1. Questions
  2. Talking to Children About Wealth
  3. Sibling Rivalry
  4. Disinheriting a Child
  5. Equal Inheritance v. Fair Inheritance
  6. Outright or in Trust?
  7. During Life or At Death?
  8. Infant
    1. Legal Definition
  9. Issue
    1. Appointing a Guardian in a Will
    2. Trust for Minors in a Will
  10. Step Child
  11. Disabled Child
    1. Supplemental Needs Trust
  12. Child with Mental Illness
  13. After-born Child
  14. Child Performers
  15. A Spendthrift Child
  16. Pretermitted Child
  17. Ways to Fund Education
    1. Coverdale Education Savings Accounts
    2. Custodial Accounts (under UGMA or UTMA)
      1. Disadvantages of Custodial Accounts
    3. 529 Plans
    4. 2503(c) Trusts (or “Minor’s Trusts”)
    5. Tuition-Only Trusts (Health & Education Exclusion or HEET Trusts)
    6. Crummey Trusts
  18. Meaning of Children
    1. Adopted Child
      1. Adoption Did Not Exist at Common Law
      2. NY Law Has Three Scenarios for Adoption
      3. Inheritance Rights of Adopted
      4. Intrafamily Adoption

Questions

Talking to Children About Wealth

When should parents start talking to their children about the parents’ money?

Sibling Rivalry

What are some common causes of sibling rivalry?

How can advisors help families avoid conflict between siblings?

Disinheriting a Child

New York law allows parents to disinherit children. Children don’t have a right to a forced share.

Equal Inheritance v. Fair Inheritance

How should parents treat their children? Treating children equally doesn’t always mean treating them fairly; treating them fairly doesn’t always mean equally.

Option 1: Equal Inheritance

When parents intend to treat their children equally, they should be careful:

  • Give children similar assets because some assets might perform better or be taxed differently.
  • Don’t forget to examine assets that the children might receive outside of a will (such a totten trust or retirement assets that have the child named as a beneficiary).

Option 2: Unequal Inheritance

Reasons parents might decide to leave a child more:

  • One child might need more because the child is in a lower-paying career.
  • The child provides care for the parent.
  • One child has children while the others don’t.
  • The child has a disability.
  • The parents gave more to one child while they were alive (for example, to pay for college or help buy a house), so the parents want to equalize past gifts. “When the parent ignores past gifts and opts for equal shares, children who received less help during the parent’s life may resent that decision, lawyers say,” writes Susan B. Garland in The Unequal Inheritance: It Can Work, or It Can ‘Destroy Relationships’, NY Times, Feb. 19, 2021.

Downsides of an unequal inheritance:

  • It can trigger fights among siblings after the parents die.
  • Children who receive less might feel like their parents loved them less.
  • Children who receive less might accuse the others of unduly influencing their parents.

“To head off sibling strife, parents should explain their decision to each child individually or as a group, or even seek mediation,” writes Garland.

Outright or in Trust?

Should you give to children outright or in trust?

It many not be prudent to make an outright gift to a child that has a mental illness or an addiction.

During Life or At Death?

Infant

EPTL 1-2.9a Infant or minor

As used in this chapter, the term “infant” or “minor” means a person who has not attained the age of eighteen years, provided, however, that such definition shall not be applicable to any provision relating to the New York Uniform Transfers to Minors Act, nor to section 13-3.4.

Issue

EPTL 1-2.10 Issue

(a) Unless a contrary intention is indicated:

(1) Issue are the descendants in any degree from a common ancestor.

(2) The terms “issue” and “descendants”, in subparagraph (1), include adopted children.

Appointing a Guardian in a Will

Trust for Minors in a Will

Step Child

Did the non-birth parent adopt the child? A step-child who was not adopted has no inheritance rights from a non-birth parent.

If there is a step child, a couple in a second marriage should not leave everything to the surviving spouse.

