Intestacy and children

In our consideration of the rules of intestacy, we’ve seen that spouses are most favored, with children being next favored.

Today, we consider what it means to be a “child.” The simple case exists when you have a married

couple that has a child together without the involvement of a third party.

But what if the child is adopted? What if the child is born or conceived after the death of a genetic parent? In today’s class, we’ll look at how these differences affect the child’s rights to inherit.

1

What were the facts in Hall v. Vallandingham (p. 97)?(Is it really true that the “primary purpose for adoption . . . is inheritance rights?”)

Earl and Elizabeth had four children. Earl died, Elizabeth remarried, and her new

husband, Jim, adopted the four children.  This case arose because Earl’s brother died

intestate. The brother had no children, no spouse and no parents.

To whom should the brother’s estate pass? The brother’s siblings and their descendants

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JimEarl Eliz.Wm.Jr.Sibs SibsSibs

Biological Children of Earl, Adopted by Jim

Hall v. VallandinghamHall v. Vallandingham (p. 97)540 A.2d 1162, (Md. Ct. Special App. 1988)

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What should happen to the sibling share that would have gone to Earl?

Should it go to Elizabeth, Earl’s widow since his estate would pass to her through intestacy? No—she’s an in-law

Can Earl’s children inherit? No—under Maryland trusts and estates law, they

lost their right to inherit by virtue of their adoption by Elizabeth’s second husband

If the children cannot inherit from Earl after the adoption, they also cannot inherit through Earl after the adoption 4

Did the court correctly interpret Maryland law?

What textual argument can we make, and Earl’s children did make, that they were heirs? “On adoption, a child no longer shall be considered a

child of either natural parent, except that upon adoption by the spouse of a natural parent, the child shall be considered the child of that natural parent” (current law)

“Upon entry of a decree of adoption, the adopted child shall lose all rights of inheritance from its parents and from their natural collateral or lineal relatives” (prior law)

How did the court reconcile the two statutes? The current statute just uses different words to say the

same thing—wouldn’t want to give adopted children greater rights than other children 5

What result under the UPC?

b) [Stepchild Adopted by Stepparent.] A parent-child relationship exists between an individual who is adopted by the spouse of either genetic parent and:

(1) the genetic parent whose spouse adopted the individual; and (2) the other genetic parent, but only for the purpose of the right

of the adoptee or a descendant of the adoptee to inherit from or through the other genetic parent.

UPC 2-119 Which approach—Maryland or UPC—does a better job of

reflecting the likely intent of someone like Earl’s brother?

Probably the UPC Besides the Maryland and UPC approaches, some states

allow adopted children to inherit from both adoptive and genetic parents even when the adoptive parent is not a stepparent 6

UPC and adopted children

If an adopted child can inherit through the genetic parent after being adopted by a step-parent, why can’t the genetic parent inherit through the adopted child? Why is it a one-way street?

Inheritance would become too complex if genetic relatives as well as adoptive relatives could inherit from or through the child;Is not clear that this is what the intestate decedent would want; andIf adoption records are sealed, it may not be possible for the adopted child to prove who the genetic relatives are and vice versa.

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Indiana law (same as Hall) For all purposes of intestate succession, including

succession by, through, or from a person, both lineal and collateral, an adopted child shall be treated as a natural child of the child's adopting parents, and the child shall cease to be treated as a child of the natural parents and of any previous adopting parents. However, if a natural parent of a child born in or out of wedlock marries the adopting parent, the adopted child shall inherit from the child's natural parent as though the child had not been adopted, and from the child's adoptive parent as though the child were the natural child. In addition, if a person who is related to a child within the sixth degree adopts such child, such child shall upon the occasion of each death in the child's family have the right of inheritance through the child's natural parents or adopting parents, whichever is greater in value in each case.

Ind. Code 29-1-2-8 (emphasis added) 8

Adoption of adults

We’ve seen that you can make a child your child for purposes of inheritance by adopting the child.

Can you make an adult your child for purposes of inheritance by adopting the adult? Maybe you want your spouse or partner to be able to

receive your share if you predecease your spouse or partner

Most states say yes, but some states will prevent the adoption (p.102)

Note the value of adoption also for fending off challenges to the validity of a will

T wants to leave estate to partner in T’s will, and T’s siblings are the apparent heirs and can challenge the will

If T adopts partner, then partner replaces T’s siblings as the apparent heir; T’s siblings no longer can challenge the will 9

Adoption and wills

We’ve seen that you can make a child your child for purposes of inheritance by adopting the child.

