Estate Planning & Probate

Transcription

1 T a k i n g a S t a n d o n I n d i a n L a n d I N D I A N L A N D WO R K I N G G R O U P Estate Planning & Probate ILWG I n d i a n L a n d W o r k i n g G r o u p TH ST. NW, 206N ALBUQUERQUE NM, Ta k i n g a S t a n d o n I n d i a n L a n d

2 A Resource Document CD and the DVD are included with your Estate Planning and Probate Manual. Resource CD Contents: Indian Land Consolidation Act (ILCA) Outline American Indian Probate Reform Act of 2004 Information Used to Write a Will - Initial Interview Checklist - Sample Will - BIA Will Form - Affadavit to Accompany Indian Will Application for Gift Conveyance Grantor s Agreement to Gift Convey Consent to Gift Convey Waiver of Estimate of Value DVD Contents: The Estate Planning and Probate DVD includes interviews with tribal representatives and landowners describing how Indian land becomes fractionated (divided into small interests owned by multiple owners) and the resulting problems; How estate planning options can prevent and reduce fractionation; How the probate process works; and describes the importance of tribal codes. WRITTEN BY: THERESA CARMODY, DIRECTOR, ILWG PRODUCED BY THE INDIAN LAND WORKING GROUP MADE POSSIBLE WITH A GRANT FROM THE NORTHWEST AREA FOUNDATION AND THE TUSKEGEE INSTITUTE

3 Estate Planning & Probate TA B L E OF CONTENTS About The How Did Multiple Ownership or Fractionation of Your Indian Land Happen Fractionation Problems Stemming From Fractionation What Can I Do? - Become Involved in Estate Planning Estate Planning & Inheritance Options on Allotted Lands: Making Decisions About Your Land Land Use Options Gift Conveyance Negotiated Sale of Fractionated Interests Acquisition of Fractionated Interests Land Exchanges Partition & Partition of Highly Fractionated Lands Joint Tenancy With Right of Survivorship Pilot Project for Family Entities Owner Managed Interests Leasing Lease Compliance Lease Councils Trespass Power of Attorney Rights of Way Appraisals & Fair Market Value New Estimate of Value Provisions in AIPRA Inheritance Options Under AIPRA Consolidation Agreements Writing a Will Review of Land Use and Inheritance Options Contacts/Resources Indian Land Consolidation Act (ILCA) Outline Appendix A American Indian Probate Reform Act of Appendix B Estate Planning and Probate 3

4 The In 1991, the 1st Annual Indian Land Consolidation Symposium was held in Pendleton, Oregon and was co-sponsored by the Confederated Tribes of the Umatilla Reservation (CTUIR), the First Nations Development Institute, and the Northwest Renewable Resources Center. The CTUIR had recently embarked on their New Nation Project whereby the Tribes were seeking to restore their original treaty homeland, and to address issues related to their allotted lands. They thought the best way to do this would be to network with other tribes who were in a similar situation and consequently organized the 1st Indian Land Symposium with a grant that they had received from Northwest Area Foundation. The (ILWG) was an outgrowth of this first symposium, where attendees decided that tribal governments and Indian individuals should continue to share their knowledge and ideas on how to address problems stemming from mixed (Indian and non-indian) land ownership of Indian homelands. The over 150 conference attendees moved to form the ILWG, which today continues to conduct the annual land symposiums. In addition to the symposium, the ILWG: conducts workshops and meetings related to land issues throughout the year; has produced an Indian Land Consolidation Manual ; developed legislation which addresses land issues related to estate planning, data development, real estate transactions, acquisition financing, and Indian probate. The ILWG has also produced a five part video series with two goals in mind: to present options for resolving problems related to multiple ownership or fractionation; and to keep Indian land in Indian ownership. The ILWG believes this will happen only if Tribes and individual Indian landowners take control. The five part series includes videos on: Estate Planning & Probate; Land Exchange & Consolidation; Land Acquisition & Financing; Leasing of Indian Land; and, Indian Land Data. Each video is accompanied by a manual which details each video topic. The ILWG has produced a Native Strategic Land Planning workbook and 3-day training curriculum now available throughout Indian Country. Check our website for regional training opportunities and details on how to schedule a training for your tribal community/ tribal council. The ILWG maintains a website: which contains announcements on our Annual Indian Land Consolidation Symposiums; Regional Trainings; and land related hearings, legislation, programs and events of interest to Tribes and individual landowners seeking to restore, use, and manage native lands. 4 Estate Planning and Probate