Disabled Child

Supplemental Needs Trust

Child with Mental Illness

Amanda Koplin, Amy Effman & Martin M. Shenkman, Planning for Beneficiaries With Mental Illness or Addiction, Wealth Management, Sept. 15, 2020 (provides discovery questions estate planners can ask clients).

After-born Child

Child Performers

A Spendthrift Child

A spendthrift child should be given an inheritance in trust, not outright.

Pretermitted Child

Ways to Fund Education

There are non-trust and trust ways to fund education:

  • Non-trust: (1) Coverdale Education Savings Accounts, (2) Custodial Accounts (under UGMA or TUMA), and (3) 529 Plans
  • Trusts: (1) 2503(c) Trusts (or “Minor’s Trusts”), (2) Tuition-Only-Trusts (Health & Education Exclusion Trusts or HEET Trusts), and (3) Crummey Trusts

Coverdale Education Savings Accounts

A disadvantage of Coverdale Education Savings Accounts is that annual contributions are limited to only $2,000.

Custodial Accounts (under UGMA or UTMA)

Disadvantages of Custodial Accounts

  • Parents’ contribution is irrevocable and nonrefundable by a child-beneficiary
  • Trust assets are included in the parents’ taxable estate (until the child is 18 or 21)
    • The child-beneficiary can use the money as the child-beneficiary wishes after reaching the age of majority.
    • For financial aid purposes, trust assets are treated as the child’s assets, so a higher percentage is counted as ‘available’ (35% or 20%)

–>

529 Plans

What is the rule re bunching of 529 plan contributions?

2503(c) Trusts (or “Minor’s Trusts”)

Tuition-Only Trusts (Health & Education Exclusion or HEET Trusts)

Crummey Trusts

Meaning of Children

Adopted Child

Adoption Did Not Exist at Common Law

Adoption did not exist at common law, so it exists under statutory enactments. In Hall v. Vallandingham,1 the Court of Special Appeals of Maryland gives a “thumbnail” history of adoption:

Adoption did not exist under the common law of England,2 although it was in use “[a]mong the ancient peoples of Greece, Rome, Egypt and Babylonia.” M. Leary and R. Weinberg, Law of Adoption (4th ed. 1979) 1; Lord Mackenzie, Studies in Roman Law, 130-34 (3rd ed. 1870). The primary purpose for adoption was, and still is, inheritance rights, particularly in “France, Greece, Spain and most of Latin America.” Leary and Weinberg, Law of Adoption, 1. Since adoption was not a part of the common law, it owes its existence in this State, and indeed in this nation, to statutory enactments.

. . .

The right to receive property by devise or decent is not a natural right but a privilege granted by the State. . . . Every State possesses the power to regulate the manner or term by which property within its dominion may be transmitted by will or inheritance and to prescribe who shall or shall not be capable of receiving that property. A State may deny the privilege or may impose whatever restrictions or conditions upon the grant it deems appropriate. Mager v. Grima, 49 U.S. 490 (1850).3

In Seaman, the New York Court of Appeals gives an overview of the history of adoption in New York:

Adoption was unknown to the common law of England: it exists in New York only by statute (see, Second Report of Temp St Commn on Modernization, Revision and Simplification of Law of Estates, “Intestate Succession and the Adopted Child”, 1963 NY Legis Doc No. 19, Appendix E, at 148-160; 9 Rohan, NY Civ Prac para. 4-1.1 [11]). Because of this, a legal adoption does not automatically terminate the children’s right to inherit from their natural kindred, nor grant them the right to inherit from their adoptive family (see, Second Report of Temp St Common on Modernization, Revision and Simplification of Law of Estates, “Intestate Succession and the Adopted Child”, 1963 NY Legis Doc No. 19, Appendix E, at 148-152). Rather, these inheritance rights are controlled by statute.