Does an adopted child also step into your shoes as a genetic child for purposes of your share under someone else’s will (e.g., child adopts grandchild)? Traditional trusts and estates law said no—testators

who were “strangers-to-the-adoption” were not viewed as intending that the adopted children take

Current law includes a presumption that adopted children will be treated as genetic children. If testators do not want adopted children to be treated as genetic children, they need to say so (something to remember when advising clients whose wills you draft) (page 103)

What if the adopted child is an adult? 10

What were the facts in Minary, p. 103

Amelia Minary and her husband had three sons, James, Thomas and Alfred

In her will, Amelia set up a trust to support her husband and sons, with the trust terminating after all four died. When the trust terminated, the corpus would go to her surviving heirs (making rules of intestacy necessary to interpret her will and trust)

Amelia died, triggering the trust The husband died first, then James died without

descendants, Thomas died after having two children and Alfred died after adopting his wife (whom he married two years after his mother’s death) 11

Mr. Minary Amelia

James Thomas Alfred

ThomasJr.

AmeliaM.G.

Myra M.1934

Minary v. Citizens Fidelity Bank (1)Minary v. Citizens Fidelity Bank, p.103

419 S.W.2d 340 (Ky. 1967)

Adopted 1959

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Dividing the trust in Minary

How should Amelia’s trust be divided? Who were the heirs, and what were their shares? Should Thomas’ two children each take 1/2 of the

estate, should Thomas’ two children and Alfred’s wife each take 1/3 of the estate, or should Alfred’s

wife take 1/2 and Thomas’ children each take 1/4 ?  Would Alfred’s wife take from the trust if she

had been a child when Alfred adopted her? Yes—absent an indication of contrary intent by the

testator, adopted children are treated as genetic children 13

What do we learn from Kentucky statutes on adoption?

“An adult person . . . may be adopted in the same manner as provided by law for the adoption of a child and with the same legal effect. . . .”

KRS 405.390 “From and after the date of the judgment the child

shall be deemed the child of petitioners and shall be considered for purposes of inheritance and succession and for all other legal considerations, the natural, legitimate child of the parents adopting it the same as if born of their bodies.”

KRS 199.520

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What result and why?

Alfred’s wife did not inherit from Amelia’s will (pp.105-106) Alfred adopted his wife solely as a way to qualify her for the

trust’s corpus. Amelia had not included her children-in-law in her will, and Alfred was trying to evade that exclusion. According to the court, including Alfred’s wife would violate Amelia’s intent

Might there be a reason why Amelia did not include Alfred’s wife in her will that would suggest the wife should take?

By not including the wife, she wouldn’t take if there was a divorce On the other hand, if they remained married, she would be

protected by Alfred or their children As we will see, there are ways to provide flexibility in a trust so

future developments can be taken into account (e.g., power of appointment in Martin B.)

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What result and why?

Minary is consistent with the UPC, p. 106. It’s one thing to adopt a child and raise it—one is

not likely to do so to manipulate the interpretation of a will or trust

If adopted adults were included in class gifts in trusts or wills (i.e., gifts to my heirs or my descendants), one could easily manipulate the interpretation of a trust or will

For example, childless beneficiaries of a trust or will could adopt their 20 closest friends.

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Posthumously-born children

If H dies, and W is pregnant, their posthumously-born child will be treated as a child for purposes of trusts and estates law (p. 115)

What if W does not become pregnant with H’s child until after H’s death (man freezes sperm in anticipation of infertility and/or death)?

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What were the facts in Woodward ?, p.118

Warren Woodward was diagnosed with leukemia.

Advised that treatment for the leukemia might leave him infertile, Warren froze some of his semen for later use.

Treatment for the leukemia was unsuccessful, and Warren died.

Two years later, Warren’s wife, Lauren, gave birth to twin girls after artificial insemination with Warren’s semen. 18

Woodward v. Commissioner of Social Security

Lauren Woodward

Warren Woodward

Michayla Woodward

Mackenzie Woodward

Woodward v. Comm’r of Soc. Sec.,760 N.E.2d 257 (Mass. 2002)

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Were the twin girls Warren’s “children” under the MA rules for intestacy?

