In re Estate of Charles, 304 N.Y.S.2d 774 (1969)

The “stranger to the adoption” rule creates a presumption that the settlor of a trust intended to include adopted children within the term “issue,” unless sufficient evidence demonstrates a contrary intention.

Summary

This case addresses whether the term “issue” in a trust indenture includes adopted children and their descendants. The court held that the stranger to the adoption rule creates a presumption that the settlor intended to include adopted children as “issue.” Respondents failed to present sufficient evidence to overcome this presumption. Further, the court determined that the settlor’s brother had to survive the payment dates to vest rights to a $5,000 drawdown provision, thus his widow was not entitled to recover said amount.

Facts

A trust indenture was created, and a dispute arose regarding the interpretation of the term “issue” as it related to adopted children of the settlor’s siblings. The central question was whether the adopted children and their descendants should be considered beneficiaries under the trust. The settlor’s brother had a provision where he could draw down $5,000 from the trust. He died before receiving all such payments.

Procedural History

The Supreme Court, New York County, initially declared that the adopted children and their issue were considered “issue” of the settlor and were to take per stirpes. The Appellate Division reversed this decision, declaring that the terms “issue” and “surviving issue” did not include the adopted children or their issue. The case was then appealed to the Court of Appeals.

Issue(s)

1. Whether the term “issue” in the trust indenture includes adopted children and their descendants, thus entitling them to benefits under the trust.
2. Whether the settlor’s brother needed to survive specific payment dates for the $5,000 draw down provision to vest in him, thus entitling his widow to the remaining amount.

Holding

1. Yes, because the stranger to the adoption rule creates a presumption that the settlor intended to include adopted children in the term “issue,” and the respondents did not present sufficient evidence to overcome this presumption.
2. Yes, because the terms of the trust indenture evidence the settlor’s intent that the draw down provision was for his sole benefit and he had to survive the payment dates for the rights to vest.

Court’s Reasoning

The court relied on the