“Death is no longer a deterrent to having children,” Sharon Klein, managing director of family office services and wealth strategies at Wilmington Trust, quipped during a panel discussion in New York City last week.
Klein was referring to reproductive technologies such as in vitro fertilization and those allowing for the storage and even posthumous extraction of genetic material, which enable conception and birth to happen long after the death of one or even both parents.
The possibility of posthumous births has added a new wrinkle to the estate planning conversations advisors have with clients, not to mention estate-planning law, Klein stressed.
“More and more, it’s likely you have to raise [the reproductive issue] in some manner just so people are equipped to deal with it,” she said.
Clients writing trust documents may need to consider that future generations of their family might use these technologies to extend a family bloodline. Estate plans should be modified to specify how the client wants inheritances handled if such a thing were to happen.
Without such planning, Klein added, estates and inheritances will be subject to state laws, many of which are still grappling with the issue of how to handle posthumous births.
“The beauty of doing it in your own document is that you can do whatever you want,” Klein said in a telephone interview.
Most people would want posthumously conceived children to inherit, but with constraints on the time limit or the consent necessary, Klein said, but statutes dealing with such situations differ from state to state.
“States are trying to weigh interests of giving rights to posthumously conceived children on the one hand, but on the other hand, trying to give existing beneficiaries finality and certainty so they can know what they’re inheriting and the distribution is not held up,” she said.
In cases where the estate of the deceased is silent on the issue, some state statutes give a timeframe ranging from a year to as long as 45 months between the parent’s death and the birth for a child to retain inheritance rights. Legislation wending its way through the New York State legislature, for example, proposes that for a child born after the death of a genetic parent to be considered the offspring of that parent for inheritance purposes, it must be in utero within 24 months or born within 33 months.