In 1887, the Legislature granted adopted children and their heirs the right to inherit from their adoptive parents; their right of inheritance from the natural parents were not altered, however, because the statute failed to sever them (see, L 1887, ch 703; see generally, 9 Rohan, Ny Civ Prac para 4-1.1 [11]; Note, When Blood Isn’t Thicker Than Water: The Inheritance Rights of Adopted-out Children In New York, 53 Brooklyn L Rev 1007, 1011-1012 [1988]). Indeed, in 1986, the Legislature amended the Domestic Relations Law to state explicitly that an adopted child’s “rights of inheritance and succession from his natural parents remain unaffected by such adoption” (L 1896, ch 272, § 64). That remained the law until 1963, when the Legislature severed the adopted child’s right to inherit from biological kindred, except from a custodial and natural parent who had remarried and consented to the child’s adoption by the stepparent (L 1963, ch 406, § 1 [now found in Domestic Relations Law § 117(1)(b), (d)]; see also, Second Report of Temp St Commn on Modernization, Revision and Simplification of Law of Estates, “Intestate Succession and the Adopted Child”, 1963 NY Legis Doc No. 19, Appendix E, at 148-160; 9 Rohan, NY Civ Prac para. 4-1.1 [11]; Note, *When Blood Isn’t Thicker Than Water: The Inheritance Rights of Adopted-out Children In New York, 53 Brooklyn L Rev 1007, 1011-1-12 [1988]). In 1987, the Legislature amended the Domestic Relations Law again, this time to restore an adopted child’s right of intestate inheritance from and through either nature parent under limited circumstances (see, L 1987, ch 499 [now found in Domestic Relations Law § 117(1)(e)]).

In Matter of Johnson,4 the New York Surrogate’s Court (Kings County) gives a legislative history for adoption in New York:

Common law did not provide for adoptions. It was not until 1873 that statutes were enacted in this State to allow for the creation of a legal parent-child relationship between persons who did not have such a biological relationship. (L 1873, ch 830.) However, the 1873 legislation did not alter the inheritance rights of adopted children as to their natural family. To the contrary, adopted persons retained the right to inherit from their birth parents until 1963, “when the Legislature severed the adopted child’s right to inherit from biological kindred, except from a custodial and natural parent who had remarried and consented to the child’s adoption by a stepparent.” (Matter of Seaman, 78 NY2d 451, 455-456, 583 NE2d 294, 576 NYS2d 838 [1991]; L 1963, ch 406, § 1.)

NY Law Has Three Scenarios for Adoption

New York law has three scenarios for adoption:

  • adoption by a new set of parents
  • adoption by the spouse of a birth parent
  • adoption by a family member

NY law treats these scenarios differently.

Inheritance Rights of Adopted

Does a child adopted by a new parent have rights of inheritance from its natural parent and from their natural collateral or lineal relatives?

There are two possibilities:

  • Adopted children retained the right to inherit from their natural parents and relatives. The right of adoptees to inherit from natural relatives as well as the adoptive parents is known as dual inheritance.
  • Adopted children lose all rights of inheritance from natural parents and from their natural collateral or lineal relatives.

NY

Does an adopted child inherit from natural parents or through natural parents from their kindred?

  • DRL 117(1)(b): “The rights of an adoptive child to inheritance and succession from and through his birth parents shall terminate upon the making of the order of adoption except as hereinafter provided.”
  • DRL 117(1)(d): “When a birth or adoptive parent, having lawful custody of a child, marries or remarries and consent that the stepparent may adopt such child . . . such consent or the order of adoption [shall not] affect the rights of such consenting spouse and such adoptive child to inherit from and through each other and the birth and adopted kindred of such consenting spouse.”
  • Prior to changes made to DRL 117 in 1963, an adopted child inherited from natural parents just as if there had been no adoption. But in 1963, DRL 117 was revised so all inheritances by the adopted child from the natural family was terminated, subject only to one exception: Where a natural parent remarries and consents to the adoption of the child by the spouse, the right of the adopted child to inherit from the consenting natural parent’s family is unaffected by the adoption. The adopted child only inherits from and through the natural parent who has re-married and consent to the adoption and not from his other natural parent.

