In 2003, Indiana abrogated the stranger to the adoption rule as to trusts and to include as beneficiaries persons adopted before age 21 and before the settlor’s death. The statute also contains a provision which makes its rules applicable to all trusts whenever created unless doing so would adversely affect the rights given a beneficiary or give a right to a beneficiary which the beneficiary was not intended to have under the trust. In Paloutzian v. Taggart, 931 N.E.2d 921 (Ind. Ct. App. 2010), a divided Indiana intermediate appellate court in a case of first impression held that the statute abrogating the rule applied to a trust created in 1953 which gave income to the settlor’s son for life, remainder to his wife and surviving children. At the time the son was unmarried and childless. He later married, adopted two children, divorced, remarried and had three birth children by that marriage. Because at the time of the enactment of the statute, the birth children could not be sure of surviving their father, retroactive application could not adversely affect their rights. The court also held that because the abolition of the rule reversed the presumption of the stranger to the adoption rule to a presumption of inclusion of adopted children, the birth children had the burden of going forward with evidence that at the time of the creation of the trust the settlor intended to exclude adopted children, and they failed to do so.
Special thanks to William P. LaPiana (Rita and Joseph Solomon Professor of Wills, Trusts,and Estates, New York Law School) for bringing this to my attention.