The status of the children under the rules for intestacy did not come up because Warren failed to write a will

Rather, Lauren applied for Social Security survivor benefits for the children, and Social Security rules look to state intestacy law to determine whether the twins were Warren’s children Not clear why Social Security does not have a federal rule

since policies for intestacy don’t necessarily align with policies for Social Security benefits

In Astrue v. Capato, 132 S. Ct. 2021 (2012), Supreme Court upheld Social Security’s reliance on state intestacy law 20

Were the twin girls Warren’s “children” under the MA rules for intestacy?

Lauren argued that posthumously-conceived children should always be treated as the decedent’s children. What’s the problem with this argument?

It could take many years to figure out who the children are The decedent may not have wanted his semen used

posthumously Did the MA definition for “issue” include

posthumously-conceived children? MA defined issue as all direct genetic descendants, marital or

non-marital Was there any reason to create an exclusion for posthumously-

conceived children? 21

In deciding the status of the girls, what were the relevant interests?

Best interests of children (pp.120-121) The state has consistently acted to protect children and

assure their financial support, regardless of their birth status The state has not excluded posthumously-conceived children

as heirs under its intestacy rules The state has done much to promote artificial insemination On the other hand, what may be best for the children born

posthumously may not be best for children overall—if posthumously-born children are given rights of inheritance, the children born during the testator’s life are given a smaller share, and this can provoke conflict within families

This takes us to the next state interest—providing certainty to heirs and creditors by the orderly, prompt and accurate administration of estates 22

In deciding the status of the girls, what were the relevant interests?

Orderly administration of estates (p.122) The state requires certainty of the decedent’s paternity—not

difficult to establish with posthumously-born children The state employs a limitations period for the filing of claims

against an estate (for potential heirs and creditors) The usual limitations period is one year. But will that

work for posthumously-conceived children? Not fair to the surviving spouse to require a decision so soon

after the decedent’s death Also, it might take several inseminations to generate a

pregnancy What’s the appropriate limitations period?

Court leaves this question for another day (other states require conception within two-three years, p.125)

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In deciding the status of the girls, what were the relevant interests?

Reproductive interests of the decedent (pp. 122-123) The decedent may not have intended to have

posthumously-born children (perhaps only to use the sperm while he was still alive)

Treat them as heirs if the decedent consented before death to

Posthumous reproduction and Support any children born through posthumous

reproduction (not always required by states that recognize posthumous reproduction)

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What does Indiana law say? Descendants of the intestate, begotten before his

death but born thereafter, shall inherit as if they had been born in the lifetime of the intestate and had survived him.

With this exception, the descent and distribution of intestate estates shall be determined by the relationships existing at the time of the death of the intestate.

Ind. Code § 29-1-2-6 But this statute was adopted in 1953.

25

Do posthumously-conceived children take from a non-parent’s will?

For an answer to this question, we turn to the Martin B. case

26

What were the facts in Martin B.?, p. 126

Martin B. died in 2001, survived by his wife, Abigail, and a son, Lindsay. Lindsay had two adult children

Martin’s other child, James, predeceased Martin by seven months. James was survived by his wife

James’ widow used his frozen sperm to have two children, born in 2004 and 2006

Martin had left trusts for the benefit of his “issue”

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Abigail B. Martin B.

Nancy James Lindsay

WarrenJamesMitchell

In re Martin B.In re Martin B.,

841 N.Y.S.2d 207 (N.Y. Surr. Ct. 2008)

Adult Child 1

Adult Child 2

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What were the relevant terms of Martin’s trusts?

Martin B. left seven trusts that gave the trustees authority to sprinkle principal among his issue while his wife, Abigail, was alive

Martin also gave Abigail a power of appointment to determine the distribution of the principal upon her death

If Abigail did not exercise her power of appointment, the trustees had authority to sprinkle the principal among Martin’s “issue” and “descendants”

Should the posthumously-conceived children of James count as the issue of Martin?

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Could the two children inherit from James?

No. Under NY law, posthumously-conceived children do not share in the intestate estate (p. 127). Similarly, if James had left a will, the children would not

take as “after-born” children unless he stated otherwise in his will (p. 127).