Do natural parents inherit from an adopted child? No, natural parents do not inherit from an adopted child. DRL 117(1)(a): “After the making of an order of adoption the birth parents of the adoptive child shall . . . have no rights . . . to [such adoptive child’s] property by descent or succession, except as hereinafter stated.”

Does an adopted child inherit form foster parents? Yes, an adopted child inherits from foster parents. - DRL 117(c): “The adoptive parents or parent and the adoptive child . . . shall have . . . the rights of inheritance from and through each other and the birth and adopted kindred of the adoptive parent or parents.

Does an adopted child inherit through foster parents from their kindred? Yes.

  • DRL 117(c): “The adoptive parents or parent and the adoptive child . . . shall have . . . the rights of inheritance from and through each other and the birth and adopted kindred of the adoptive parent or parents.
  • Prior to changes to DRL 117 in 1963, an adopted child did not inherit through foster parents from their kindred.
  (A) AC from/through birth parents? (B) AC from/through adoptive parents? (C) Birth parents from/through AC? (D) Adoptive parents from/though AC?
(1) AC adopted-out (i.e., new set of parents) (1A) No (1B) Yes (1C) No (1D) Yes
(2) Child adopted by spouse of birth parent (2A)
(i) Yes as to consenting birth parent. DRL 117(1)(d).

(ii) No from other birth parent.		 (2B) Yes. (2C)
(i) Yes as to consenting birth parent.

(ii) No as to other birth parent.		 (2D) Yes.
(3) AC adopted by family member (3A) ? (3B) ? (3C) ? (3D) ?

Do adoptive parents inherit from an adopted child? Yes. DRL 117(c): “The adoptive parents or parent and the adoptive child . . . shall have . . . the rights of inheritance from and through each other and the birth and adopted kindred of the adoptive parent or parents.”

(1) New Set of Parents: Adopted-Out Child

  • Does Adopted Child Have Inheritance Rights?
    • (1A) Not From Birth Parents. Adopted child does not inherit from natural parents or through natural parents from their kindred. DRL 117(1)(b): “The rights of an adoptive child to inheritance and succession from and through his birth parents shall terminate upon the making of the order of adoption except as hereinafter provided.” The exception does not apply because it is when a birth parent remarries. Here, there are two new parents.
    • (1B) Yes, From and Through Adoptive Parents. Adopted child inherits from adoptive parents. DRL 117(c): “The adoptive parents or parent and the adoptive child . . . shall have . . . the rights of inheritance from and through each other and the birth and adopted kindred of the adoptive parent or parents.”
  • If the Adopted-Out Child Dies, Who Can Inherit?
    • (1C) Not Birth Parents. Birth parents do not inherit from adopted-out child.
      • DRL 117(1)(a): “After the making of an order of adoption the birth parents of the adoptive child shall . . . have no rights . . . to [such adoptive child’s] property by descent or succession, except as hereinafter stated.”
      • Prior to changes made to DRL 117 in 1963, an adopted child inherited from natural parents just as if there had been no adoption. But in 1963, DRL 117 was revised so all inheritances by the adopted child from the natural family was terminated, subject only to one exception that does not apply to an adopted-out child.
    • (1D) Adoptive Parents and Kindred of Adoptive Parents Inherit. DRL 117(c): “The adoptive parents or parent and the adoptive child . . . shall have . . . the rights of inheritance from and through each other and the birth and adopted kindred of the adoptive parent or parents.”

(2) Child Adopted by Spouse of Birth Parent

  • Does Adopted Child Have Inheritance Rights?
    • Yes, From Birth Parent Consenting to Adoption
      • DRL 117(1)(d): “When a birth or adoptive parent, having lawful custody of a child, marries or remarries and consents that the stepparent may adopt such child . . . such consent or the order of adoption [shall not] affect the rights of such consenting spouse and such adoptive child to inherit from and through each other and the birth and adopted kindred of such consenting spouse.”
  • If the Adopted-Out Child Dies, Who Can Inherit?
    • DRL 117(1)(d): “When a birth or adoptive parent, having lawful custody of a child, marries or remarries and consents that the stepparent may adopt such child . . . such consent or the order of adoption [shall not] affect the rights of such consenting spouse and such adoptive child to inherit from and through each other and the birth and adopted kindred of such consenting spouse.”

