pertained to the automatic homestead exemption statute. Further, both cases were decided prior to the 1994 revisions of the Bankruptcy Code that altered section 522. Most importantly, since these cases were decided, this panel has issued In re Mayer and held that the date for the determination of the homestead exemption amount is the date on which debtors file a bankruptcy petition.
Creditor asserts that because California opted out of the federal bankruptcy scheme as permitted under section 522(b)(2)(A), California exemption rules alone should apply. Indeed, CCP § 703.050 states that the exemption amount is determined “by application of the exemption statutes in effect (1) at the time the judgment creditor’s lien on the property was created.” The policy, however, of allowing states to opt out of the federal exemption scheme is not absolute. Rather, courts must apply state exemption statutes “along with whatever other competing or limiting policies the statute contains.” Owen, 500 U.S. at 315. Essentially, the state law exemption statutes must not conflict with the general policies underlying the Bankruptcy Code, or section 522 specifically. In re Charnock, 318 B.R. at 727. “To the extent that the California exemption law attempts to establish a procedure that overrides the well-settled bankruptcy law regarding the date for determining an exemption, it is preempted.” In re Kim, 257 at 687.
Indeed, Webb v. Trippet, 235 Cal.App.3d 647, 651 (Cal. App. 1991) reached the same conclusion as follows:
Respondent would find support for the trial court’s requirement of continuous residence in the fact that the declared homestead provisions contain numerous references to the automatic exemption codified under section 704.710 et seq. (See §§ 704.910, subds. (c), (e), 704.950, 704.960, 704.965, 704.995.) The declared homestead provisions and the automatic exemption law each confer different rights on the homesteader, and there is no overlap between these rights. One may have rights under the declared homestead law, or rights under the automatic exemption law, or both, or neither. (See In re Anderson (9th Cir.1987) 824 F.2d 754, 756.) However, the fact that one set of statutes refers to the other in some manner does not blur the distinctions between the rights each confers on the homesteader.
The Ninth Circuit Bankruptcy Appellate Panel (BAP) in the case of In re Mayer, 167 B.R. 186, 188–189 (B.A.P. 9th Cir. 1994) reached the same conclusion:
 
Exemptions are determined as of the date the bankruptcy petition was filed. In re Herman, 120 B.R. 127, 130 (9th Cir. BAP 1990), Owen v. Owen, 500 U.S. 305, 111 S.Ct. 1833, 114 L.Ed.2d 350 (1991), § 522(b)(2)(A).
Mayer relied on Cal.Civ.Proc.Code §§ 704.710 and 704.730(a)(3)(C) to claim a homestead exemption of $100,000 in the property…. Mayer fulfilled all the requirements for the homestead exemption which he claimed. He lived on the property on the date he filed bankruptcy, he was over 55, married, and his household income was under $20,000. Therefore, on the date the petition was filed, he qualified for a homestead exemption in the property in the amount of $100,000 under Cal.Civ.Proc.Code § 704.730(a)(3)(C).
The Nadels’ judgment lien is not relevant in determining whether Mayer is entitled to the homestead exemption listed in his schedules. The filing of the petition constitutes an attempt by the trustee to levy on the property. It is this hypothetical levy the court must focus on in analyzing Mayer’s entitlement to a homestead exemption. See, Morgan, 149 B.R. at 153. The existence of the Nadels’ judgment lien may impact a trustee’s decision to abandon or sell property of the estate, but it does not affect the exemption that Mayer is entitled to claim.
In re Mayer relied upon the Ninth Circuit BAP in In re Thomas K. Morgan, 149 B.R. 147, 153 (B.A.P. 9th Cir. 1993), not to be confused with the reasoning in In re William Alan Morgan, 157 B.R. 467, 469–470 (Bankr. C.D. Cal. 1993) rejected by Zall, to find that:
Under § 522(f), however, the court must determine whether the debtor would have been entitled to the exemption in the absence of the lien. See Owen v. Owen, 500 U.S. 305, –––– – ––––, 111 S.Ct. 1833, 1836–1837, 114 L.Ed.2d 350 (1991); In re Opperman, 943 F.2d 441, 443–444 (4th Cir.1991); In re Galvan, 110 B.R. 446, 450 (9th Cir. BAP 1990). This determination is made as of the date the debtor files bankruptcy. In re Herman, 120 B.R. 127, 130 (9th Cir. BAP 1990). The state of affairs considered by the court is hypothetical, not actual. Owen, 500 U.S. at ––––, 111 S.Ct. at 1837. Thus, the court must essentially treat the judicial lien as non-existent until the date of the bankruptcy at which time there is a hypothetical attempt to levy on the property by the trustee. See Herman, 120 B.R. at 130.

Contact an Experienced Homestead Exemption Bankruptcy Attorney

The bottom line is that bankruptcy creditors have rights, but sometimes those rights must yield to the rights of the debtors, including Chapter 7 bankruptcy debtors. If you are involved in a homestead exemption fight, contact the bankruptcy and real estate attorneys at Talkov Law at (844) 4-TALKOV (825568)

The bankruptcy attorneys at Talkov Law are skilled in the areas of:


3 Things to Expect if the Bill and Melinda Gates Divorce Gets Messy

What can we expect to see if the Bill and Melinda Gates divorce gets messy? Find Out Here!

Bill and Melinda Gates Divorce No Prenuptial Agreement California Attorney Family Law Lawyer

3 Things to Expect if the Bill & Melinda Gates Divorce Gets Messy

For those of us who do not know them personally, the announcement that Microsoft Corp. co-founder Bill Gates and his wife, Melinda Gates, who is co-chair of their philanthropic foundation, are ending their 27-year marriage, is shocking. This picturesque couple landing in the same plight so many average Americans face every day – the end of a marriage – is a harsh reminder that no segment of society is immune from divorce.

