New York Law Journal
We live in a brave new world of emerging reproductive technologies, in which the term "natural child," historically meaning the biological child of two parents, is a little more complicated. In the not too distant past, before DNA tests were readily available to determine paternity, the father's claim to be the parent—or not to be the parent—was something that was not provable to a scientific certainty. Blood tests could rule out paternity in certain cases, but could not prove paternity.
Now, of course, DNA tests carry almost 100 percent certainty of determining paternity. Also, in the past, there was never a doubt as to maternity: if a woman gave birth, the child was her natural child and no test or other proof of sanguinity was needed or even contemplated. Now, of course, at least four people could have credible claims to be the parents of their "natural child:" the biological mother or egg donor, the woman who carries the child (the "gestational mother"), the biological father or sperm donor, and the spouse of the gestational mother who may or may not be the biological father (whether the child is a product of the gestational mother's own egg or one that was donated) because there is a presumption that a child born to a married couple is the child of each spouse in that marriage.
Against this backdrop, adoption seems to hold no ambiguities, no ethical conundrums about who is the parent: If a child is adopted, he or she is for all purposes the child of the adopting parent and as such is equal in the law to a natural or biological child. Most would agree that the adopted child is and should be entitled to the same support and inheritance rights granted by law, and to be included in the class of persons who are the adoptive parent's issue, descendants or children for purposes of construing instruments that dispose of interests to a class consisting of such persons. This is certainly so in cases of parental support and inheritance in intestacy, and this is also true in the case of testamentary and inter vivos provisions, but perhaps not as completely or absolutely as one might believe. Certain older instruments carry the baggage of the so-called "precautionary addendum," an antiquated rule that arguably should not have a place in modern law but which is very much still alive and kicking, as illustrated by the recent case of Estate of E. MacGregor Strauss, 5101/89, NYLJ 1202492108594, at *1 (Surr. N.Y. Co., April 21, 2011).
DRL §117
The rights of adopted individuals to be treated as natural children of the adoptive parent, or more precisely, the law's treatment of adopteds as equal to and indistinguishable from natural children, is set forth in Domestic Relations Law ( DRL) §117 (which derives from prior DRL §115 and former DRL §114). Adopted individuals are to be fully assimilated into the adoptive family for all legal purposes and to cease to be legal members of the natural or birth family, except in limited circumstances for certain adoptions within the natural family.1 For testate and intestate individuals dying on or after March 1, 1964 and for dispositions under inter vivos instruments executed on or after that date or before that date that were revocable or amendable on that date, the right of an adopted to inherit or to take from and through the adoptive parent as a child, issue, descendant or heir of the decedent, testator or creator of the instrument is absolute.
However, for inheritance from or dispositions by an individual who died before March 1, 1964, and for individuals who executed instruments that were or became irrevocable prior to that date, DRL §117(3) retains prior law. Under that law, adopteds were treated as natural children for all purposes but with the key exception that the precautionary addendum could still apply. The precautionary addendum provided that "as respects the passing and limitation over of real or personal property dependent under the provisions of any instrument on the foster [adoptive] parent dying without heirs, the person adopted is not deemed the child of the foster [adoptive] parent so as to defeat the rights of remaindermen."2
The precautionary addendum defers to the bygone time when the presumption was that a testator or grantor of a trust (who may be referred to simply as the "testator" for ease) intended to include only blood descendants and not adopted descendants unless he or she indicated otherwise. Earlier law included extensive debates about whether an adoption should be allowed to defeat the passage of the remainder to those alternative individuals specified to take upon a beneficiary's death without issue, descendants or heirs, as there was much concern for the ability of a beneficiary to adopt after the testator or grantor had died and perhaps even adopt an adult with whom the beneficiary did not have a true parent-child relationship. This was often referred to as a fraud upon the contingent remainderman that was contrary to the intent of the testator.3
Case Law
The rule thus emerged that if there was evidence the testator intended to include adopteds, the general rule of including adopteds on par with natural descendants would apply and the precautionary addendum would not.4 A further refinement occurred when the case law, as embodied in the Court of Appeals cases Matter of Park and Matter of Silberman,5 found that the precautionary addendum did not apply where permitting the adopted child to take would not defeat but would simply reduce the size of the remainder going to other remaindermen. For example, where a trust provides beneficiary A with a lifetime income interest and directs the remainder be distributed at her death to her issue who survive her, and A is survived by both of her children, one natural and one adopted, the children would share the remainder equally even if the trust was created before March 1, 1964, because the inclusion of her adopted child in the class of her issue would not defeat the natural child's remainder interest, but would merely reduce it.
Matter of Gardiner, 69 NY2d 66 (1986), in which a power of appointment was construed as evidence of intent to go outside the bloodline and thus not exclude adopteds, clarified that (i) the precautionary addendum only applied where the act of adoption alone defeated the remainder and did not simply reduce it, and (ii) the precautionary addendum would not apply where there was intent that the testator or grantor intended to include adopteds. Thus, where there is no evidence of intent, the sole inquiry must be whether the interests of remaindermen would be wholly defeated solely by the treatment of the adopted descendant as a natural descendant.
