By David Shayne
Are you sure who you would include as your descendants in your estate plan? Would it include stepchildren, children adopted as adults, non-marital children, and those born after the death of a parent? A relatively recent phenomenon is the birth of a child conceived artificially after a parent’s death, a “PC child.” While not common, many persons in dangerous occupations, cancer patients and middle-aged woman have had their sperm or eggs preserved against the possibility of death or infertility before creating offspring. There have been more than a dozen cases in recent years turning on whether or not a PC child is entitled to inherit the deceased parent. Surprisingly, those cases split about equally. Nearly all of them involved a Social Security Administration regulation that ties survivor benefits to the intestacy rights of a child under state law. In 2012 the Supreme Court in Capato upheld the regulation. It involved a Florida decedent and that state at the time of Mr. Capato’s death was one of the few with a law concerning PC children. Currently there are seven states with laws excluding PC children from intestate inheritance, including Florida, Illinois and Virginia. There are 18 that allow them to inherit under various circumstances, notably California, New York, Maryland and Texas. Unfortunately, the others have no law on the subject.
A woman’s eggs can be fertilized in a laboratory whether or not the male parent is living, creating a pre-embryo. PC children generally include those whose birth resulted from the placement of eggs, sperm or pre-embryos after the death of a parent even where conception can be considered to have occurred earlier.
The Capato case confirmed that a child denied inheritance rights by state law due to postmortem conception can also be denied survivor benefits under Social Security, a double blow.
The problem then is that PC children’s path to inheritance is unclear in most states. Twenty-seven states have no relevant law and nearly all of the others limit it to intestacy, that is, the laws do not govern wills, trust documents or beneficiary designations. For example, a typical trust gift is to spouse for life and then to descendants, per stirpes. But what if at the spouse’s death there is frozen sperm of a deceased child in the control of his widow? Does the trustee dare distribute to the existing descendants of the creator of the trust? The answer for future documents is to define descendants, including or excluding those conceived postmortem. As to trusts that can’t be modified, a statement of intention by the creator might help. Otherwise one must hope that the remaining legislatures will clarify the matter.
For documents created or which can be modified in the future, it is advisable to discover the estate owner’s intention and document it. Excluding PC children is obviously the simplest course and perhaps should be the default provision. But for those inclined to allow PC children to participate, it is prudent to impose some parameters including requiring a time limit, written consent by the donor and notice to the trustee or other account holder.
New York and California have particularly thorough provisions with two year limits and requirements of written consent and notice to the personal representative of the estate. Neither requires the birth mother to be married to the genetic parent. One way to clarify the status of PC children would be to incorporate the provisions of a suitable statute.
As assisted reproduction becomes more and more common, it behooves estate owners to define descendants in their transfer documents, including clarifying the status of PC children.
For more on this topic, read the author’s article titled “Posthumously Conceived Child as Heir Depends on Where” that appeared in the December issue of Estate Planning. Also of interest is this quiz: “Who are your descendants?”
Published courtesy of the Holland & Knight Tax Compliance Blog.