Dennis v. Kline, — So.3d —-, 2013 WL 3014115 (Fla. 4th DCA June 19, 2013)

The adult adoption order at the center of the 3d DCA’s recently published opinion in the Goodman v. Goodman case wasn’t voided on substantive grounds, it was set aside for procedural reasons: the adopting party’s intentional lack of notice to other trust beneficiaries having a “direct, financial, and immediate” interest in the adoption proceeding amounted to fraud upon the court (click here for my take on this case).

Just three months later we have another adult-adoption/trust case (is this a trend?). This time it’s before the 4th DCA and the opinion focuses on the much more interesting questions of public policy and settlor intent. As far as I can tell this is the first Florida appellate opinion directly tackling these core inheritance-law issues in the adult-adoption context.

The Changing American Family:

The facts of this case couldn’t be more different from Goodman, where the level of malfeasance was breathtaking. In this case what I see instead is a reflection of a broader trend: families redefining what it means to be a “family” in America. This adds a level of estate-planning complexity for clients and lawyers unimagined a generation ago. Does a family include sperm donors or posthumously conceived in vitro heirs? Maybe, click here, here, here. How about same-sex couples, stay tuned. As for adult adoptions, it’s common practice in some cultures (see Why Adult Adoption is Key to the Success of Japanese Family Firms), and far from unheard of in the U.S. Bottom line, what used to be a given (who are my future “lineal” descendants) is far from certain today, and according to census data it’s going to get even less certain over time (a point to keep in mind as multigenerational dynasty trusts become the norm).

Now here’s the good news: with a little forethought and careful drafting, these uncertainties are fixable at the estate-planning stage (see my sample clause below). But it’s the “unknown unknowns” that get you. You can’t fix a problem if you don’t even know there’s a problem that needs fixing. That’s what makes cases like this so important for working trusts and estates lawyers: they raise awareness.

Backstory:

The settlor had five children. Only one challenged the adult-adoption order. One of the settlor’s five children is a son who could not have children (he’s not the challenger); this son adopted an infant, which, according to the 4th DCA, is what prompted the settlor to amend his estate planning documents to expressly include adoptees.

When the Settlor approached attorney William D. McEachern to draft the Trust instrument in question, his net worth was approximately fifteen to sixteen million dollars. Without elaborating on the purpose for creating Family Trust A, McEachern stated in a deposition that in 1992, the Settlor requested that he draft a restatement of the Trust to incorporate his desire to “include adopted persons” as “issue.” McEachern said that at the time of the Trust’s restatement, he did not contemplate an adult adoption and never broached the idea with the Settlor.

As described by the 4th DCA, both the settlor’s trust agreement and pour-over will contained clauses including adopted persons within the definition of the settlor’s lineal descendants, thus qualifying them as future beneficiaries of his trust.

Crucial to this case is the Trust’s definition of the term “issue.” The Trust, as amended and restated in 1992, contains express definitions of terms relevant to this case. Section XII(E) defines “issue” as “lineal descendants forever,” with the provision that “words of relationship in any degree includ[e] legally adopted persons.” Likewise, Section VIII of the Settlor’s 1992 pour-over will included adoptees among its definition of “children” and identified “issue” as “those becoming so by adoption and those born or adopted after the execution of th[e] will.”

By the way, the default directive contained in F.S. 732.108, which controls intestate succession and adoptees, reaches the same result: they’re included as heirs just like natural-born children. What both the settlor’s trust agreement and Florida law leave unsaid is what happens in the case of adult adoptees. Are they treated the same as minor adoptees? That’s the question at the heart of this case.

Now back to the facts. Another of the settlor’s five children, a daughter named “Dianna,” was also unable to have children due to her battle with Hodgkin’s disease. Rather than form a family by adopting an infant (like her brother did), Dianna’s family evolved over time. Here are the key facts as told by the 4th DCA:

In 2011, thirteen years after the Settlor’s death, Dianna, a New Jersey resident, initiated a court proceeding in Pennsylvania to adopt a twenty-seven-year-old Pennsylvania resident who was living with her biological parents.

. . . As Dianna argues, the nature of Dianna’s relationship with the adoptee is relevant to show that the Settlor would have “fully supported and embraced the adoptee” had he known of the adoption.

Prior to the adoptee’s birth, Dianna was close friends with her biological parents; Dianna attended their wedding and was later chosen as the adoptee’s godmother. From the girl’s birth in 1984 until 1986, the girl’s parents shared a small apartment building as tenants with Dianna, during which period Dianna built a bond with the infant. Over the years, Dianna and the adoptee maintained their relationship; Dianna took the girl on a vacation and later assisted her college aspirations by paying for testing and funding a substantial portion of her college tuition.

