Class gifts to “issue” (or “descendants”) are common in wills and trusts. Identifying the members of this class is ordinarily a straightforward task for the fiduciary charged with administering the gift. Under Section 1-2.10 of the Estates, Powers and Trusts Law (EPTL), “issue” is defined simply as “the descendants in any degree from a common ancestor.” The statute even specifies that the term includes adopted children. But the question becomes more complex when individuals are adopted-out of the settlor or testator’s biological family. Should the fiduciary permit those individuals to share in the class gift? Missteps in this decision can, and often do, lead to the assertion of claims against the fiduciary followed by costly, protracted litigation. This article aims to assist fiduciaries of New York trusts and estates in navigating this dilemma while minimizing the risk of litigation.

To understand how best to approach this issue, we look first to the evolution of New York law governing the inheritance rights of adopted children. From 1896 to 1963, adopted children retained their right under New York law to inherit from and through their biological families, even after having been adopted-out. See Matter of Piel, 10 N.Y.3d 163, 167 (2008) (quoting Domestic Relations Law Section 64). In 1963, the Legislature amended Domestic Relations Law (DRL) Section 117 to terminate an adopted child’s inheritance rights from their biological family. Id. However, the amendment clarified that the termination of rights applied “only to the intestate descent and distribution of real and personal property and shall not affect the right of any child to distribution of property under the will ... or under any inter vivos instrument ... executed by such natural parent or his or her kindred.” Thus, left unresolved was whether an adopted-out child could still inherit as a member of a class gift made by a biological ancestor.