The 'Strauss' Case
Surrogate Nora S. Anderson was presented in the Strauss case with facts that she found fell squarely within the precautionary addendum. Anne Archbold established a trust by irrevocable instrument dated Oct. 5, 1957, for the lifetime benefit of her daughter Lydia Foote, and directed the trust to be divided on Ms. Foote's death into equal shares for her children, which were to be held in further lifetime trusts for them. These trusts were to terminate, respectively, when a child died and the trust remainder was to be paid to the child's "descendants...per stirpes and if such child shall leave no descendant him or her surviving...then to the descendants then living of Lydia A. Foote, per stirpes..."
Ms. Foote died in 1988 survived by her three children, E. MacGregor Strauss (Strauss), Armar Strauss (Armar), and Lydia Delauny (Lydia). Mr. Strauss had no natural children and in 2005, 21 years after his marriage, adopted his wife's children from her prior marriage. These children were minors at the time of the marriage but age 28 and 30, respectively, at the time of the adoption. When Mr. Strauss died in 2008, his sister, Lydia, claimed that his adopted children were not entitled to take the remainder of Mr. Strauss' trust, invoking the precautionary addendum.
Surrogate Anderson found that Lydia was right, and the precautionary addendum applied, since Mr. Strauss' adopted children would completely preclude the remainder from passing to the contingent remaindermen. Thus the remainder was held to pass pursuant to the alternative disposition to Ms. Foote's then living descendants, per stirpes. Ms. Foote's then living descendants, determined in per stirpes manner, would be Armar as to one-third, Lydia as to one-third, and the adopteds sharing equally Mr. Strauss' one-third share.
Despite the incongruity of excluding these two individuals as their adoptive father's descendants but including them as his mother's descendants, the Surrogate properly found no basis to exclude them from sharing as Ms. Foote's living descendants because their inclusion in the class of living descendants of Ms. Foote would reduce but not eliminate the remainder passing to the other surviving issue of Ms. Foote. Thus one-third of the trust remainder was directed to be paid to Mr. Strauss' adopted children, one-third to Armar and one-third to Lydia.
Intent
Despite the incongruity of treating Mr. Strauss' children as issue of grandmother Lydia Foote but not of their father, since their status as issue of Ms. Foote was derived through their status as Ms. Strauss' children by adoption, the analysis holds in the context of complete versus partial defeat of the interests of remaindermen. What is curious, however, is the Surrogate's statement that "[t]here is no occasion to analyze the settlor's intent to see whether there is ground to exempt the trust from the effects of the precautionary addendum." It appears that the statement refers to the irrelevance of examining intent with regard to the second portion of the analysis (the precautionary addendum's inapplicability where the remainder is only reduced, not defeated), which is correct; the precautionary addendum clearly would not apply to preclude the passage of one-third of the remainder to Mr. Strauss' adopted children.
It is not clear whether intent was examined in connection with the first portion of the analysis (where the precautionary addendum was found to apply), as the intent of the creator is always relevant where the precautionary addendum is invoked; here, an intent to include adopteds would increase the share of the two adopted children from one-third of the remainder of their father's trust to all of it. If no evidence of such intent could be shown from a reading of the instrument and the surrounding circumstances (taking into account any presumption that the creator intended to include, rather than preclude, adopteds), the analysis would have clearly preserved for Strauss' adopted children as much of the remainder as was possible under the circumstances.
Take-Away From 'Strauss'
For the practitioner who encounters a trust held under a pre-March 1, 1964, instrument or the will of a testator who died prior to that date, the "take-away" from the decision is that an inquiry to determine whether any possible takers were adopted is probably advisable and, in anticipation of a possible challenge based on the precautionary addendum, an attempt should be made to garner evidence of the testator's or grantor's intent regarding adopted individuals. Unfortunately, this may prove to be fairly difficult in many if not most cases.
Where possible, an available power of appointment should be exercised, and, if the governing instrument permits the trustees to change the situs of the trust with the effect of changing the law applicable to its construction, consideration should be given to moving the situs to a jurisdiction that never had, or at least no longer applies, a rule like the precautionary addendum. Invoking the provisions of EPTL §10-6.6 to "decant" the trust may also prove to be an option in certain cases.
Footnotes:
1 As a corollary of complete integration into the adopted family, the adopted individual is essentially legally excised from the natural family and cannot, except in limited circumstances, inherit from or through the natural family or take under testamentary or inter vivos instruments that create class gifts or dispositions that would have included the adoptee had she not been adopted into another family. DRL §117(1)(e) and (2)(b) provide for the exception in cases where the intestate decedent who dies after Aug. 31, 1987, or the testator or creator who executed the will or other instrument after Aug. 31, 1986, is the birth grandparent of the adopted child (or a descendant of such grandparent) and the child is adopted by the birth parent's spouse, the birth grandparent or an individual descended from the birth grandparent. See also Matter of Best, 66 NY2d 151 (1985).
2 The same language was included in both former DRL §114, which was re-enacted as DRL §115 in 1938, which was renumbered as DRL §117 in 1961.
3 See, e.g., Matter of Park, 15 NY2d 413, 418 (1965) and Matter of Walter, 270 NY 201, 206 (1936).
4 See, e.g. Matter of Upjohn, 304 NY 366 (1952) (where the testator had knowledge that a niece named as an income beneficiary had adopted a child 11 years before he drew his will, he was presumed to have intended to include adopteds when he used the term "lawful issue or descendants.")
5 23 NY2d 98 (1968).
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