February 2, 1998
Nancy R. Pomeranz, Director Personal Taxes Division
N.C. Department of Revenue Post Office Box 25000 Raleigh, North Carolina 27640
Re: Advisory Opinion; inheritance taxes; equitable adoption; qualification as Class A beneficiary; G.S. 105-4; Lankford v. Wright, et al.,
Dear Ms. Pomeranz:
In Lankford v. Wright, et al., 347 N.C. 115 (1997) ("Lankford"), our Supreme Court held that North Carolina recognizes the doctrine of equitable adoption. For inheritance tax purposes G.S. 105-4 provides a preferential tax rate for "Class A" beneficiaries, defined in part to include "lineal" issue and ancestors, and children adopted "in conformity with the laws of this State." You request our opinion as to whether parties to an equitable adoption qualify under Section 4 as Class A beneficiaries.
Lankford is written narrowly. Equitable adoption is invoked in the context of intestate succession to effectuate a decedent’s intent "to adopt and provide for the child." Id. at 117. Being only an equitable remedy to enforce a contractual right, the doctrine does not "create the legal relationship of parent and child, with all the legal consequences of such a relationship, nor is it meant to create a legal adoption." Id. at 118. The doctrine "is not intended to replace statutory requirements or to create the parent-child relationship." Id. Equitable adoption "is invoked for the sole benefit of the foster child in determining heirship" where the foster parent dies intestate. Id. at 119. (Emphasis added). It "does not create a legal adoption." Id. at 120.
In In re Morris Estate, 138 N.C. 259 (1905) the Supreme Court traced the evolution of the inheritance tax and concluded that the right to take by descent is solely a creature of law and does not constitute one of "the natural rights of man." Id. at 262. As a result, the legislature is afforded considerable constitutional deference as to how it "may discriminate between relatives and between these and strangers. . ." Id. at 263.
Familiar canons of statutory construction instruct that a statute must be considered as a whole and none of its provisions deemed redundant. State v. Harvey, 281 N.C. 1, 19 (1972). Consequently, the separate inclusion of lineal issue and statutorily adopted children within G.S. 105-4 indicates that the terms are not synonymous, but reflect different legal relationships, although each category qualifies for Class A treatment.
Equitable adoption plays no role in the administration of G. S. 105-4. Lankford unequivocally holds that the doctrine does not create a legal adoption or establish a parent-child relationship. Whatever the status of such a foster child for other purposes, that individual does not constitute a person adopted in conformity with the laws of North Carolina within the literal language of Section 4. Whether parties to an equitable adoption warrant Class A recognition remains a policy determination for the legislature.
We hope the foregoing is helpful.
signed by:
Reginald L. Watkins Senior Deputy Attorney General
George W. Boylan
Special Deputy Attorney General