While the Gateses do not live what most people would consider “normal” lives, it is very likely their divorce will adhere to most of the “normal” procedures every other divorcing couple faces.

The pair live in Washington, which is a community property state. That means if a couple is unable to reach an agreement as to how to divide their marital assets, a family law judge will divide the community property equally between the pair.

While it is absolutely possible the Gates will resolve all of their property division and complete their divorce out of the public eye, without issue, it is also possible the divorce may get messy. As discussed in her interview with the Los Angeles Times, lead family attorney Colleen Sparks predicts what potential issues could arise should the Gates divorce get messy.

1 – There is No Prenuptial Agreement Between Bill & Melinda Gates. How Will They Divide Community Property Assets Without a Prenup?

Mr. Gates is listed by Forbes as the world’s fourth wealthiest person—with a net worth of $130.5 billion—after Amazon.com Inc. founder Jeff Bezos, French luxury-goods tycoon Bernard Arnault and his family, and Tesla Inc. Chief Executive Elon Musk.

Most of the Gates family’s wealth is held by a personal investment firm called Cascade Investment LLC. Even so, the divorce will create new questions about the fate of the Gates fortune.

While details about how the Gateses have structured their finances are not known, they were believed to have a prenuptial agreement. However, in Ms. Gates’s May 3, 2021 Petition for Divorce, filed in King County Washington, according to TMZ, divorce documents from Melinda Gates ask for a ruling that the marriage ended “as of the date in the separation contract.” The contract isn’t included, but its existence indicates there’s no prenup, TMZ reported. She isn’t asking for any spousal support, and requests an April 2022 trial.

Bill and Melinda Gates Divorce Petition

As a result of this lack of a prenuptial agreement, the couple’s assets will be divided by agreement or court order in compliance with community property principles of Washington State.

For example, the Gateses are the largest owners of farmland in America and have vast investments through Cascade Investment, which manages Mr. Gates’s personal wealth and owns large stakes in the Four Seasons hotel chain, the Canadian National Railway and AutoNation, the country’s largest chain of car dealerships, among other companies. The family’s homes and properties include a private plane and a mansion in Washington that has been estimated to be worth more than $120 million, which features amenities such as a trampoline room, a screening room and a multiroom library filled with rare documents and artifacts.

The couple also paid $43 million for an oceanfront home near San Diego in one of the largest deals recorded in the area last year.

All of this property will either be divided by agreement, or by court order.

2 – The Fight Over Bill Gates’s Personal Stake in Microsoft in the Bill and Melinda Gates Divorce

As the story goes, Bill Gates dropped out of Harvard University to start up Microsoft with childhood friend Paul Allen in 1975. Gates owned 49% of Microsoft at its initial public offering in 1986, which made him an instant multimillionaire. With Microsoft’s explosive growth, he soon became one of the world’s wealthiest individuals.

In 2000, he handed the role of CEO, and scaled back involvement in day-to-day operations of Microsoft in 2008, focusing more on the Bill & Melinda Gates Foundation’s work. He remained active as chairman of Microsoft until 2014, when he became a regular board member.

Last year, Mr. Gates announced he was stepping down from Microsoft’s board of directors, as well as the board of Berkshire Hathaway, the conglomerate run by his close friend Warren Buffett.

Mr. Gates’s personal stake in Microsoft is worth around $26 billion, according to FactSet. He remains one of the largest individual Microsoft shareholders, holding more than 100 million shares as of Dec. 2019, as reported by The New York Times.

We can all agree that Microsoft was formed and much of its explosive growth occurred prior to the marriage of Bill and Melinda Gates in 1994. But that doesn’t mean Mr. Gates’s personal stake in Microsoft didn’t exponentially grow between 1994 and 2021. That growth could easily become a contested issue in the Gates’s divorce because an argument can be made that the growth is community property (i.e. a result of Mr. Gates’s time and effort during the marriage) or that the growth is Mr. Gates’s separate property (i.e. the personal stake in Microsoft would have grown without Mr. Gates’s time and effort during the marriage).

3 – The Fate of the Bill & Melinda Gates Foundation in the Divorce

In 2000, the couple jointly formed the Bill & Melinda Gates Foundation, which oversees charitable ventures to which the billionaire philanthropist couple have devoted their fortune.

Bill and Melinda Gates Divorce No Prenuptial Agreement California Attorney Family Law

According to a statement posted on both of their Twitter accounts announcing their divorce on May 3, 2021, “We continue to share a belief in that mission and will continue our work together at the foundation, but we no longer believe we can grow together as a couple in this next phase of our lives.”

The foundation said in a statement that apparently, Mr. and Ms. Gates would remain co-chairs and trustees and that no changes were expected at the organization.

The foundation has more than $51 billion in assets, according to a tax filing, making it one of the world’s wealthiest foundations.

“The Gates Foundation is the most important and influential philanthropic entity in the world today,” said Rob Reich, a professor of political science at Stanford University. “The divorce may have huge repercussions for the foundation and for its work across the globe.”

While both parties have created there own independent foundations as well, the management and future of the Bill & Melinda Gates Foundation may become an issue we will all be watching very closely during this divorce.

California’s divorce procedures are complex and trying to navigate them without help of a skilled family lawyer can be frustrating. If you have questions about divorce, contact us by calling (844) 4-TALKOV (825568) or contact us online for a free consultation with our experienced family law attorney, Colleen Sparks, who can guide you through the court process in a prompt and clear manner.

Our knowledgeable attorneys can also help if you have questions about any of the following:


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