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Oct 1, 2009 12:00 PM
Adopted Kids and Old Money
State laws on inheritance rights vary dramatically, creating traps for the unwary
Imagine you are the beneficiary of a trust established by your great-grandfather more than 70 years ago. You've been receiving an annual income of $400,000 from the trust for 20 years and your whole family's lifestyle has come to depend upon it. Then, one day, you get a call from a trust officer informing you that the law has changed and your income will be cut in half because your adopted cousin now also is a beneficiary of the trust.
Imagine that you are a professional fiduciary and the law in your state has been amended to provide that adopted individuals now are presumed to be beneficiaries of trusts established during a time when the opposite was true. You must scramble to identify which trusts will be affected by the change in the law. Quickly, you have to identify which families may have adopted children — information you did not need in the past. Once you find the adoptees, you need to collect information about the circumstances and needs of these new beneficiaries to determine if they should receive discretionary distributions from the trust. And you not only must include these new beneficiaries in mandatory income distributions, but also must inform the current beneficiaries that their income stream is going to shrink.
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| GSTs | Family Offices |
| Private Foundations | Life Insurance |
| 2010 Tax Act News | Industry Trends Surveys |
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