Wednesday, May 27, 2009

Ad-Opting Out

Did Leonore Annenberg adopt her butler Micheal?

Heirs to Leonore Annenberg, billionaire widow of publisher Walter Annenberg, are said to be fretting over a bequest she made to a loyal caregiver.

Reports are that she became so close to her butler, Michael, she adopted him. Lee, as she was known, had an attorney who is denying it as absolutely false.

Adult adoptions are used, but rarely, as a financial planning tool by wealthy trust beneficiaries to steer the trust funds to the person they want to receive them after they die, rather than the person dictated by the trust. For example it is common for parents to leave wealth in trust to their children and when the children die require the remaining trust funds go to grandchildren.

Though most adult adoptions, which are used to provide for a partner, friend, stepchild, etc., remain private, some blow up in spectacularly public ways.

The late Doris Duke inherited $100 million dollars in 1925 when her father died. The money was left in trust and was payable to any children after Doris died. At the age of 75, Doris Duke legally adopted Chandi Heffner, a 35-year-old companion. The women had a falling out. In her final will Duke specified that she did not want to leave Ms. Heffner anything and said she regretted the adoption.

According to this article in the New York Times, Heffner challenged the will and eventually settled for more than $65,000,000.

The stakes are very high because while you can divorce someone you can rarely dis-adopt them. The result, sadly is that the family money can bypass intended heirs, and pass outside the family to strangers.

Laws vary from state to state.

The Utah code provides for adult adoption. In an convoluted attempt to dictate public policy, the law was changed in recent years to allow adult adoption by married couples and any single couple as long has they are not "cohabitating in a relationship that is not a legally valid and binding marriage under the laws of this state."

(3)(b), "cohabiting" means residing with another person and being involved in a sexual relationship with that person.

I guess in Utah, single people in Utah can adopt as long as they don't live with the person they're having sex with. If they are not in a sexual relationship at all that's okay, too. Hmmm, could make for some interesting testimony in an adoption annulment case.

At any rate all state laws are different and you should really, really think twice and consult an attorney.

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