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How Reproductive Advances Affect Financial Planning

Choices about reproduction are among the most personal most of us will ever face. As such, it’s a topic that few people are eager to discuss outside their very closest friends and family.

However, assisted reproductive technologies (ARTs) can cause financial complications that are important to discuss with an adviser.

Don’t assume that if your adviser has not asked about these issues, he or she does not need to know. Some lawyers, financial planners and other professionals may believe these issues arise so infrequently that the topic need not be raised. However, according to data from the Centers for Disease Control and Prevention, over 60,000 live births in the U.S. were the result of ART in 2011. The CDC estimates that more than 1 percent of all births in the U.S. today are the result of conception via ART. As the technology becomes more commonplace, it will become standard to consider its financial and legal implications.

Even individuals without a child conceived using assisted reproduction, or who have no immediate plans to try to have a baby, can face legal complications due to ART. An increasing number of people are choosing to preserve sperm, eggs or embryos to guard against future fertility problems, which can arise due to age, surgery, vaccinations and cancer treatment. An individual may also decide to donate his or her genetic material to others, either out of altruism or for compensation. In all of these cases, it is important that a plan is in place for dealing with the genetic material and any potential children that could result from it.

Legislative Attempts to Deal with ART

Technological advances have created situations that transcend traditional concepts of parenthood. Many of the existing laws regarding intestacy and inheritance were drafted before it was possible to have posthumous children.

There have been attempts to modernize some of these laws. The Uniform Parentage Act (UPA) outlines specific provisions regarding how authorities should deal with issues regarding the parentage and legal rights of children born via ART. The UPA provides rules and procedures for determining who is legally responsible for children after their birth. At this writing, the act has been enacted in Alabama, Delaware, New Mexico, North Dakota, Oklahoma, Texas, Utah, Washington, and Wyoming.

Determining legal parentage is important because it often determines whether a child is eligible to receive benefits such as Social Security or financial support, or to inherit assets. Traditional concepts of parenthood, where genetic relationships were central, are no longer the only basis for a legally recognized parent-child relationship. Modern reproductive technology means a child can have genetic parents (the suppliers of egg and sperm), a gestational mother (such as a surrogate), and intended parents, all of whom may be different. The UPA seeks to cope with this reality.

The Uniform Probate Code (UPC), which applies if a decedent’s assets were not disposed of via a will or trust, has also adopted rules to address issues that arise with children conceived using ART. An important distinction between the parentage act and the UPC is that the probate code designates specific timetables for a child to be born after a parent’s death in order to inherit assets from an estate. (The child must be in utero within 36 months or born within 45 months of a parent’s death). The child’s heirship is automatic under the UPC as long as the timetables are met. Before the UPC was amended in 2008, the code required that children be conceived before a parent’s death in order to inherit assets.

The UPC further distinguishes between children born to a genetic parent who is the gestational carrier and children who are carried by a surrogate. The code also includes various requirements for establishing intent to be a parent. The model UPC has been adopted wholly or in part by 18 states. However, many states have made substantial amendments, making it “uniform” only in name. For example, only two states have so far adopted the new provision regarding automatic inheritance rights based on specific timetables for conception and birth.

Inheritance and Posthumous Children

The concept of posthumous children is not solely a product of ART. There have been laws on the books for years regarding children that were conceived before a parent’s death but born after. However, ART addresses situations in which conception might occur years after the death of a parent. As discussed in the prior section, laws regarding inheritance in these cases are often unclear and can be inconsistent from state to state.

In May 2012, the U.S. Supreme Court decided the case of Asture v. Capato, one such inheritance dispute. The case centered on whether twins who were conceived after their father’s death were eligible for his Social Security benefits. Robert Capato had deposited his semen in a sperm bank before receiving treatment for esophageal cancer. Following her husband’s death in 2002, Karen Capato conceived twins via in-vitro fertilization. Robert Capato’s will named the couple’s two older children and his children from a previous marriage as beneficiaries of his estate, but did not specifically mention posthumous children. The Court ruled that the twins were ineligible for benefits because Florida, where the Capatos resided, only provides for inheritance in cases where children are specifically named in the decedent’s will.

The Court acknowledged that the results might have been different if the family resided in another state, one that allowed for inheritance. The importance of this ruling is that the Supreme Court affirmed that the determination of posthumous Social Security benefits is based on state law. This underscores the importance of properly drafting documents and understanding the laws in the prospective parent’s state of residence.

When allowing for the possibility of posthumous children in estate planning, it is important to consider the language of the drafted document. Wills or trusts commonly refer to beneficiaries as “issue” or “children.” If a document does not specifically define whether the term only applies to children who were alive before the parent’s death or born within a certain period after, it could lead to complications for the beneficiaries. Children born after the parent’s death who are not included among his or her beneficiaries specifically may be excluded, as in the Capato case, whether this is the parent’s intention or not.

Estate administration is another factor in planning for posthumous children. Uncertainty regarding who is eligible to make claims against the estate or when a class of future beneficiaries may be established could delay the estate’s administration and increase costs and litigation risks.

Donating and Controlling Genetic Material

When donating or preserving genetic material, it is important to understand the potential rights of any resultant children for parental support. Generally, the intended parent is legally responsible for supporting the child, and the donor has no parental rights or obligations. A child in this scenario is unable to make a claim for support or inheritance on the biological parent.

However, a donor who does not want parental responsibilities must also follow certain rules to avoid unintended consequences. For instance, the courts will not generally consider a sperm donor a child’s legal parent, as long as the donor actively waived his parental rights and a doctor handled the mother’s insemination. Without both of these provisions, a sperm donor could inadvertently create legal paternity.

For example, a man in Kansas donated his sperm to a lesbian couple to help them conceive. The insemination was not supervised by a doctor. The couple later separated, and one woman filed for state assistance to support the child. The state of Kansas eventually filed a suit against the sperm donor to collect for assistance paid for the child, even though he had signed away his parental rights. In this case, Kansas ignored the parties’ expressed intent due to the absence of medical supervision. (The courts have generally shown that intent weighs heavier in cases of egg donation.)

If a heterosexual couple divorces and the woman uses her ex-husband’s sperm for in-vitro fertilization, he will not be considered the resulting child’s legal father unless he gave prior written consent for the use of his sperm. Even in cases where there was a signed agreement between the biological parents, the law often sides with the father if there is a subsequent dispute regarding a child’s conception. American courts are generally reluctant to force legal paternity when given another option.

Donors should make sure they document how they wish their preserved or donated genetic material to be handled. Clear evidence of intent can help avoid many legal tangles. If donors signed agreements in the past that no longer reflect their wishes, they should take steps, in writing, to revoke them.

Advances in reproductive technologies have brought the joy of parenthood to many for whom it once was out of reach. Knowing and planning for the issues that can arise when children are conceived using these technologies will help ease worries regarding the financial well-being of the future parents and their children.

Senior Client Service Manager ReKeithen Miller, who is based in our Atlanta office, is among the authors of our firm’s recently updated book, The High Achiever’s Guide To Wealth. His contributions include Chapter 6, “Should I Buy Or Lease A Vehicle?”, and Chapter 17, “Living And Working Abroad.” He also contributed to the firm’s book Looking Ahead: Life, Family, Wealth and Business After 55.
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