5 How Did Multiple Ownership or Fractionation of Your Indian Trust Land Happen? Prior to non-indian encroachment, most Indian societies had communal land use systems. Wealth, including land, was passed down through matriarchal (mother) and patriarchal (father) lines; within clans and extended families, from generation to generation. Non-Indians were blind to the fact that Indian Nations already had highly developed societies of their own, with spiritual, political, economic, and social systems tied deeply to the land. A highly developed barter system existed within and between tribes, which was built on the tribes ability to hunt, fish, gather, and grow crops within traditional land areas. The treaty making period took place between Indian nations and the United States from 1744 through 1871, during which time tribes were forced to relinquish millions of aboriginal acres for designated areas known as reservations. Several members of the U.S. Congress prevented Indian tribes from losing their entire aboriginal land base. During the late 1800 s, two groups pressured the U.S. Government to allot Indian land for different reasons. One of the groups - Christian reformers - saw themselves as advocates and protectors of Indians. They wanted Indians to adopt the white society s customs and assimilate themselves into the mainstream American society. They viewed tribal institutions and customs as obstacles to full-scale integration. The other group of persons, included owners of timber and railroad companies, developers, homesteaders and other interests who made it well known that they wanted to obtain select pieces of reservation land. Finally, in direct violation of the treaties, the U.S. Government decided to allot Indian treaty lands. In February 1887, President Cleveland signed the General Allotment Act, also known as the Dawes Act. This Act authorized the President to divide reservations and allot tracts of land to individual Indians. Each head of household received 160 acres; single individuals over 18 received 80 acres; and children under 18 received 40 acres. The federal government sold any remaining land to non-indian entities through surplus land sales. Often the best land was saved for these surplus sales. Indians lost 90 million acres before the Allotment process was ended in 1934, under the Indian Reorganization Act. Fractionation The Dawes Act created an additional problem for Indians through its inheritance provisions, which stipulated that when the owner of a piece of property died, the Bureau of Indian Affairs was to give each heir an undivided share which had not been partitioned or physically divided. In other words the BIA simply divided the land on paper. The number of owners per parcel began to grow with each generation. Today, Indian landowners find themselves to be coowners with hundreds of other Indian landowners within tracts which were originally owned by just one individual. Although these provisions were changed in Indians could then write wills - the BIA Estate Planning and Probate 5

6 to this day continues to divide land on paper. Limited assistance is available to Indian landowners who want to partition, convey, will, and exchange their undivided interests so as to reduce the number of owners per tract. These options are simply not promoted by the Trustee. The BIA is currently not responsible for writing wills or for will storage. This became effective in April of 2005 under protest from many including the ILWG. Problems Stemming From Fractionation When small undivided interests in a piece of property are owned by a large number of people, management and use of the property becomes more difficult, and income from the property, per owner, is often small in amount. Indian landowners find it difficult to use and control their own land. All the following areas are impacted: probate and estate planning who will get my land when I die?; leasing - getting the required number of signatures from landowners when I want to lease my land or lease someone else s land; land data - getting all the records that give me a good idea of what I own, the location of what I own, who the other co-owners are, and the value of my land interests; acquisition - trying to buy additional land interests so that I can own enough land for things like a homesite, pasture area, or commercial development. What Can You Do? Become Involved in Estate Planning Estate Planning is deciding what you want to do with your land possessions. There are several options available to Indian landowners which not only prevent the land from being further divided, but enable landowners to consolidate their land interests into economically viable pieces of land in which they are the sole owner, or where the number of owners in a tract of land is greatly reduced. These options are explained in this manual. 6 Estate Planning and Probate

7 Estate Planning & Inheritance Options on Allotted Lands Making decisions about your land When small-undivided interests in a piece of property are co-owned by many people, management and use of the property becomes more difficult. Income from the property, per owner, is often small in amount. Landowners find it difficult to use and control their own land. There are many problems: many owners in the same parcel; internal family disputes over use of the land; hard to contact co-owners and owning an interest in common does not give you the right to take your share. In order to do this you must partition the land which requires consent from all owners; getting a home site requires approval of more than 50% of the ownership; this makes it difficult to use your land for purposes important to you. This workbook will explain options and choices which will assist you in managing fractionated lands. You will learn about choices that will reduce the number of owners on your allotment, such as gifting a land interest to just one of your heirs, while you maintain a life estate. This means that you can use and benefit from the land while you are alive just like the land is yours. When you pass away, the land goes immediately to the person that you have gifted it to without having to go through the probate process. It s important to choose options that will stop the land from getting more fractionated or divided among more co-owners. With some strategic planning, you will be able to use various options, which will help you to combine small fractionated interests into a usable piece of land for options such as a homesite, increased pasture land, or a place to put a business. You may have already experienced how difficult it is to manage the land when there are tens and hundreds of owners. But YOU CAN DO SOMETHING ABOUT IT. So let s get started in reviewing just what options are out there for using, as well as deciding who will take care of your land in the next generation. Estate Planning and Probate 7

