Matter of Snowden, 39 N.Y.2d 322 (1976)
When a trust agreement grants beneficiaries a broad power of appointment, indicating a lack of strict adherence to bloodlines, adopted children may be included in the term “issue” for inheritance purposes, even under former Section 114 of the Domestic Relations Law.
Summary
This case concerns whether adopted children can inherit from a trust established in 1922, based on the interpretation of “issue” in the trust agreement and the application of former Section 114 of the Domestic Relations Law. The court held that because the trust agreement gave beneficiaries a broad power to appoint the trust corpus to anyone they chose, the settlor demonstrated a lack of strict adherence to bloodlines, implying an intent to include adopted children within the definition of “issue.” Thus, the adopted children were entitled to their deceased father’s share of the trust.
Facts
James and Marian Snowden created a separation and trust agreement in 1922, funding a trust for the benefit of Marian and their children. Upon Marian’s death, the trust corpus was to be divided per stirpes among the surviving children and the “issue” of any deceased child. Each child’s share was held in trust with distributions at ages 30, 35, and 40. If a child died before the trust terminated, their share would be paid to appointees by will, or lacking that, to their living “issue,” or lacking that, to their next of kin. James Snowden died in 1930, Marian in 1969. One daughter died in 1943 survived by natural children. The son died in 1964 survived by two adopted children. Another daughter, childless, survived her mother.
Procedural History
The case began as a proceeding to settle the trustee’s account after Marian Snowden’s death. The lower court ruled against the adopted children, denying them their father’s share of the trust. The Appellate Division affirmed, with a divided court. The dissenting justices in the Appellate Division disagreed, leading to this appeal to the New York Court of Appeals.
Issue(s)
Whether, under the terms of the 1922 trust agreement and considering former Section 114 of the Domestic Relations Law, the term “issue” includes adopted children, thereby entitling them to inherit their deceased father’s share of the trust corpus.
Holding
Yes, because the settlor granted his children a broad power of appointment, demonstrating an intent not to limit inheritance strictly to blood relatives, which implies that adopted children should be included within the meaning of “issue.”
Court’s Reasoning
The court reasoned that the “precautionary addendum” of former Section 114, which restricted adopted children’s inheritance rights to protect remaindermen, should be narrowly construed. The court cited Matter of Rockefeller (12 N.Y.2d 124) stating it did not apply if it “affirmatively” appeared from the context of the trust instrument or from extraneous facts “that the grantor intended to include adopted children”. The court emphasized that the key consideration is the settlor’s intent. Here, the settlor’s grant of a broad power of appointment to his children indicated he was not solely concerned with preserving the trust corpus for his bloodline. As the court stated, “Since the settlor had authorized his child to appoint those not of his blood, it is difficult to believe that he did not intend adopted, as well as natural, children to be included in the word, ‘issue,’ wherever used in the trust instrument.” The court distinguished cases like Matter of Carll, where the trust explicitly limited the remainder to the grantor’s bloodlines. The court also noted the 1963 amendment to the Domestic Relations Law, which favored including adopted children in generic terms like “issue,” unless the instrument specifically provided otherwise, reflecting a public policy of integrating adopted children into their new families for inheritance purposes.