Manataka American Indian Council
Probate Reform Act
The American Indian Probate Reform Act (AIPRA) was signed into law by President Bush on October 28, 2004. The legislation introduced by Senator Ben Nighthorse Campbell of Colorado and supported by former Secretary of the Interior Norton reforms American Indian Probate rules and helps to facilitate the consolidation of Indian land ownership across the nation.
The American Indian Probate Reform Act of 2004 (S. 1721) provides valuable tools to the Department of the Interior, Tribal governments, and individual Indians to facilitate the consolidation of Indian land ownership in order to restore economic viability to Indian assets. The Act amends the Indian Land Consolidation Act and amendments made in 2000.
The legislation provides a clearer method to pass individual Indian land ownership from one generation to the next - creating a uniform federal Indian probate code instead of the multiple individual state laws that now govern Indian probate activity. This new law establishes a definition of highly fractionated lands, allows small interests in land to pass exclusively to single heirs when there is no will involved, and allows greater flexibility for individuals and Tribes to consolidate and acquire interests during the probate process. The measure makes the Department of the Interior's Land Acquisition Pilot Program permanent and allows a Tribe or a co-owner to request a sale of a highly fractionated parcel of land for the purposes of making that parcel whole under one individual owner. AIPRA increases the importance of writing a will or doing an estate plan. Most of the provisions do not take effect for one (1) year.
On June 20, 2006, the American Indian Probate Reform Act (“AIPRA”) became effective. AIPRA is a federal law passed by Congress in 2004 that overhauls the federal probate process for Indian trust property. One of AIPRA’s goals is to reverse the severe consequences of “fractionation.” Fractionation, where individual trust allotments have so many owners of small interests that no one can effectively use the land, has been an escalating problem since the passage of the Dawes Act in 1887 (responsible for most allotments on reservations), which began the Allotment Era. Congress attempted numerous times between 1983 and 2004 to address this problem; however, those attempts were found either unconstitutional or simply never became effective.
While AIPRA is a welcome change in the probate law governing trust property, the law is very complex and can be difficult to understand. As such, this article will focus on the major highlights of the law and those areas which will most generally affect Indian trust land owners.
Simply put, probate is the process by which a person’s estate (the property they own) is divided and passed on to heirs. If the person has a Will, the property will be divided according to the Will. If there is not a Will, the property will pass according to applicable law. For Indian trust property owners, their estates may be subject to two different probate processes if they own both trust and non-trust property.
All non-trust property (for example, a house, car, personal items and regalia) must be probated through state or tribal court. Trust property (usually an allotment or an Individual Indian Money Account, or “IIM”) is handled by the Office of Hearings and Appeals, which is a federal agency under the Department of the Interior. When an Indian person passes away, the Bureau of Indian Affairs must be notified and then the probate process begins. For more information on probate of trust and non-trust property, see CILS’ ACORN packet, “What Do I Need to Know About Probate When My Indian Loved One Passes Away?”
AIPRA sets out the rules on how the Office of Hearings and Appeals will probate Indian trust property. Prior to AIPRA, trust property was probated under state law. AIPRA dramatically changes the probate rules for how trust property can be passed to one’s heirs when the individual passes on “intestate” (without a Will) or with a Will.
If a trust property owner does not have a Will, his or her property will pass “intestate” and follow the federal probate scheme under AIPRA. If the Indian property owner (called the decedent), passes leaving a spouse, and if there are children who are eligible heirs, 1/ the spouse will receive a life estate in the property (meaning they can live on and use the land until they pass) and 1/3 of the decedent’s trust personalty (usually an IIM). The remaining personalty will be split between the eligible heirs equally. An eligible heir under AIPRA is: an Indian, meaning a member of or one eligible for membership in a federally-recognized tribe; a lineal descendant of the decedent within two degrees of consanguinity (or blood) to an Indian person (for example, parent-child is one degree; siblings are two degrees because the parent of the siblings is one degree, the second degree is the sibling); 2/ and those persons who already own an interest in the property. If there are no children, then the spouse receives a life estate in the land and all of the personality.
