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New Case: Inheritance Rights of “Adopted Out” Children in New York

A case recently came before a New York court that delved into a very unique inheritance issue. The case, Matter of Svenningsen involved the inheritance rights of “rejected” adopted children. “Rejected” is a harsh word, but refers to children who were adopted and whose adopted parents terminate parental rights. It is a rare occurrence, but various health issues or circumstantial factors may make such change in parental rights necessary in some cases.

The circumstances in the Svenningsen case are somewhat complex. Essentially, a New York family adopted a child, Emily, from China in 1996. The family had executed a trust in 1995 the had specifically included adopted children. A second trust was executed in 1996 that specifically named Emily. Sadly, the patriarch of the family died the following year, in 1997.

Eventually, Emily began attending a boarding school for children with special needs. Apparently Emily developed a close bond with those working at the school. As such, several years later, in 2003, Emily’s adopted mother agreed to terminate her parental rights under the assumption that Emily would be adopted by one of the director’s of her boarding school. No mention of Emily’s trust was provided during that second adoption hearing.

Emily’s Inheritance Rights
Eventually the new adopted parents learned that Emily’s first adopted father had created the trust in her name to pay for her medical and educational needs. The new parents sought to obtain access to those funds, but the first adopted family rebuffed the effort. The case escalated and ended up in a New York court. The original adopted family claimed that Emily’s interests in the trust were terminated upon the second adoption.

However, in a first impression ruling, the court determined that Emily’s inheritance rights were not actually terminated. The New York Surrogate’s ruled that her interests in her original adopted father’s estate (via trusts and inclusion in the will) were complete. Those interests had “vested” and she did not lose those inheritance rights because she was “adopted out” several years later.

The case is ultimately a re-affirmation that adopted children have equal standing with biological children in all regards. Previous courts had ruled that biological children who are “adopted out” do not lose inheritance interests in this regard. As a result of the ruling in this case, the same applies to adopted children who are “adopted out” again.

However, it is still important for families with adopted children to be careful to update estate plans following an adoption or other change in family structure. Depending on how trust documents or wills are written, children may be left out or desired protections may not actually be in place. Be sure to speak with your estate planning attorney after any major life event such as this.

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