8 Illustration 1 Land Use Options Strategic land planning is deciding what you want to do with the land you own. There are several options available to Indian landowners which not only prevent the land from being further divided, but enable landowners to consolidate their land interests into economically viable pieces of land where they are the sole owner or the number of owners in a tract of land is greatly reduced. These options are explained in this workbook which will prepare you to develop your strategic plan. Illustration 1, pictures Tommy Pino from Ramah Navajo, NM, one of our strategic planners, surrounded by the options for planning that will be reviewed in this workbook. Strategic Plan Options Gift Conveyance (25 CFR ) A gift conveyance is the transfer of property, or the title to property, from one person to another by means of a written instrument. The written instrument transfers property during the lifetime of the donor or grantor - the person who is giving the land. The BIA Superintendent must approve the deed and once it is completed the gift transfer cannot be changed. Deeds with life estates retained means that the grantor can keep benefits from the land until they die. Title to the land is transferred the date the gift deed 8 Estate Planning and Probate

9 transaction is approved by the superintendent. This process transfers land without having to write a will. This keeps the land transfer out of the probate process, which is often backlogged and can hold up real estate transactions for months and years. Gifts can also be made without an exchange of money. This allows you to give your undivided interests to your relatives in a way that prevents the interests from being further divided. There are several kinds of gifts related to land. You can gift deed - give the land, its use and benefit to someone else while you are alive. Or you can gift deed and retain life use and benefit of your land, a portion of your land or maybe some of your income. You make the choices. If you are farming or ranching, gifting your land interests to someone else, does not have to interfere with your using and benefiting from your land. The law requires that the person conveying by gift deed be provided with an estimate of value on the land interest before the transaction gets approved. This requirement creates a backlog because the staff and process to provide these estimates in a timely manner are not in place within the BIA. This provision was just recently changed. A new provision within the ILCA Amendments of 2000 allows a waiver of the requirement for an estimate of value when the gift conveyance is to certain persons. The provision of ILCA Amendments, Section 2216(2)(2) reads as follows: Waiver of requirement the requirement for an estimate of value may be waived in writing by an Indian selling, exchanging, or conveying by gift deed for no or nominal consideration an interest in land with an Indian person who is the owner s spouse, brother, sister, lineal ancestor of Indian blood, lineal descendant, or collateral heir. (See Appendix A: ILCA Outline, A-10). This means you do not have to go through the process of getting an estimate of value to gift deed your land interests to close or extended family relations. Samples of the forms you can use to waive this estimate of value and to make a gift transfer of your land are contained in the Resource CD. Writing wills is not a traditional way of passing on wealth or possessions in native communities and many people are afraid that misfortune will fall upon them if they write a will. Gift deeds are a way to avoid this fear, yet make sure that your land does not get divided further. Gift deed transactions can enable family members and landowners to consolidate land ownership for different uses. Illustration 2 and 3 shows how 6 family members gift deeded interests to each other for home site and agricultural use. The land interests are owned by family members from the Lummi Reservation. Lummi Nation zoning requires a minimum of 8,000 square feet for home site use. Allotment #1404 is zoned for home site use. Six (6) family members - Tom, Robert, Frank, Cyril, and Sandra each own.165 share or 7,187 square feet in this allotment. Evelyn, another sister owns a share or 39,640 square feet. Estate Planning and Probate 9

10 In Allotment #108 which is zoned for agricultural use, Tom, Robert, Frank, Cyril and Sandra each own a.277 share or 12,066 square feet. Evelyn owns a acre share or 118,135 square feet. Evelyn gift deeded her share in Allotment #1404 in equal shares to her 4 brothers and sister. This means that each brother and sister received an additional acre share or an additional 7928 square feet. This share was added to the shares that each of the brothers and sister already owned. Now each owns 15,115 square feet; well over the number of square feet needed for a home site for each of them. In return, Tom, Robert, Frank, Cyril and Sandra each gifted their ownership in Allotment #108 to Evelyn, giving her a total of acres for agricultural use. In these gift transactions the estimates of value were waived. The family members ended up with acre shares they could use: Tom, Robert, Frank, Cyril and Sandra had their shares in allotment #1404 subdivided for home site use; and Evelyn increased her ownership share in Allotment #108 for agricultural use. Tom Robert Illustration acres 7187 st. ft acres Evelyn acres Tom Allotment #108 Tom, Robert, Frank, Cyril, and Sandra, gift deed their shares of acres each to Evelyn. Evelyn now has (60,330 sq. ft.) additional acres for a total of (178,465 sq. ft.) acres in allotment # acres (12,066 sq. ft. Frank acres Robert acres Evelyn Cyril Sandra acres acres acres Frank acres Evelyn gift deeds her acres in even shares of acres to her 5 relatives/co-owners. Each person receives (7928 sq. ft.) acres. Now each co-owner has 15,115 sq. ft. enough for a homesite. Allotment # Cyril Sandra acres acres Illustration 3 Estate Planning and Probate

