F. Scott Fitzgerald observed that the rich are different, but that does not mean an heiress can adopt her 65-year-old ex-husband to increase her family's claim to a billion dollar inheritance.
You can pick your husband and, if you adopt, you can even pick your kids. But according to at least one court, you can’t adopt your ex-husband to be your adopted child to cut your death tax exposure.
Just when you think you have seen it all in the exciting world of estate planning, along comes a gem. Enter a recent case concerning the Gore-Tex fortune.
As Reuters reported in an article titled “Court: Gore-Tex heiress can't adopt ex-husband,” the Gore-Tex fortune was set to pass through a family trust to the children and grandchildren of the aging founders. All of the first generation—the children of the founders—had four children themselves, except for Susan Gore. Susan had three children with her husband Nathan Otto before they split in a divorce.
Once Susan did the math, she discovered her side of the family equation was getting stiffed an entire person’s share. Why? Because she was short an heir. Solution? Her ex-husband agreed to be adopted by Susan as her fourth child by way of a secret adoption.
When it came time to distribute the first trust to the beneficiaries, the trustee balked at the secret contrivance to seek out more shares. The court agreed.
While Susan should receive high marks for her creativity, it really was a bald-faced attempt to grab at the family fortune. Then again, it’s not uncommon for bickering heirs to do this sort of math and resort to just this type of contrivance.
As the old tax maxim goes, however, pigs live and hogs get slaughtered.
Contact Meier Law Firm to discuss your estate planning needs.
Reference: Reuters (May 23, 2012) “Court: Gore-Tex heiress can't adopt ex-husband”