Can a birth parent inherit from an adopted child?

  • If there are two new parents (i.e., adopted-out child), then the birth parents do not have any inheritance rights from the adopted-out child. DRL 117(1)(a): “After the making of an order of adoption the birth parents of the adoptive child shall be relieved of all parental duties toward and of all responsibilities for and shall have no rights over such adoptive child or to his property by descent or succession, except as hereinafter stated.”
  • If the birth parent remarries and consents to the stepparent’s adoption of the child, then the birth parent continues to be able to inherit from the adopted child. DRL 117(1)(d): “When a birth or adoptive parent, having lawful custody of a child, marries or remarries and consents that the stepparent may adopt such child, such consent shall not relieve the parent so consenting of any parental duty toward such child nor shall such consent or the order of adoption affect the rights of such consenting spouse and such adoptive child to inherit from and through each other and the birth and adopted kindred of such consenting spouse.”

Can adoptive parents inherit from an adopted child? Yes. DRL 117(1)(c): “The adoptive parents or parent and the adoptive child shall sustain toward each other the legal relation of parent and child and shall have all the rights and be subject to all the duties of that relation including the rights of inheritance from and through each other and the birth and adopted kindred of the adoptive parents or parent.”

Can an adopted child inherit from birth parents?

  • If there are two new parents (i.e., adopted-out child), then the adopted-out child cannot inherit from or through the birth parents. DRL 117(1)(b): “The rights of an adoptive child to inheritance and succession from and through his birth parents shall terminate upon the making of the order of adoption except as hereinafter provided.”
  • If the birth parent remarries and consents to the stepparent’s adoption of the child, then . . .
    • The adopted child continues to inherit from and through the consenting birth parent. DRL 117(d): “When a birth or adoptive parent, having lawful custody of a child, marries or remarries and consents that the stepparent may adopt such child, such consent shall not relieve the parent so consenting of any parental duty toward such child nor shall such consent or the order of adoption affect the rights of such consenting spouse and such adoptive child to inherit from and through each other and the birth and adopted kindred of such consenting spouse.”
    • The adopted child can inherit from and through the other birth parent if the decedent is the the adoptive child’s birth grandparent or is a descendant of such grandparent (e.g., and uncle or aunt). DRL 117(1)(e).
  • “However, an adoptive child who is related to the decedent both by birth relationship and by adoption shall be entitled to inherit only under the birth relationship unless the decedent is also the adoptive parent, in which case the adoptive child shall then be entitled to inherit pursuant to the adoptive relationship only.” DRL 117(e).

Can an adopted child inherit from adoptive parents? Yes. DRL 117(1)(c): “The adoptive parents or parent and the adoptive child shall sustain toward each other the legal relation of parent and child and shall have all the rights and be subject to all the duties of that relation including the rights of inheritance from and through each other and the birth and adopted kindred of the adoptive parents or parent.”

Intrafamily Adoption

When a child is adopted by a family member, you must look to DRL 117(1)(e) to determine inheritance rights of the adoptive child:

(e) Notwithstanding the provisions of paragraphs (a), (b) and (d) of this subdivision, as to estates of persons dying after the thirty-first day of August, nineteen hundred eighty-seven, if:

(1) the decedent is the adoptive child’s birth grandparent or is a descendant of such grandparent, and

(2) an adoptive parent (i) is married to the child’s birth parent, (ii) is the child’s birth grandparent, or (iii) is descended from such grandparent,

the rights of an adoptive child to inheritance and succession from and through either birth parent shall not terminate upon the making of the order of adoption.

However, an adoptive child who is related to the decedent both by birth relationship and by adoption shall be entitled to inherit only under the birth relationship unless the decedent is also the adoptive parent, in which case the adoptive child shall then be entitled to inherit pursuant to the adoptive relationship only.