11 Negotiated Sale of Fractionated Interests Sale of trust or restricted land within Section 25 CFR allow for sales to be negotiated rather than advertised. This makes it much easier to work out a purchase price with other family members or co-owners who might be interested in selling to you. Under 25 CFR sale to co-owners says With the approval of the Secretary, Indian owners may negotiate a sale of and sell trust or restricted land to a co-owner of that land. The consideration may be less than the appraised fair market value, if in the opinion of the Secretary there is a special relationship between the co-owners or special circumstances exist. As with gift deeds, the estimate of value that is required for land sales, may also be waived if you are selling to a close or extended family member. This would include your spouse, brother, sister, lineal ancestor of Indian blood, lineal descendant, or collateral heir. This will make it easier for co-owners who are related to sell fractionated interest. Section (c) also provides for waiving an estimate of value when some other special relationship exists between grantor and grantee or special circumstances exist that in the opinion of the Secretary warrant the approval of the conveyance. This special circumstance may include consolidations for home sites and other purposes. You may own a number of fractionated interests in an allotment where a family is trying to consolidate their ownership. They may offer to buy all the fractionated interests in this parcel which you own. If you agree, the money you make from this sale can be used to purchase several interests in an allotment where you are trying to gain more pasture land for instance. It is important to let your BIA or tribal realty or other co-owners know about your goals. For instance, let them know that you would like to buy from any willing seller in your allotment. Special Note: Income from land sales may affect benefits you are receiving. Contact your Trust Officer for information on this. Under the Internal Revenue Service Ruling , the income derived by an Indian from the sale of trust property is not subject to Federal income tax. Acquisition of Fractionated Interests Acquisition of trust, restricted and fee interests is governed by CFR section Acquisition of fractional interests. Acquisition of a fractional land interest by an individual Indian can be approved by the Secretary if: (a) the buyer already owns a fractional interest in the same parcel of land: or (b) the interest being acquired by the buyer is in fee status; or (c) the buyer offers to purchase the remaining undivided trust or restricted interests in the parcel at not less that their fair market value; or Estate Planning and Probate 11

12 (d) there is a specific law which grants to the particular buyer the right to purchase an undivided interest or interests in trust or restricted land without offering to purchase all of such interests; or (e) the owner of a majority of the remaining trust or restricted interests in the parcel consent in writing to the acquisition by the buyer. For individuals wanting to purchase trust lands there are several opportunities. In the AIPRA section 2212, Fractional Interest Acquisition Program, the Secretary of Interior is buying fractionated interests from willing sellers. On some reservations individual landowners have made it known that they are interested in purchasing land interests that come up for sale in their allotments or neighboring allotments where they are trying to consolidate. Currently, individuals are not eligible to acquire interests through this program. The ILWG is trying to change this so that co-owners will be notified whenever an interest is sold in their allotment. But for now, it is important to let your BIA or Tribal Realty staff know that you are interested in buying from co-owners who may want to sell within your allotment(s). It is also a good idea to get the names and addresses of the other co-owners to let them know that you are interested in buying their interests. Many landowners would like the opportunity to purchase land interests from willing sellers in their allotments. It makes sense because it reduces fractionation and speeds up consolidation and makes it easier to use your land. Within the AIPRA, individual landowners may apply for grants and loans for purchase of highly fractionated interests. This program is provided for under Section 4: Partition of Highly Fractionated Indian Lands. It says: The Secretary may provide grants and low interest loans to successful bidders at sales authorized by this subsection, provided that (A) the total amount of such assistance in any such sale shall not exceed 20 percent of the appraised value of the parcel of land sold; and. (See Appendix B: AIPRA, B-22) If you are acquiring a fee interest and you want to put this land into trust, you must go through the fee to trust application process. There is currently a backlog of fee to trust applications across Indian country for both tribal and individual fee to trust applications. The U.S. Government does not want to take more land into trust because they do not want to be liable for management of the land. Rodney Cawston, a member of the Colville Confederated Tribes, wants to put land into trust and sent a letter of request to the BIA asking what was required for trust status. He received a letter of response noting that applications need to be fully justified. A portion of the letter reads: 12 Estate Planning and Probate

