Kris Knaplund, “‘Adoptions Shall Not Be Recognized’: The Unintended Consequences for Dynasty Trusts,” UC Irvine Law Review (forthcoming)

May 16, 2016 — Professor Kristine S. Knaplund’s article, “‘Adoptions Shall Not Be Recognized’: The Unintended Consequences for Dynasty Trusts,” (SSRN) has been accepted for publication in the UC Irvine Law Review.

Abstract of “Adoptions Shall Not Be Recognized”:

Multi-generational trusts lasting for decades are now colliding with new ways of creating children to result in mismatches of donor intent and beneficiaries. This article will for the first time explore the interpretation of dynasty trusts established either when courts presumed the settlor intended to exclude adoptees as beneficiaries or with express language excluding adoptees. Assisted insemination, in vitro fertilization, the use of gestational carriers, and the abolition of the Rule Against Perpetuities in many jurisdictions have combined to vastly complicate the interpretation of old trusts and the drafting of new ones. If these old presumptions or new language are applied literally to children conceived through assisted reproduction technologies (ART), the result will be to exclude many children the settlor would likely intend to be included, while including others that logically should be omitted. The main thesis of this article is that ART children must be viewed through a different lens than those conceived coitally in order to carry out the trust settlor’s intent. In addition to proposing methods for courts to interpret language in trusts created decades before assisted reproductive techniques, this article will recommend language to be included in the drafting of new trusts.

Part II of this article will briefly discuss the common law rationale that class terms such as “children” or “descendants” invariably meant those related by blood, and that, once American states enacted legislation allowing adoptions in the mid-nineteenth century, “adoptees” were not related to the transferor by blood. Part III explores two key changes in the twentieth century: the increase in multi-generational trusts due to alterations in the tax code and the Rule Against Perpetuities, and, more recently, scientific advances that allow embryos to be created and transferred outside the body. Part IV examines current law on whether adoptees are included in class gifts in wills and trusts, and then proposes two solutions to deal with children of assisted reproduction: how to draft language in new trusts, and how to interpret language in decades-old trusts. Part V concludes the article.