The gist of this blog post is to make sure you know what “adoption” provisions exist in your estate planning documents. The recent Georgia testamentary trust case I discuss below goes directly to adoption, and provides fodder for some possible augmented, creative estate planning by use of adult adoption. I am not judging below whether such planning is good, bad, or appropriate; but, rather note there exist many creative minds in the field of estate planning.
The recent Georgia Court of Appeals opinion is Morse v. Suntrust Bank, N.A., No. A22A0200, 2022 Ga. App. LEXIS 242 (Ct. App. May 16, 2022). This opinion raises an important question about estate planning and adoption. In this instance, adoption of an adult.
Let me preface my comments with the point that I am in favor of the inclusion of adopted individuals in estate planning documents, subject to final decision by each client. I typically under the express language of the estate planning document (Will, trust, etc.) include a limitation that adopted persons must be adopted prior to the age of majority (e.g., 18).
In this Morse opinion the appeals court had to address a multi-generational family trust (a 1967 testamentary trust under a Will) that included equal subtrusts for each of 13 grandchildren named in the trust document. The trust included language also that the number of grandchildren would increase for any grandchildren “born to me, whether during my lifetime or after may death . . .”, with the number of grandchildren trusts to increase accordingly.
The trust also provided that if a grandchild dies without descendants, his or her share is divided and added equally to the other remaining trusts. The 1967 Will included no express exclusion of adult adoptees.
Here is the kicker:
One of the 13 named grandchildren (“Molly”) never had biological children. But, in 2018 Molly adopted two adults, ages 34 and 36. The trial court record included an acknowledgment by Molly that she adopted the two adults, in part, so that they could receive distributions from her trust share. The other trust beneficiaries objected to Molly’s inclusion of the two adopted adults as beneficiaries of her trust share under a judicial theory of “subterfuge”. This is a legal doctrine involving committing fraud on a court by doing something the law allows, but creating a circumstance the law otherwise seeks to avoid (or should seek to avoid). The trial court agreed with the opposing beneficiaries on this theory of subterfuge.
However, the Court of Appeals reversed the trial court, and rejected the subterfuge argument. The appeals court concluded the trust document placed no limitation on an adult adoption, neither did the applicable Georgia adult adoption statute include language contrary to Molly’s inclusion of the two adopted adults so as to make them beneficiaries of her trust share.
[This Morse case, dealing with a 1967 trust, involved the Georgia adoption statute that existed prior to the current version enacted in 1990. In my view, the pre-1990 and 1990 statutes are sufficiently similar so that the rational expressed by the appeals court in Morse would arguably apply to a trust or Will created 1990 and thereafter.]
So, again bottom line, see what your documents state about adoption, or if silent in reference to adoption. Also, review what language is in your document for a beneficiary’s limited power of appointment, such as a class of appointees “related” to the beneficiary by adoption or birth, etc. Creativity, especially in trust and estate litigation, is abundant. And, most often costly.
Email me and I will be glad to send you a pdf copy of the above Morse opinion, and the current Georgia adult adoption statute. firstname.lastname@example.org