Potential Pitfalls of Adult Adoption

Many gay and lesbian couples have turned to adult adoption as a means of steering trust funds to a partner upon the beneficiary-partner’s death. Though individuals are free to leave their assets to anyone upon death, a trust may require that trust assets pass to a beneficiary’s heirs or, in the event no heirs exist, to the beneficiary’s other relatives. While adult adoption can serve to pass trust funds to a partner, adoptions are incredibly difficult to reverse which can be devastating in the event that the relationship ends.  

Two lawsuits involving Olive F. Watson (granddaughter of I.B.M. founder Thomas J. Watson) highlight the pitfalls of adult adoption in a same-sex couple relationship. Ms. Watson adopted her lesbian partner, Patricia, in 1991 after the two had lived together for fourteen year. At the time of the adoption, Ms. Watson was 43 and Patricia was 44. Less than a year later, the relationship ended and Patricia received $500,000 from Ms. Watson. Patricia did not, however, give up her right to inherit as Ms. Watson’s adopted child. After Ms. Watson died in 2004, Patricia claimed a right to share in three multi-million dollar family trusts.

The court ruled that Patricia had no right to share in the trusts because Olive Watson had not informed her father (the settlor of the trust) of the adoption and because “[Mr. Watson] did not intend to benefit someone who [was] adopted for no reason other than to obtain his money.” In a separate suit filed in Maine by the trustees of the family trusts in an attempt to annul the adoption, the court granted the annulment because the adoption was based in fraud since Patricia did not live in Maine (the state where the adoption took place).  

While adult adoption can serve as a beneficial estate planning tool for same-sex couples, it is important for both the attorney and the couple to consider the affects of the adoption. Individuals considering adult adoption should first consult with an estate planning attorney and an adoption expert as adult adoption laws vary from state to state.

See Deborah L. Jacobs, Adult Adoption a High-Stakes Means to an Inheritance, The New York Times, May 20, 2009.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.