When a child is adopted by a family member, the child is related to the adoptive parent by both blood and adoption, but New York law only allows the child to take one intestate share: The child inherits under the birth relationship, unless the adopting parent is the one who died.5

Examples: F and M have a child, C. F and M and die. S, M’s sister, adopts C.

  • If C’s maternal grandmother, G, who is the mother of M and S, dies intestate. Seemingly, C can inherit from M and S, but New York law allows C to inherit only one share. The birth relationship controls. C is treated as the child of C’s birth mother, M.
  • If S dies intestate, C is related to S by blood (as a nephew) and by adoption. The adoptive relationship controls because S, the adoptive parent, is the decedent. C takes an intestate share as S’s child.

A child adopted by an aunt or uncle can inherit from either birth parent.6

Example: M has a child, C. M is a live. A, the paternal aunt, adopts C. M marries F, and subsequently they divorce. Then, M dies intestate. Result: C is inherits from M as M’s child because C inherits from the birth relationship.

  New Parents Spouse of Dad Spouse of Mom Adopted by Family Member (Maternal Aunt)
Birth Mom Dies No. DRL 117(1)(b). Yes, child can inherit from either birth parent. DRL 117(1)(e). Yes, mom was the consenting spouse, so child inherits from mom. DRL 117 (1)(d). Child inherits from birth relationship. DRL 117(1)(e).
Birth Dad Dies No. DRL 117(1)(b). Yes, dad was the consenting spouse, so child inherits from dad. DRL 117 (1)(d). Yes, child can inherit from either birth parent. DRL 117(1)(e). Child inherits from birth relationship. DRL 117(1)(e).
Adoptive Parent Dies Yes. DRL 117(1)(c). Yes, child inherits from spouse of birth dad. DRL 117(1)(c). Yes, child inherits from spouse of birth mom. DRL 117(1)(c). Yes: The adoptive parent, the maternal aunt died, so child inherits through adoptive relationship only. DRL 117(1)(e).
Maternal Aunt Dies No. DRL 117(1)(b). Yes. DRL 117(1)(e). Yes. DRL 117(d). Yes: The adoptive parent, the maternal aunt died, so child inherits through adoptive relationship only. DRL 117(1)(e).
Paternal Aunt Dies No. DRL 117(1)(b). Yes. DRL 117(1)(d). Yes. DRL 117(1)(e). Yes. DRL 117(1)(e).
Adopted Child Dies No. DRL 117(1)(a). Yes, dad inherits under DRL 117(1)(d); spouse under 117(1)(c). But mom doesn’t inherit. Yes. Mom inherits under DRL 117(1)(d); spouse under 117(1)(c). But dad doesn’t inherit. Maternal aunt is the adoptive parent and inherits under 117(1)(c). Other family members don’t inherit.

  1. Hall v. Vallandingham, 75 Md. App. 187, 540 A.2d 1162 (1988).  ↩

  2. According to J.W. Madden, Handbook of the Law of Persons and Domestic Relations (Wash. 1931) §106, adoption in the sense of the term as used in this country was not a part of the English law until 1926.

    ↩

  3. Since the Legislature is elected by the people, it is answerable to the people, and that is the best safeguard against unreasonable laws concerning inheritance.

    ↩

  4. Matter of Johnson, 18 Misc. 3d 898, 850 N.Y.S.2d 855 (Sur. Ct. Kings County 2008). ↩

  5. DRL 117(1)(e). ↩

  6. DRL 117(1)(e); Matter of Johnson, 18 Misc. 3d 898, 850 N.Y.S.2d 855 (Sur. Ct. Kings County 2008) (ruling that a child adopted by paternal aunt can inherit from mother, and holding, “where the other requirements of Domestic Relations Law § 117(1)(e) are met, an adoptee may inherit from his or her birth mother and father so long as the adoptive parent is a descendent of the adoptee’s birth grandparents. . . . [T]he adoptive parent need only be descended from a birth grandparent of the child as is the case here and not from the same birth grandparent as the decedent”). ↩