Arnold Levien was an accomplished engineer, and perhaps more accomplished still as a real estate investor. At the time of his death in 1979 he was a multimillionaire, and his Will established a Trust of which his children and/or grandchildren were income beneficiaries, pending the Trust's termination. The terminating event for the Trust was the attainment of age 35 of the last of his surviving great-grandchildren who was alive on the date of his death. Upon termination, the Trust principle was distributable to Arnold's surviving great-grandchildren.
The trustees of the Trust were empowered, in their absolute discretion, to invade the principle for early distribution to an income beneficiary on account of "serious illness, misfortune or other emergency affecting any such beneficiary."
Two of Arnold's grandchildren, Stephen and Harlan (apparently neither of whom is anything resembling a slouch in his own right), are afflicted with muscular dystrophy. Neither has sired any biological natural children. Their respective (and apparently coordinated) requests to the trustees for early Trust principle distribution on account of their medical situations were rebuffed; they sued the trustees. The lawsuit was settled in July 2012 by agreement giving Stephen and Harlan each a six-figure cash payment, in return for which, they "relinquish all rights as beneficiaries of income and/or principal of the Trust" and would "make no further requests of the Trustees for income or principal."
As will be discussed shortly, the settlement agreement had a gag clause prohibiting its terms from being disclosed to others.
In October 2012, Stephen and Harlan each respectively adopted an adult son, said adoptions having been validly formalized in Texas courts. Apparently, one of the adopted sons is older than his adoptive father. The Trustees of the Trust were apprised of these adoptions shortly thereafter.
In February 2013, the last of Arnold's surviving great-grandchildren alive at Arnold's death attained the age of 35, thereby terminating the Trust. Kenneth Ives and Parvin Johnson, Stephen and Harlan's adoptive sons (this Kenneth not to be confused with Kenneth Levien, one of the trustees, nor with the author of this posting) claimed their respective shares of Trust principle as Arnold's great-grandchildren (each share being worth in excess of a million dollars before taxes), and the trustees of the Trust sought declaratory judgment that Kenneth and Parvin were not entitled to shares of the Trust as Arnold's great-grandchildren.
In a verbose ruling [Levien v. Johnson, 2014 N.Y. Misc. LEXIS 1802, 2014 NY Slip Op 30995(U) (Surr. Ct. N.Y. Co. 2014)], the New York County Surrogate's Court dealt with the Trustee's relevant contentions as follows:
A. Arnold did not intend to benefit non-biological descendants: The laws of New York (and other states) recognize offspring by adoption on par with biological offspring, and Wills are so construed unless a contrary intention is specified. No contrary intention on the part of Arnold was specified in his Will, and none was otherwise proven.
B. The adoptions were unique and unforeseeable if not a sham: Adoption is specifically recognized as a valid method of creating parent-child relationships under the laws of New York (and other states). Adoption is foreseeable and, inasmuch as no misrepresentations were made to the Texas courts in the course of the adoption proceedings, the adoptions were valid and not sham.
C. Stephen and Harlan had a duty to disclose their anticipated adoptions to the Trustees during the course of the settlement negotiations in the prior lawsuit: No such duty was shown, and, even if it did exist, it would not affect the status of Kenneth and Parvin as adoptive children of Arnold's grandchildren.
D. The distributions of principle to Kenneth and Parvin would circumvent the settlement agreement in the prior lawsuit: Though the settlement agreement was intended to bind the "heirs, executors, successors, and assigns" of Stephen and Harlan, it did not in any way affect Stephen and Harlan's rights and capacities to adopt.
And so, if this court decision stands, Kenneth and Parvin will get their shares from their adoptive great-grandfather's life labors.
But the Court did not dismiss the trustees' claims against Stephen and Harlan for breach of contract. The trustees contend that the only way Kenneth and Parvin could have learned of the terms of Arnold's Will was through Stephen and Harlan; Kenneth and Parvin contend that they knew that information before the settlement agreement was entered into. On the disputed facts, a trial is necessary, and dismissal on motion is inappropriate. Never mind that Arnold's Will, having been duly probated, is a matter of public record.
The foregoing is an abbreviated synopsis of a very wordy judicial opinion; the reader is free to read the original opinion if he or she so desires.
Never mind that there obviously was a scheme involved here, the propriety of which shall not now be taken to the mats. The decision in the case brings forth some questions hitting at the intersection of genealogy and privacy. What are the uses and misuses of adoption? How, if at all, should adult adoptions be treated differently than infant adoptions or pre-teen adoptions or teenager adoptions? How open or private should side deals behind adoptions be?
Regardless of whether or not this particular court decision stands (the dollars at stake here may well be impetus for an appeal), these questions will likely be reprised somewhere, at some future time, in some form.