Appellate Division Decides Case of First Impression Concerning “Adopted Out” Child’s Right Of Inheritance
March 04, 2013
The term “adopted-out” child, commonly used by the courts, refers to a child adopted out of his or her biological family, i.e., a child placed for adoption by his or her biological family. A detailed discussion of the inheritance rights of adopted-out children is available here. Recently, in a case of first impression, Matter of Svenningsen, the Appellate Division, Second Department, addressed the inheritance rights of a child adopted by the decedent (prior to his death, of course) and his spouse, but subsequently re-adopted out to another family eight years after the decedent’s death.
The child, Emily, was born in China on July 7, 1995. The decedent, John Svenningsen, and his wife, Christine, formally adopted Emily in 1996. They entered into a Chinese adoption agreement in which they guaranteed that they would deem Emily to be their biological child; that they would not transfer or have her re-adopted; and that Emily had a right to inherit from their estates.
The decedent died on May 28, 1997, survived by Christine, five biological children, and Emily. He left a Last Will and Testament dated March 17, 1997 (which was admitted to probate in July of that year), as well as two irrevocable inter vivos trusts for his children, dated July 20, 1995, and October 29, 1996.
In the 1995 trust, created prior to Emily’s adoption, the decedent directed the division of the trust assets equally among his children, when the oldest child reached the age of 30. The trust defined the term “children” to include the decedent’s four living children (the fifth had not yet been born), identified by name, “and any additional children born to or adopted by [the decedent] after the creation of this Trust.”
The 1996 trust established six equal and separate irrevocable trusts, one for each of the decedent’s children. Each child, including Emily, was expressly named as a beneficiary. The trust instrument identified Emily as the sole beneficiary of her separate irrevocable trust, denominated as “The Emily Fuqui Svenningsen Trust.”
The decedent’s Will created two testamentary trusts – a credit shelter trust and a marital trust. The credit shelter trust was for the benefit of the decedent’s “then living issue, per stirpes. . . .” The marital trust was to be funded upon Christine’s death for the benefit of the decedent’s “then living issue, per stirpes. . . .” The Will defined the term “issue” as including “children who have been legally adopted at the date of my death as well as children with respect to whom legal adoption proceedings had been commenced prior to the date of my death though not completed at the time of my death.”
In 2003, approximately six years after the decedent’s death, Christine enrolled Emily in a school for children with special educational needs. Christine’s attorneys contacted school administrators, inquiring about putting Emily up for adoption. Ultimately, Maryann Campbell, a school official, and Fred Cass, her husband (for ease of reference, the “Petitioners”), agreed to adopted Emily. Christine terminated her parental rights with respect to Emily in 2004. The re-adoption was consummated in 2006 by court order. When they adopted Emily, the Petitioners were unaware of the provisions of the decedent’s will or trusts, although they were ultimately advised that the decedent had arranged money for Emily’s education and medical needs.
In November, 2007, Christine’s financial advisor requested the Petitioners’ consent to separate Emily’s interest in the decedent’s estate from those of the decedent’s biological children, through the creation of a spray trust. In connection with that request, the advisor provided the Petitioners with a list of estimated values of estate assets, and estimated Emily’s interest in the trusts at $842,397. Ultimately, the Petitioners examined the files of the Westchester County Surrogate’s Court and learned that the decedent’s estate had an estimated value, on the estate tax return, of $250,000,000. The Petitioners commenced proceedings seeking to compel accountings with respect to Christine’s administration of the decedent’s estate, and with respect to the 1995 and 1996 trusts.
The respondents in each of the proceedings asserted affirmative defenses based on Emily’s alleged lack of standing. The Petitioners moved for summary judgment compelling the accountings and the respondents cross-moved for summary judgment dismissing the petitions. Among other things, respondents argued that Emily’s contingent interests in the trusts were extinguished upon adoption. The Surrogate’s Court, Westchester County, granted the Petitioners’ motion and denied respondents’ cross-motion. The court directed the respondents to account. An appeal ensued.
The Second Department affirmed, in a decision authored by Justice Leonard B. Austin.
The court began its analysis with a review of the law concerning the inheritance rights of adopted and adopted-out children, including a detailed discussion of Domestic Relations Law § 117 and Estates, Powers and Trusts Law 2-1.3. It then turned to the Court of Appeals’ decision in Matter of Best, 66 NY2d 151 ). At issue in that case was the right of an adopted-out child to inherit from his biological maternal grandmother. The Court held that, absent a contrary indication in the will, an adopted-out child is not entitled to share in a class gift to issue in the will of a biological relative. The Appellate Division explained that Best “remains relevant for the policy considerations enunciated in support of termination of an adopted-out child’s right of inheritance.”
The court summarized the issues before it as “whether the decedent expressly intended to include Emily as a beneficiary under the subject trusts and whether Emily’s interest in those trusts vested prior to her being adopted by the petitioners.” The court answered both those questions in the affirmative.
First, as to the decedent’s intent, the court noted that Emily was expressly named in the 1996 trust; and although she is not mentioned specifically by name in the Will or in the 1995 trust, “she is plainly referred to by status in both instruments” — referring to definitions of the term “issue” in the trust instrument and in the Will. The court rejected respondents’ argument that the court should dismiss as “mere surplusage” the inclusion of adopted children in the definition of “issue.” In sum, the court concluded that
Emily’s adoption by the petitioners did not, and was not intended to, terminate her interest in the Marital Trust or the 1995 Trust. The decedent expressed an intention to include his adopted child in the absence of any reason to believe that his status as the parent of Emily would be terminated by her subsequent adoption many years after his death. Further, at the time of the decedent’s death, Emily was not an “adopted-out” child but instead was, and remained, his issue, as defined by the Trust instruments, despite the subsequent unforeseeable actions of Christine.
Turning to the issue of whether Emily’s rights in the trusts vested prior to her re-adoption, the court concluded that “while the rights of Emily and the other beneficiaries may be inchoate, they are, nevertheless, vested by their inclusion in the trust document. Thus, Emily’s interests under the decedent’s will and the 1995 Trust fully vested, subject only to the condition of her survival as provided for in the instruments (citation omitted).”
The court further noted that SCPA 2205 permits a “a person interested” to compel an accounting. A “person interested” is defined by SCPA 103(39) as “[a]ny person entitled or allegedly entitled to share as beneficiary in the estate.” The court concluded that Emily was a “person interested” and entitled to an accounting. Therefore, absent a genuine issue of fact requiring a trial, the Surrogate’s Court properly granted summary judgment in the Petitioners’ favor.
One thing is clear from the Svenningsen decision. Regardless of how convoluted the facts of a given case, or how complex the law governing its resolution, when it comes to inheritance rights, the courts are guided predominantly by the decedent’s intentions.