Who is Your Descendant?

“ ….and if my daughter does not survive, then the share created for her shall be distributed by the trustee to her descendants, per stirpes.”

Many, if not most, trusts at some point use the word descendants. A bequest to descendants (called a class gift) is often used for ease instead of naming several individual beneficiaries or more remote, unknown beneficiaries. Yet interpretation problems can arise when the trust instrument refers to distributions of a trust’s income or assets to a person who is related to and survives the named beneficiary as his or her descendant.

If the trust or beneficiary designation does not expressly define the term descendant, nor does it identify what persons are intended to be included within that class, Michigan provides the default definition to help the trustee interpret that legal document. Unfortunately, these statutory default definitions also can lead to confusion and unwanted probate litigation.

Descendant: Michigan’s Estates and Protected Individuals Code (for convenience, the Code) defines a descendant to mean ‘in relation to an individual, all of his or her descendants of all generations, with the relationship of child and parent contained in this Code.’ (Note that this definition uses descendant to describe itself!) The Code also makes it clear that the word issue has the same legal meaning as descendant.

Child: A child is defined as ‘including, but not limited to, an individual entitled to take as a child under the Act by intestate succession from the parent whose relationship is involved. Child does not include an individual who is only a stepchild, a foster child or a grandchild or remote descendant.’ Again, the definition uses child to describe itself.

Parent: A parent is defined to ‘include, but is not limited to, an individual entitled to take, or would be entitled to take, as a parent under this Code by intestate succession from a child who dies without a will and whose relationship is in question. Parent does not include an individual who is only a stepparent, foster parent, or grandparent.’

These statutory definitions in Michigan can lead to a lot of questions. The problem with these statutory definitions of descendant, parent, and child is that today’s ‘modern’ family looks much different than the conventional parent-child relationship on which the Code’s definitions rely. Consider the following recent statistics and demographic trends:

• One (1%) percent to two (2%) percent of babies born in the U.S. each year are estimated to result from artificial reproductive technology (ART), where the donors of zygotes and embryos may not technically be the parent of a child;
• The donor of genetic material used in ART may not be living when a child is born using the donor’s gametes, i.e., posthumous conception, which has led to new legal classifications that include genetic parentage, gestational parentage, and functional parentage;
• Fewer couples now are married before they have children. It is estimated that 40% of children are born to women outside of marriage, either as single women or women who cohabitate with an unmarried partner;
• More children are born in nonmarital relationships. In the past, a child ‘born out of wedlock’ was not considered to be either the issue or a descendant of the father. In the 1970’s the U.S. Supreme Court held that defining a descendant purely on marital status violated the Equal Protection Clause of the 14th amendment;
• Several states have expanded a child’s adoption to include new situations such as an equitable adoption, or they have expanded a legal adoption to include the adoption of an adult;
• The advancement in genetic testing has revolutionized the process used to determine an individual’s biological parentage; and,
• Blended families are now commonplace with second and third marriages where stepchildren are treated as part of the ‘family unit’ and are frequently held out to the public by the stepparent as ‘my child.’

Each state has its own laws and definitions of descendant, child, parent, adoption, and stepchildren. Consequently, the risk of confusion is increased when an individual moves to another state and their Will or Trust makes a class bequest to their descendants. This risk is exacerbated is when a dynasty-type Trust is used that is intended to exist for multiple generations where the trustee is authorized to make discretionary distributions to the trust creator’s descendants when a descendant is determined by reference to the dynamic parent-child relationship, which can vary from state-to-state.

Who will qualify as a potential descendant of the Trust’s creator and thus become eligible, as part of the class of descendants who is entitled to receive a trust distribution?

• A child born with someone else’s genetic material?
• An individual who meets the state’s definition of an equitably adopted child that arises from a relationship that is not a formal, legal adoption?
• An individual who was treated openly and held out to the public as ‘my child’ by a stepparent?
• The biological child of an individual whose rights as a parent were legally terminated due to neglect?
• A child born long after the father’s death when the child was born using the father’s frozen sperm?
• The legal adoption of a 55-year-old girlfriend?

As time, medical science and societal norms change, the ‘law’ then follows, albeit slowly. These changes will impact the definition of who falls within the class of an individual’s descendants.

It will be helpful if the trustee that is charged to administer a trust has a clear and workable definition of who the trust creator intends as a descendant to benefit from their trust by providing a more comprehensive definition of descendant and not rely on the state’s vague and circular definitions. The trust’s creator can then describe how broad, or narrow, that definition of descendant will be when it is used in the trust. The trust instrument definition might expressly exclude adult adoptees. Or it might permit a posthumously born child to be consider as a descendant, but only if the child is born within three years after the death of their genetic parent. A nonmarital child could be included within the class of descendants, but only if that cohabitation arrangement of their parent persisted for an extended number of years. A stepchild might be treated as a descendant if the state by statute expressly recognizes the legal concept of equitable adoption. These detailed definitions are just some examples where confusion could be avoided when a trust directs the trustee to distribute income or assets to a descendant.

In light of the fact that the identification of a descendant can turn on so many different factors along with the state’s definition of a child who is entitled to inherit from his or her parent, some thought should also be given to including a provision in the trust instrument that holds the trustee harmless for its good faith effort to determine who is a child or a descendant.

It is perfectly acceptable for a trust instrument to use the word descendant when it describes the class of persons who it is intended to benefit. What is important is that descendant be defined with some care and not simply rely upon a state’s vague (or elastic) definition of that word.