In re the Accounting by Fleet Bank
884 N.E.2d 1040, 10 N.Y.3d 163 (2008)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A child adopted out of their biological family does not presumptively share in a class gift to the biological parent’s issue, descendants, or children established in an irrevocable trust, even if the trust was executed prior to the 1963 and 1966 amendments to the Domestic Relations Law concerning inheritance rights of adopted children.
Facts:
- Florence Woodward created two irrevocable trusts, one in 1926 and a second in 1963, for the lifetime benefit of her daughter, Barbara W. Piel.
- Upon Barbara W. Piel's death, the trusts directed the trustee to distribute the principal to her "descendants" (1926 trust) or "each then living child of hers" (1963 trust).
- Barbara W. Piel gave birth to three daughters: Elizabeth McNabb (born August 15, 1955), Stobie Piel (born 1959), and Lila Piel-Ollman (born 1961).
- Within days of Elizabeth McNabb's birth, Barbara W. Piel signed a consent to adoption, relinquishing her parental rights.
- An Oregon court finalized Elizabeth McNabb's adoption by strangers in November 1955, and she lived her life in Oregon as a member of the Jones family.
- There is no indication that Florence Woodward knew of Elizabeth McNabb's birth or adoption.
- Barbara W. Piel died in July 2003.
Procedural Posture:
- In October 2004, Fleet Bank (as trustee) initiated two proceedings in Surrogate’s Court (trial court) for judicial settlement of the final account for each trust.
- Fleet Bank cited Stobie Piel and Lila Piel-Ollman as interested parties but failed to include Elizabeth McNabb or her children.
- In November 2004, Elizabeth McNabb moved for permission to intervene and file objections to the accounts, later joined by her two children.
- Elizabeth McNabb objected to each account for its failure to provide her with a one-third distribution of the principal and income of each trust.
- The parties subsequently cross-moved for summary judgment in Surrogate’s Court.
- The Surrogate’s Court denied Elizabeth McNabb’s motions for summary judgment and granted Fleet Bank’s motions, dismissing Elizabeth McNabb’s objections.
- The Appellate Division reversed the Surrogate’s Court's decision, finding the reasoning and policy considerations from Best inapplicable because the Woodward trusts were executed prior to the 1963 and 1966 DRL amendments, which the Appellate Division believed distinguished the cases.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a child adopted out of their biological family by strangers presumptively share in a class gift to the biological parent’s 'descendants' or 'children' in irrevocable trusts created prior to the 1963 and 1966 amendments to New York's Domestic Relations Law?
Opinions:
Majority - Chief Judge Kaye
No, a child adopted out of their biological family does not presumptively share in a class gift, even in trusts executed prior to the 1963 and 1966 Domestic Relations Law (DRL) amendments. The court reinstated the Surrogate’s Court's decrees by applying the reasoning and strong policy considerations from Matter of Best (1985). The court first sought the grantor’s intent, but where the trust terms were ambiguous and no extrinsic evidence existed, it applied general, rebuttable rules of construction based on statutory interpretation and public policy. While DRL § 64 (pre-1963) permitted adopted-out children to inherit from biological parents in intestacy, the court in Best had determined that similar statutory language in DRL § 117 (specifically subdivision 2) did not mandate that an adopted-out child receive a class gift by implication, but only preserved inheritance rights when specifically identified. The court found no evidence in pre-1964 legislative history or case law suggesting adopted-out children would share in such class gifts. The majority emphasized three "powerful policy considerations" from Best that predate both Woodward trusts and militate against inclusion: (1) the legislative objective of fully assimilating the adopted child into the adoptive family; (2) the importance of confidentiality in adoption records (recognized since 1924, mandated sealed by 1938); and (3) the need for finality of judicial decrees, which would be compromised by the "lurking possibility" of unknown adopted-out children. The court also noted additional practical concerns for pre-1964 instruments, such as the difficulty of unearthing old adoption decrees, and the undesirability of creating two classes of beneficiaries. These policy interests of finality and stability in property titles strongly favor consistency with Best.
Analysis:
This case significantly reinforces and extends the Matter of Best rule, clarifying that New York's strong public policy against including adopted-out children in class gifts to biological family applies broadly, irrespective of the trust's creation date, even predating substantial statutory changes to inheritance laws. It underscores the paramount importance of assimilating adopted children fully into their adoptive families and preserving the finality of trust distributions and property titles. Future cases interpreting class gifts in wills and trusts, especially those executed prior to DRL amendments, will likely apply this precedent, prioritizing well-established public policy over potential historical statutory interpretations that might otherwise suggest a different outcome for adopted-out children, thereby preventing the reopening of settled estates based on claims from previously unknown biological descendants.
