With special guest blogger, Bryan Cave summer associate, Anne Jump.
When people create Wills and Trusts, they routinely define what constitutes a “descendant” in their estate planning documents for purposes of determining who will inherit their estates. Many include in their definition of descendant any child adopted into the family and that child’s descendants. (For a discussion on issues relating to adult adoption, see our prior post, “Girlfriends Come and Go, but Daughters are Forever: the Case for Adult Adoption”.)
But what happens when a descendant is adopted out of a family? For example, where a trust document has defined descendants to include any person adopted by a descendant, a child adopted out of a family may no longer be considered a descendant. The Supreme Court of Montana came to just such a conclusion in the recent case, In the Matter of the Cecilia Kincaid Gift Trust for George. There, the trust document specified that an adopted child was to be considered the lawful blood descendant of the adopting parent and no longer the descendant of the biological parent. Because the trust did not differentiate between children adopted into and out of the family, any adoptive child was considered the descendant of its adoptive parents under the terms of the trust. For a more detailed description of this case, see the post from our sister-blog, bryancavefiduciarylitigation.com, “Are Children Given Up for Adoption Still ‘Descendants’ of Their Natural Parents?”
Without a provision distinguishing between adoptions into and out of a family, courts interpreting a trust document may have little choice but to apply the same interpretation to both scenarios. This can lead to unintended results and is therefore worth addressing in estate planning documents.
Adoption out of a family is not uncommon. Take, for example, the case of a child whose natural parent dies. The child’s other natural parent remarries, and the stepparent legally adopts the child. Is that child still a descendant of the deceased parent? With a clause like that in Kincaid, the answer is no. The child becomes a descendant of its stepparent and is no longer a descendant of its deceased natural parent. A similar result may be reached under state law, as well. Pursuant to Missouri Code Section 474.060, for example, an adopted child becomes the descendant of its adoptive parents only.
You may wonder, why does this matter? The natural parent is already dead by the time the child is adopted, so the child would have already received his inheritance from his natural parent, right? Not necessarily. If the deceased parent created a trust that initially benefits his surviving spouse, and then passes to his descendants upon the surviving spouse’s death, depending on how the trust is written, the child adopted by his step-parent may no longer be the natural parent’s descendant. An even more likely scenario is that the child’s grandparents may want the child to inherit his deceased parent’s share under their estate planning documents. If the grandparents’ documents don’t specify that descendants who are adopted out of the family are still to be considered their descendants, the grandchild may not inherit.
To provide for all descendants, including those who may be adopted out of a family from a legal standpoint, you should discuss how to distinguish between adoptions into and out of the family in your estate planning documents with your estate planning attorney.