Tag Archive for 'beneficiary'

Wouldn’t This Be Nice

Joel Shoenmeyer writes here about the (relatively) new Illinois law (Public Act 95-0784) that allows an individual to name a beneficiary of a car thus allowing it to pass outside of probate…  This would be great.

There is only so much work one can do in Ohio to assitt clients with avoiding probate but there’s always something…  Whether its the $1,500 burial policy the decedent took out in 1964 or a car, it can be dificult to escape the ever-widening grasp of probate courts. 

It is true that in Ohio one can own a car jointly which would vest survivorship rights in the surviving joint-owner after the death of the first, but jointly owning assets has its own headaches (I’m thinking mostly of liability here) that make it ill-advised as a planning device to invoke solely for probate avoidance.  There is also the allowance that a surviving spouse can take any two cars of their deceased spouse so long as their aggregate value is less thatn $40,000 and that can be done with an affidavit only (without having to open a full estate).

Here’s hoping our legislature take a short look west and takes the hint.  This would be nice.

Thanks Joel!

“Adopted-Out” Child Loses Out On Millions From Jell-O Fortune

This interesting read at Trusts & Estate.com tells the story of Elizabeth McNabb of Longview, Wash.:

In 1889, Orator Francis Woodward purchased the rights to JELL-O gelatin for $450. In 1926 and 1963, his daughter Florence created two irrevocable trusts for the lifetime benefit of her daughter, Barbara Woodward Piel, and upon Barbara’s death, for the benefit of Barbara’s “descendants” and “living “child[ren]”.

Barbara died in July of 2003. In October 2004, Fleet Bank instituted proceedings for judicial settlement of the trusts’ final accounts. The total amount of trust principal at stake was about $9.7 million.

Barbara had three daughters. The first, Elizabeth McNabb, was born out-of-wedlock in 1955—the result of an affair with a married man. Within days of the birth, Barbara relinquished her parental rights and consented to Elizabeth’s adoption by strangers. (There was no evidence presented that the grandmother Florence Woodward knew of Elizabeth’s birth or adoption.) Barbara’s other two daughters, Stobie Piel and Lila Piel-Pullman, were born of her marriage to Michael Piel.

According to news reports about the case, Elizabeth began her quest to locate her birth family in 1974. She finally uncovered her birth mother’s identity, Barbara Woodward of Rochester, New York, in 1988 when she located a copy of her birth certificate. She then telephoned every Woodward in a Rochester telephone book, ultimately locating her mother’s cousin who provided Elizabeth with her mother’s married name. Elizabeth contacted Barbara, and they developed a relationship. After Barbara’s death in 2003, Fleet Bank contacted Elizabeth and requested proof of her relationship with Barbara. But the bank apparently later decided that Elizabeth was not entitled to a share of the trusts benefiting Barbara’s children.

The story ends with In the Matter of the Accounting by Fleet Bank, as Trustee of the Trust f/b/o Barbara W. Piel, 2008 WL 656471 (N.Y.), 2008 N.Y. Slip Op. 02082, March 13, 2008 and a ruling that Ms. McNabb is not entitled to receive any of the trusts’ income or principal.

The court emphasized the public policy considerations underlying Best of “fully assimilating the adopted child into the adoptive family and . . . the importance of keeping adoption records confidential.”

The court also expressed concern regarding the “lurking possibility” of “secret out-of-wedlock” children compromising the finality of judicial verdicts. Whereas, in this case, Elizabeth proactively intervened in the trustee’s accounting action, in other cases, the family might not know of the adopted child, thereby placing an “onerous” burden on a trustee to search out unknown potential beneficiaries.

The court said its ruling did not depend on Elizabeth’s status as a non-marital child and therefore did not implicate any equal protection concerns. It also said that to side with the appellate court would create two classes of adopted persons: those that could inherit from both biological and adoptive parents because the instrument was executed prior to 1964 when state law changed, and those cut off from the biological family because the instrument was executed after that date.

A Growing Conflict

Many states have laws that describe what happens when a child is conceived during the term of a marriage but not born until after one of the parents passes away. But what happens when a child is posthumously-conceived? What happens when a child is conceived after the death of one of the parents? The two cases below seem to hint at a growing conflict among the few state courts that have addressed the issue:

  1. In this post a The New York surrogate court was asked the following question: “Are posthumous children conceived using biotechnology “issue” and “descendants” for purposes of being beneficiaries of a trust?” They answered in the affirmative. In In re Martin B. (Sur. Ct. 2007), 841 N.Y.S.2d 207, a wife preserved her husband’s sperm and, several years after his death, used it to conceive two children. Decedent’s father had a trust that allowed portions of his trust’s principal to be distributed to his “issue” and “descendants.” This case was brought after decedent’s death to decide whether the settlor’s son’s posthumous children were qualified beneficiaries of this trust.

    Professor Berry
    writes: “In deciding this issue, the court considered The Restatement of Property. The Restatement provides that a child of assisted reproduction is considered a child of a person who consented to parenthood but was prevented from becoming a parent by death. The court stated that “if an individual considers a child to be his or her own, society through its laws should do so as well.”
  2. This case appears to go the other way… Posted here is the retelling of this story from the Arkansas News Bureau, Jan. 11, 2008 titled: Court: Embryo implanted in mother’s womb after father’s death not an heir: “A child conceived through in vitro fertilization but implanted in his mother’s womb after his father’s death is not automatically considered his father’s heir under Arkansas’ inheritance laws, the state Supreme Court said Thursday in an advisory opinion.The court issued the opinion in response to a request from a federal judge in an Arkansas woman’s lawsuit against the Social Security Administration over its denial of her claim for “child’s insurance benefits.”The Supreme Court noted that the state statute governing intestacy * * * was enacted in 1969, before the technology of in vitro fertilization was developed, and therefore does not address the issue.Because the law predates the technology, “we can definitively say that the General Assembly … did not intend for the statute to permit a child, created though in vitro fertilization and implanted after the father’s death, to inherit under intestate succession,” Justice Paul Danielson wrote.

    Danielson wrote that it is not the court’s role to create law, but he added that “we strongly encourage the General Assembly to revisit the intestacy succession statutes to address the issues involved in the instant case and those that have not but will likely evolve.”

    The full case can be downloaded as a PDF here. The court took the much easier way out by relying on the implicit intent of the general assembly and expressly declined to define the word “conceive.”

Many thanks (again!) to Professor Berry for his wide reach among the various experts in this field. To our great benefit his resources appear to be limitless.