The remainder interest (what is left after the person holding the life estate passes) in the land will pass to the surviving eligible children. If there are no surviving children, it will then pass in the following order to the eligible surviving grandchildren: to the surviving great-grandchildren; then parents; and finally siblings of the decedent. If there are no children or other eligible heirs, then the interest will pass to the tribe with jurisdiction over the land.
Under AIPRA’s intestate rules, there are other circumstances where an Indian person’s trust land may pass to the tribe where the land is located. AIPRA adopts a “5% rule” which provides that if an interest in the trust property is 5% or less of the entire parcel, a different set of intestate rules applies. The rule for this situation, referred to in AIPRA as a “single heir rule,” provides that the interest will pass to the decedent’s oldest child, and if none, then to the oldest grandchild, then to the oldest great-grandchild and if there are none, then to the tribe. If there is no tribe, then the interest will pass to the other co-owners in the property. The reason for this rule is that with a 5% or less interest, the property is already fractionated. By passing the interest to only the oldest eligible heir, it avoids further fractionation as fewer people will share in that interest.
AIPRA may be viewed as a “Will-friendly” law because its intestate provisions can profoundly effect an individual’s trust interests. Because the intestate provisions of AIPRA can have the consequence of passing an Indian person’s property to someone they may not want to have it, or even in some cases to the tribe, it is strongly suggested that trust property owners execute a Will.
Having a Will allows an Indian person to leave their trust property to whomever they want. AIPRA expands the definition of eligible devisees (those who can receive property through a Will) and actually allows property to be given, or devised, in trust to any “lineal descendant” of the testator (the person who executed the Will), even if the devisee is not a member of a federally recognized tribe.
AIPRA also adds to the definition of “Indian” those persons who own trust property in California, even if not members of federally recognized tribes. These persons generally own trust property off-reservation in California (often called “public domain allotments”). This allows persons who meet this definition and who are not members of federally recognized tribes to inherit trust property.
Both of these new provisions are major changes from the old law that normally would remove from trust any property given to an Indian person who is not a member of a federally recognized tribe.
Trust property left to a person who is not an “eligible devisee” is passed as a life estate with the remainder going to the “eligible devisees” of the decedent. If an Indian allotment owner wishes to pass their trust property in fee (meaning it will no longer be in trust), they can only do so to a person who is not eligible to receive the property in trust. For example, they could leave the property to a non-Indian, but they could not leave it to their lineal descendent even if that person is not a member of a federally recognized tribe, because that person is eligible to receive the property in trust. Trust personalty can be left to any person or entity; if passed to an Indian person, it will remain in trust.
Because of these changes, trust property owners who already have a Will should have it reviewed to ensure it complies with the new law.
AIPRA allows heirs and beneficiaries to consolidate their interests at probate, either at an intestate proceeding or where there is a Will. This means that the heirs can give their interest to another person who also has an interest, thus consolidating the interest(s) into one person. This avoids fractionation because instead of multiple interest owners, only one person holds the interest.
AIPRA allows tribes to adopt their own Tribal Probate Codes, through which the tribe can determine its own rules for intestate succession and testamentary devise. The Code must be approved by Secretary of Interior. If approved by the Secretary of the Interior, a Tribal Probate Code will be applied by the Office of Hearings and Appeals during the probate process to determine what will happen to a tribal member’s trust interests.
The probate code can also change the rules for testamentary devise, however AIPRA does place limits on how the code may effect those devises. These provisions are very complicated, and the important point is that trust property owners should be aware of whether their tribe, or the tribe where their land is located, has an approved Tribal Probate Code and how it may effect their estate.
Because AIPRA is a lengthy and complicated law, you should contact your local CILS office with specific questions.
1/ AIPRA uses separate definitions for those eligible to receive property in the intestate and testamentary provisions. Those who can receive property under a Will are referred to as “eligible devisees.” Those who can take property under the intestate rules adopted by AIPRA are “eligible heirs.”
2/ This can be a very confusing concept and if you have questions, please call your local CILS office.
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