What result under the UPC? (p. 125) You have a 45-month window to give birth to the child.

James died on January 13, 2001, and the first child was born on October 15, 2004, which is 45 months and 2 days after James’ death. If Nancy could show that she conceived by January 13, 2004, then the first child would count as an heir under the UPC. 30

But we’re dealing with a third-party’s trust

The rules that govern James as decedent do not necessarily apply to Martin as donor

Moreover, the trust interests are future interests. We don’t have the need to wind up a decedent’s estate in a timely fashion (p. 128) The relevant statutes for future interests include

posthumously-born children in the definition of issue, but they did not anticipate posthumously-conceived children

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Are James’ children eligible for trust sprinklings?

General trusts and estates principles hold that a child of assisted reproduction should be treated as any other child of the decedent if the decedent considered the child as his or her own (pp. 128-129)

In this view, the two boys are part of Martin’s bloodline, and Martin intended the trusts to benefit all the members of his bloodline The court observed that under the trust instruments,

Martin’s intent was to have the trust “benefit his sons and their families equally” (page 129) 32

Testator ($50,000)

Daughter A ($10,000) Daughter B ($0) Daughter C ($0)

1. Testator’s estate at death: $50,000.00 3. Daughter A's share $20,000.00

plus advancements $10,000.00 minus advancements $10,000.00

Total hotchpot $60,000.00 $10,000.00

2. Hotchpot divided by 3 heirs: $20,000.00 4. Daughter B's share $20,000.00

minus advancements $0.00

$20,000.00

5. Daughter C's share $20,000.00

minus advancements $0.00

$20,000.00

Advancements: Hotchpot Example Advancements: hotchpot example

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Presumption against treating lifetime gifts as advancements—gifts may reflect a desire to favor the recipient

UPC § 2-109(a) treats gift as an advancement only if (i) the decedent declared in a contemporaneous writing or the heir

acknowledged in writing that the gift is an advancement or (ii) the decedent's contemporaneous writing or the heir's written

acknowledgment otherwise indicates that the gift is to be taken into account in computing the division and distribution of the decedent's intestate estate

Ind. Code § 29-1-2-10 (1) the decedent declared in a writing or the heir acknowledged in

a writing that the gift is an advancement; or (2) the decedent's writing or the heir's written acknowledgment

otherwise indicates that the gift is to be taken into account in computing the division and distribution of the decedent's intestate estate. 34

Guardianship of minors Guardianship of the property

Subject to burdensome and costly judicial supervision and should be avoided.

Conservatorship A guardian of property with investment powers similar to

those of trustees, more flexible than guardianship. Custodianship

A person is given property to hold for the benefit of a minor under the UTMA or UGMA. Useful for modest funds.

Trusts Flexible and highly customizable property management

arrangement. Don’t expire when child reaches age 18 or 21 35

UPC intestacy rules (p.73)Facts 1990 UPC § § 2-101 to 2-106 (rev. 2008)

S; no D; no P §2-102(1)(A) all S

S; D §2-102(1)(B) all S only if all D are also S’s and S’s only kids§2-102(3) $225K + 1/2 S if D are also S’s but S has others; rest D§2-102(4) $150K + 1/2 S if one or more D is not S’s; rest D

S; no D; P §2-102(2) $300K + 3/4 S; rest P

no S; D §2-103(a)(1) all D (per capita at each generation)

no S; no D; P §2-103(a)(2) all P

no S; no D; no P; B or S §2-103(a)(3) B or S (per capita at each generation)

no S; no D; no P; no B or S; G or GD

§§2-103(a)(4) and (5) 1/2 paternal G; 1/2 maternal G or all to maternal or paternal if no survivors on other side – per capita at each generation

no S; no D; no P; no B or S; no G or GD

§2-103(b) stepchildren§2-105 escheat to state; therefore no “laughing heirs”; note: no great grandparents

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Maryland law

An adopted child shall be treated as a natural child of his adopted parent or parents. On adoption, a child no longer shall be considered a child of either natural parent, except that upon adoption by the spouse of a natural parent, the child shall be considered the child of that natural parent. Md. Estates and Trusts Code Ann. §1-207(a)

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