When the adoptee was twelve years old, Dianna approached her biological parents regarding her desire to adopt the girl. Recognizing that this was a difficult decision, the girl’s parents decided to let her make her own decision once she reached the age of maturity. However, despite this prolonged relationship with Dianna, the adoptee never met the Settlor, was not otherwise included in Dennis family events, and maintained a healthy relationship with her biological parents.

Against this backdrop the trial court was asked to decide if the adoption of a 27-year-old adult was against Florida public policy and if it’s not, whether summary judgment should have been granted modifying the trust agreement pursuant to F.S. 736.04113 to exclude adult adoptees. In both instances the trial-court judge ruled against the adult adoption (which must have stung for the losing side). On appeal, the 4th DCA reversed both of these orders (which just goes to show that in litigation, as in life, it ain’t over ’til it’s over).

Is adult adoption for inheritance purposes against Florida public policy? NO

Given the trust agreement’s express inclusion of adoptees and the facts of this case, the challenger must have known this wasn’t going to be an easy fight. If you know you may end up arguing against the express text of the trust agreement and perhaps an adverse finding of settlor intent, really all you have left is to play the public policy card.

We all know carrying out settlor intent is the guiding principle of inheritance law. What’s often overlooked is that this general principle has always been subject to exceptions based on competing public policy concerns. For example, the rule against perpetuities was designed to limit the reach of a settlor’s “dead hand” control - regardless of intent – after so many years (a limitation fast becoming obsolete with the ascendancy of dynasty trusts). Another example of public policy trumping testamentary freedom is the invalidity of a will or trust clause disinheriting a beneficiary for marrying someone of a certain faith (a topic I previously wrote about here and here).

So attacking the adult-adoption order on public policy grounds isn’t as far fetched as it might seem at first blush, especially in light of some of the very harsh wording contained in the 3d DCA’s recent Goodman decision. That said, this argument is always a long shot and almost never works. This case is no exception. Here’s how the 4th DCA deconstructed – and rejected – the challenger’s public-policy argument.

We agree with the fifth district that “[t]he public policy of Florida expressly permits the adoption of adults.” In re Adoption of Holland, 965 So.2d 1213, 1214 (Fla. 5th DCA 2007) (citing § 63.042(1), Fla. Stat. (2007)). Such policy is articulated through the wording of the Florida statutes, which provide, with minimal qualification, that any person, whether a minor or an adult, may be adopted. See § 63.042, Fla. Stat. (2011).

In limited circumstances, the Legislature has codified its disapproval of certain adoptive relationships, exemplified by the limitation on adopting one’s spouse. See, e.g., § 63.042(2)(c), Fla. Stat. (2011) (stating that a married person may not adopt his or her spouse). However, unlike other states,[FN8] once a valid adoption has occurred, Florida makes no distinction as to the extent to which an adult adoptee may become a beneficiary in probate proceedings, nor does Florida set a line of demarcation as to whether the “policy” favoring adult adoption extends only to rights specifically identified by statute. In contrast, by way of illustration, Uniform Probate Code § 2–705 expressly limits an adult adoptee’s right to inherit through class gift provisions of wills and other governing instruments . . .

[FN8.] For example, some states specifically prohibit adult adoptions motivated by inheritance objections. See, e.g., Ala.Code § 26–10A–6 cmt. (2011) (“Adult adoptions for inheritance purposes provided for in … the Alabama Code [were] repealed.”). Likewise, “[o]ther states distinguish between adult and minor adoptees under state intestacy and glass gift laws.” Sarah Ratliff, Adult Adoption: Intestate Succession and Class Gifts Under the Uniform Probate Code, 105 NW. U.L.REV. 1777, 1792 & n. 132 (2011) (citing Ind.Code § 29–1–6–1(d) (2011) as an example). Additionally, other states, such as New Jersey, set age restrictions such that adult adoptions “shall not be granted, unless the adopting parent or parents are at least 10 years older than the person to be adopted.” See N.J. Stat. Ann. § 2A:22–2 (West 2011).

Given the existence of UPC § 2–705, the Florida Legislature in 1974 had the opportunity to add such a provision when it “created the Florida Uniform Probate Code Study Commission” for the purpose of “consider[ing] adoption of the Uniform Probate Code.” . . . Following debate, however, the Legislature deemed the Florida Probate Act of 1933, which omitted such a provision, to be satisfactory, electing only to tailor our statutes to be “in the format of the Uniform Probate Code insofar as possible.” Id.

As a result, current Florida probate statutes treat adopted persons, both young and adult, equally with their biological counterparts. See § 736.1102, Fla. Stat. (2011) . . . There is no statutory basis to preclude an adult adoptee from inheriting under a trust. . . . Against the weight of the statutory law, Harriet, nevertheless, requests this court to extend our case law by adopting a public policy which would create an impediment to an adult adoptee’s ability to inherit. . . . We decline Harriet’s request to invoke public policy in this case.

What about settlor intent? 

