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George F. Bearup, J.D. Senior Legal Trust Advisor

1-Jun-20

“Stranger to the Marriage” Doctrine – Adopted Children in Estate Planning

Take-Away: Children who are adopted are treated under the Michigan Estates and Individual’s Code [EPIC] as natural born children of their adoptive parent. At common law that was not the case when it came to third-party dispositions, which treated adopted children as strangers to the marriage.

Common Law: About 150 years ago, while adding children to a family through adoption was a legal possibility, those adoptees were disfavored and generally barred from inheriting from third-party donors under the stranger-to-the-marriage doctrine, e.g. a class gift by a grandparent to ‘my grandchildren.’ While the adoption was valid between or among the parties (parents and child), the adoption was ignored when it came to dispositions by third-parties. Over the next 125 years the doctrine was narrowed, and ultimately abolished by state statutes. Application of the doctrine last appeared in a federal court case in 1971 when the Court of Appeals refused  apply retroactively to a Will that had been executed in 1929 a statute that had abolished the stranger-to-the-marriage doctrine. In doing so, the Court relied on the assumption that an average testator ‘at the time would not have wished for a non-blood individual to take under his or her Will.’ Riggs National Bank of Washington, D.C. v Summerlin, 445 F.2d 201 (D.C. Circuit, 1971.)

Repeal of the Doctrine: California was the first state to statutorily repeal the common law stranger-to-the-marriage doctrine. Michigan follow 9 years later in 1966 with its repeal of the doctrine.

Adoption Rights in Intestacy: Michigan’s statute will treat as a child for intestate succession purposes an adopted child.

  • An adopted individual is the child of his or her adoptive parent or parents and not of his or her natural parents, but adoption of a child by the spouse of either natural parent has no effect on either the relationship between the child and that natural parent or the right of the child or a descendant of the child to inherit from or through the other natural parent. An individual is considered to be adopted for purposes of this subsection when a court of competent jurisdiction entered an interlocutory decree of adoption that is not vacated or reversed. [MCL 700.2114(2).]
  • The first clause states the general rule and the balance of the sentence creates an exception. The exception applies solely to the right of an adopted individual to take by inheritance from the natural parent who is not married to the adoptive parent.
  • The exception thus permits the adopted child to inherit from and through their natural parent as well as to inherit from the adoptive parent.
  • The exception applies regardless of the reason the rights of a natural parent were terminated and without regard to whether the adoptee was a minor or an adult when the adoption occurred.
  • However, since only a single exception is made under this statute, the apparent legislative intent is that the adopted individual is not entitled to a share of exempt property or allowances that might be available to a child of their natural parent.

Thus, this section (albeit not very clearly stated) provides that a child who is adopted by a stepparent remains an heir of the natural parent who is married to the stepparent. The adopted child also retains the ability to inherit from or through their other natural parent.

Adoption and Rules of Construction:  Part 7 of EPIC provides an extensive set of rules of construction that are to be applied to all governing instruments, unless the statutory application is expressly excepted. [MCL 700.2701.] The concept of what constitutes a governing instrument is very broad. It includes includes both trusts and beneficiary designations and deeds. [MCL 700.1104(m).]

  • An intention that is contrary to the application of these statutory rules of construction must be expressed in the relevant governing instrument. Leete v Sherman, 290 Mich App 647 (2010). Therefore, these rules of construction will apply to Wills, trusts, beneficiary designations, and deeds unless the testator, settlor, account owner, or title holder expressly opts out of their application.
  • A couple of specific rules apply to an adopted individual in the context of a class gift, which was usually where the stranger-to-the-marriage doctrine was encountered. An adopted individual (and his or her respective descendants if appropriate to the class,) are included in class gifts and other terms of relationship in accordance with the rules for intestate succession. [MCL 700.2707(1).] With regard to class gifts when the transfer is made “by someone who is other than the natural or adopting parent of the person in question, an adopted child is not considered the child of the adopting parent unless the adopted individual lived while a minor, either before or after the adoption, as a regular member of the household of the adopting parent.”
  • This last restriction is designed limit class inclusion to only when the adoptee was a minor. It is (I believe) intended to thwart enterprising gaming-playing to create rights of inheritance when none were ever intended, e.g. where  a terminally ill adult grandchild adopts his girlfriend so that she might be included in a class gift to ‘each of my grandchildren, if living, otherwise to my deceased grandchild’s descendants per stirpes.’ This prevents adults from being legally ‘adopted’ so that they can claim to be a part of a class of inheritors. You might say that it remains a vestige of the old stranger-to-the-marriage doctrine in that, to be respected, the adoptee must have been a minor and lived with their adoptive parent in order to be treated as a child of the adoptive parent.

Omitted Adopted Child: EPIC also addresses a situation where a parent executes a Will, later adopts a child, but never adds the adopted child to their Will. As a general rule, if a testator fails to provide in his/her Will for a child who is adopted after the execution of their Will, the omitted after-adopted child will receive a share of the testator’s estate. [MCL 700.2302(1).] The amount of that share is dependent upon if there were other children of the testator. If there are other children of the testator, the omitted after-adopted child receives the same share as the other children, i.e. the class is expanded to include the adoptee. If there are no other children, the omitted after-adopted child receives an intestate share. Accordingly, if a parent leaves a Will and none of the children born or adopted prior to the execution of the Will are to receive anything, neither will the omitted after-adopted child.

  • However, the omitted after-adopted child statute also contains an exception. The previously stated rule will not apply if either (i) it appears from the testator’s Will that the omission was intentional, or (ii) “the testator provided for the omitted after-adopted child by a transfer outside of the Will (e.g. a beneficiary designation or a devise under a trust) with the intent that the [outside] transfer was to be a substitute for a testamentary provision, which intent is demonstrated by the testator’s extrinsic statements or which intent can be reasonably inferred from the amount of the transfer or other evidence.”[MCL 700.2302(2).]
  • It would seem that a fight can easily arise among children (natural and adopted) over what constitutes a reasonable amount that was intended by the testator as a substitute gift to the omitted after-adopted child.
  • Example: An omitted adopted child is named as beneficiary of a TOD securities account which held one stock holding. The stock holding in the TOD on February 1, 2020 was worth $100,000. By March 5, 2020 the stock in the TOD account fell to a value of $50,000 when the account owner-parent dies. What date is to be used to derive an inference whether the amount passing to the adoptee under the TOD was intended as a substitute for not being included in the parent’s Will? Does asserting the right to be included in the parent’s Will as an omitted after-adopted child trigger a ‘no contest’ clause, when based upon a presumed inference as to the intent to make a substitute gift? Does the omitted after-adopted child even have standing to assert a claim to be included in the testator’s Will? Lots of questions but very few answers.

Conclusion: Hopefully most trusts that are drafted expressly address the question of whether an adopted individual is to be treated as part of a direct class gift, “to my grandchildren in shares of equal value” or an indirect class gift, e.g. “and if my grandchild does not survive to the date of distribution, then such deceased grandchild’s share shall be distributed to his or her descendants, per stirpes.” While the stranger-to-the-marriage doctrine is no longer with us, the rules pertaining to adopted children can still be hard to decipher.