Rulings Can Differ on Inheritance of Adopted Children Says Andrew Soshnick

As adoptions have become more common and more accepted for expanding the family tree, courts have had to address some legal matters clarifying those familial ties, Indiana Lawyer reported in its story, "Expanding the Family Tree: Appellate Courts Address Estate Tax, Trust Division Regarding Adoptions."

Two opinions in recent months regarding inheritances for grandchildren – those adopted into the family and those adopted by another family – have shed some light on how the courts consider adoptions when it comes to trusts and inheritance tax, the story said. While this is something that typically would fall under the umbrella of estate law, family law attorneys should also pay attention to these cases, said Andrew Soshnick of Baker & Daniels.

The cases, the Indiana Lawyer story reported, are In Re The estate of Forrest W. Quackenbush, deceased, et al. v. Indiana Department of Revenue, Inheritance Tax Division, No. 49T10-0810-TA-61, which was decided by the Indiana Tax Court April 22, 2010; and Bonnie E. Taggart Paloutzian and Linda M. Taggart v. Gregory A. Taggart and Belle Delint-Eaglesfield, No. 49A02-0908-CV-812, decided by the Court of Appeals August 13, 2010.

"Are these opinions inconsistent? In some ways they are," Soshnick told Indiana Lawyer, regarding how they treat people who have been adopted. He said he understood why the Tax Court ruled the way it did in the Quackenbush case because it was a matter of interpreting the statutes for inheritance tax. Those statutes state once someone is adopted by another family, they become part of the adopting family and their rights are taken away in terms of their connections to the biological family.

Soshnick also said it was easy to understand why there was a split in the Taggart case, according to the story. "The big issue is the dissent focuses on the cardinal element of trust law: to try to derive the intent of the settlor," he said. Soshnick added in this case, even with the retroactivity of the 2003 amendment, it was not clear cut as to whether Alex Taggart meant to include his adopted grandchildren.

Other circumstances should be considered in estate planning when it comes to families with adopted children, according to the story. Soshnick told Indiana Lawyer it was common for someone to adopt his or her stepchildren while married to the natural parent of those children. But if the couple later divorced, the relationship with the adopted stepchildren may not be as strong later in life. This could greatly affect how the parent views the children in terms of estate planning, the story said.

"I think it's a reminder to everyone that you need to keep an eye on and update your estate plan regularly," Soshnick told Indiana Lawyer. He added that lawyers needed to keep up with the laws and remind their clients that some laws could have changed since they last updated their estate plans, including if they have adopted children or plan to.