Having dispensed with the public-policy challenge, the 4th DCA turned its attention to the real heart of the matter: settlor intent. Did the settlor intend to exclude adult adoptees or not? Here’s how the 4th DCA framed the issue:

The fact issue that controls this case is the Settlor’s intent in creating the Trust. . . . Here, the terms of the Trust unambiguously place no limitations on a “legally adopted” person becoming a beneficiary under the Trust.

Absent any provision to the contrary, where a trust is created and executed in Florida, the law presumes that the settlor expected Florida law to apply and Florida law permits adult adoptions. . . . To overcome this presumption, Harriet must establish the existence of a latent ambiguity in the trust which occurs “where the language employed is clear and intelligible and suggests but a single meaning, but some extrinsic fact or extraneous evidence creates a necessity for interpretation or a choice among two or more possible meanings.” Barnwell v. Miami–Dade Cnty. Sch. Bd., 48 So.3d 144, 145–46 (Fla. 1st DCA 2010) (citation omitted).

The 4th DCA then tells us what kind of evidence is going to be needed to decide the case once it’s sent back to the trial judge.

The lawyer who drafted the Trust did not discuss adult adoptions with the Settlor. In the absence of ironclad evidence of the Settlor’s express declaration of opposition to adult adoptions, the Settlor’s intent turns on the credibility of witnesses, the weight to be given to their testimony, and the subtle nuances of the Settlor’s beliefs about the significance of family bloodlines. Whether this adult adoption “substantially impair[s] the accomplishment of a material purpose of the trust” is an issue inappropriate for resolution on summary judgment. § 736.04113(1)(b), Fla. Stat. (2011).

So how can you prove “the subtle nuances of the Settlor’s beliefs about the significance of family bloodlines”? It ain’t easy. In fact, it’s impossible to predict with any certainty what your fact finder (in this case the trial judge who’s already ruled against the adult adoption for public policy reasons and on summary judgment) is going to find convincing when the case is tried. This lack of certainty is underscored by the ambiguous nature of the evidence presented thus far by the parties (see below). All of it’s relevant, none of it’s ironclad. (Can anyone say “settlement”?)

[Evidence: Party arguing for inclusion of adult adoptee:] Addressing the issue of the Settlor’s intent, Dianna described in a deposition that when her father created the Trust, he was initially “anti-adoption” in his desire to maintain his “bloodlines” and “blood rules.” However, following Tom, Jr.’s adoption of an infant daughter, her father started to “come around” to the idea of adoption, resulting in the addition of the “adopteds” provision of the Trust.

[Evidence: Party arguing for exclusion of adult adoptee:] Harriet, on the other hand, described her father as “very conservative” and “old fashioned.” She stated that his intention in creating the Trust was to allow his assets to pass per stirpes, since it was desire “to provide this money for his family to go down the line.” Thus, while her father was initially opposed to Tom, Jr.’s adoption, he eventually agreed to modify the trust to include adopted children since “he had acknowledged [Tom, Jr.'s daughter] and wanted to make [sure] she also got [her] part” as a family member. Harriet did not discuss the concept of an adult adoption with her father.

Lessons learned?

First, based on this case and the 3d DCA’s opinion in the Goodman case we now know how to litigate adult-adoption cases.

  1. Don’t get your adult-adoption order in secret; provide notice and an opportunity to be heard to all other pre-existing trust beneficiaries having a “direct, financial, and immediate” interest in the adoption proceeding (as required by F.S. 63.182(2)(a)).
  2. Don’t count on getting the adult-adoption order set aside on public policy grounds.
  3. In the absence of a trust clause specifically addressing adult adoptions, assume your document suffers from a “latent ambiguity” that can only be resolved at trial.
  4. At trial, the fact issue that controls this kind of case is the settlor’s intent and “beliefs about the significance of family bloodlines.”

Second, this type of case cries out for a drafting solution at the estate planning phase. Including a simple adult-adoption clause in a client’s will or trust should spare all involved the stress and financial strain inherent to any form of inheritance litigation. Below is the clause provided by the Lawgic drafting software, which we use in my firm (it tracks the 18-year-old cut off for adoptees found in Uniform Probate Code § 2–705(f)(1)). I’m sure there are lots of good alternate clauses floating around out there. Just pick one and use it.

Sample Adult Adoption Clause:

Effect of Adoption. A legally adopted child (and any descendants of that child) will be regarded as a descendant of the adopting parent only if the petition for adoption was filed with the court before the child’s eighteenth birthday. If the legal relationship between a parent and child is terminated by a court while the parent is alive, that child and that child’s descendants will not be regarded as descendants of that parent. If a parent dies and the legal relationship with that deceased parent’s child had not been terminated before that parent’s death, the deceased parent’s child and that child’s descendants will continue to be regarded as descendants of the deceased parent even if the child is later adopted by another person.