Adopted In or Adopted Out? Defining "Children" in Your Estate Plan Requires Careful Consideration

You heard a lot on our blog about new Maryland legislation allowing certain posthumous infants conceived from genetic material to qualify as “children” under state intestacy law.  One advantage of planning is that if you disagree with the legislation or if you do not believe it is expansive enough, you have the ability to alter its impact on your own estate through proper drafting.  In other words, and while some exceptions apply, you have control over and can define the class of individuals who will benefit from your legacy.

The need for precision in planning in this area is not new.  Take, for example, adoption – a procedure far more historic than in vitro fertilization.  This past spring, in In Re Kincaid Gift Trust for George, 2012 MT 119 (Mont. 2012), the Montana Supreme Court confronted two Trustees arguing that the biological daughter of a Trust’s beneficiary was not entitled to a Trust distribution because she was given up for adoption.  The Trust dated back to 1976 and provided that after the death of the beneficiary, George, the Trust assets were to be distributed to his “living descendants.”  The Trust defined “descendants” as George’s “lawful blood descendants” and stated that “an adopted child . . . shall for all purposes be regarded as the lawful blood descendant of the adopting parent or parents . . . and such adopted child . . . shall not be regarded as the descendant of either natural parent of such adopted child.”

A lower court held that George’s daughter was entitled to distribution because she was his “lawful blood descendant.”  The court also found that the adoption language referred to children adopted into George’s family, rather than children adopted out of his family.   Therefore, his daughter still qualified as a beneficiary.  The Montana Supreme Court disagreed, stating that the trust’s terms were not ambiguous: children, whether adopted into or out of the family, became children solely of their adoptive parents.  Therefore, George’s daughter, while biologically his, was no longer considered a descendant for purposes of the Trust.

The sole dissenting judge noted that the Trust’s grantor probably did not contemplate George giving up a child for adoption.  Instead, it seems more likely that the language was inserted to ensure that if George decided to adopt, such children were treated fairly.  Regardless, the Court kept George’s daughter “out,” and the opinion serves as a reminder to think seriously about the classes of individuals you want kept “in.”  To discuss your plan and ensure that it appropriately covers relevant “what ifs,” contact us.

-  Gary Altman, Esq. and Coryn Rosenstock

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