Important News from the T&E Section Re: Adopted Issue

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Authored by:
Boston Bar Association Trusts & Estates Section

On July 1, 2010, there was an important statutory change to a longstanding rule of construction governing the treatment of adopted persons in wills, trusts and similar instruments executed before August 26, 1958. Adopted persons (or their issue) who were previously presumed to be excluded as beneficiaries where the instrument did not specify their status will now be presumed to be included, retroactively conferring upon them benefits they never before enjoyed and retroactively diminishing interests held by natural-born descendants.

When the Legislature modernized Massachusetts law in 1958 to presume that adopted persons are included in terms such as “child”, “grandchild” and “issue” unless the instrument plainly states otherwise, it made the change effective only to instruments executed after the law’s effective date of August 26, 1958. The old law continued to apply to earlier instruments. Under that law, adopted persons were presumed to be included if they were adopted by the creator of the instrument, but were presumed to be excluded if they had been adopted by someone in the family other than the creator.

This clearly-understood rule of construction was changed by Chapter 524 of the Acts of 2008, which was signed by the Governor on January 15, 2009. That act abolished the distinction between instruments signed before and after August 26, 1958 by applying the modern rule of construction to all instruments. In other words, after the effective date of Chapter 524, adopted persons suddenly would be presumed to be included as children, grandchildren or issue under pre-1958 trusts.

This change came as a surprise to members of the bar and raised multiple concerns. First, the statute meant that the trustees of pre-1958 trusts might be unable to identify correctly the beneficiaries of those trusts. Second, Chapter 524 had the potential to wreck havoc on estate plans drafted in reliance on the old rule of construction. Many of these estate plans have been designed to include lifetime gifts or bequests that would compensate adopted persons who could not benefit from pre-1958 trusts established by other family members. To the extent that these arrangements are irrevocable, Chapter 524 could result in adopted persons receiving a greater combined benefit than similarly-situated biological descendants. Finally, Chapter 524 was potentially unconstitutional, as it could violate due process by reducing or eliminating the vested property rights of biological descendants.

Due to these concerns, the Boston Bar Association and other bar associations asked the Legislature to repeal the new act or to delay its original April 15, 2009 effective date. The legislation took effect as scheduled, but in response to these requests, the Legislature included provisions in the 2009 budget that essentially suspended the Chapter 524 changes during the year from July 1, 2009 to June 30, 2010. The bar’s further efforts to repeal Chapter 524 permanently were not successful, resulting in a change in the law when the suspension expired on July 1st and the rule of construction introduced by Chapter 524 returned.

The Boston Bar Association continues to work on the repeal of this new rule of construction introduced by Chapter 524. It also will be hosting a brown bag lunch at its offices on Friday, September 17, 2010, at 12:30 PM, to discuss the matter. In the meantime, lawyers should consider the effect of this change for their clients.