13 Items No 9 of the application needs to be fully justified. Please indicate why your property should be acquired in trust. Avoidance of taxes is not an acceptable reason for acquiring land in trust and will not be considered. You may wish to consider jurisdictional issues, probating through the Bureau of Indian Affairs and leaving the property to your children in trust status, HUD housing, and economic development as a justification for requesting your property be converted into trust status. (Letter contained in Resource Document CD) These are justifications, which most landowners can use for taking a property into trust. Another justification would be that you would want this interest to become part of your family corporation or entity, which you have formed as part of your strategic plan. Or, you have formed a lease council and you would like to move this interest under the lease council but it must be in trust status first. Both lease councils and family entities are discussed later in this section as options for consolidation. Land Exchanges Another method of consolidation is to exchange your interest in one parcel for someone else s interest in another so that you end up with a larger interest in a parcel or maybe a neighboring or contiguous parcel. For instance, look at the example in illustration 4. Illustration 4 Owner A owns interests in allotments #100 and #102. Owner B owns interests in allotments #101 and #103. The owners exchange theirs interests in Allotments #101 and #102, so that now owner A has shares in allotments #100 and #101, and owner B has shares in Allotments #102 and #103. So what why bother? Consolidating your undivided interests into as few allotments as possible makes it Estate Planning and Probate 13

14 easier for you and your family to have greater control over your land resources. Having a few co-owners in an allotment makes it easier for you to convince others to partition, use the allotment in a certain way, or gift deed your interests to a relative. Your larger interests are of more value to your children or siblings than if they inherit many small undivided interests scattered over many allotments. With all your interests consolidated into one allotment or neighboring allotments, you can gain enough of a percentage of the ownership to lease or partition for a house or a business. If you can get the number of co-owners down to just yourself and several other persons, it becomes easier to negotiate your own farm lease or timber permit and possibly get better returns for the use of your land. Another example of an exchange is shown in Illustration 5. Marcell, from the Pine Ridge Reservation, is a 1/8 shareholder in Allotment A, and a 1/40 shareholder in allotment C. Marcell is taking a leadership role within his family towards the goal of acquiring interests in allotments A and B since the family would like to partition within these allotments for homesite use. Marcell and his family would also like to piece together their ownership within this area so they can restore what they know as their extended family use area or tiosapaye. Darwin, another landowner, owns a 1/20 share in Allotment B and a 1/8 share in Illustration 5 Allotment D. Darwin s 1/20 share in Allotment B has been valued at $5,000 and Marcell s 1/40 share in Allotment C has been valued at $4,800. Darwin knows that there is a $200 difference in the estimates of value, but he considers the exchange worth it. He wants to consolidate his land interests within one location for ranching purposes, instead of owning interests all over the reservation which he cannot use. Marcell and Darwin make the exchange of their shares in Allotments B and C so that now Marcell has a 1/20 share in Allotment B and Darwin has a 1/40 share in Allotment C. Currently, programs such as the Tribal Land Enterprise (TLE) of the Rosebud Sioux Nation offer exchange and consolidation options for tribal members. The TLE has developed the policy and procedures, which allow tribal members to trade-in their fractionated interests for a consolidated tract equal in size and value to what was traded. 14 Estate Planning and Probate

15 Participating Rosebud tribal members have the option of receiving an assignment of land with title held by the tribe; or a trust deed where the individual holds the title. In both scenarios, the individual must designate one person, who is a tribal member, as heir to the assignment or trust deed. This prevents the land from once again becoming fractionated. Since many individuals are trading interests which they already own, lack of financing for land acquisition does not limit activity under this program. The TLE has also attempted to implement an inter-tribal exchange program. This program allows Oglala tribal members who have inherited land at Rosebud, to exchange their Rosebud land interests for equal interests at Pine Ridge. A copy of the intertribal exchange memorandum is included in the Resource Documents CD. Partition (25 CFR ) Illustration 6 If you own an undivided interest in a parcel of land, e.g. 80 acres, it may be possible for you and the other co-owners to divide the land. In a partition all co-owners must be in agreement as to the specific area each will eventually own when the transaction is final. Illustration 6 shows an 80 acre parcel where there are 40 co-owners and co-owner A owns a 10% share. 10% of 80 acres would be an 8 acre share. If all the other co-owners are in agreement with the 8 acres you select, partitioning will make you the sole owner of these 8 acres. Partition can be difficult, because often co-owners cannot agree on who should own what; especially when there are a large number of co-owners. But in situations where there are a minimum number of co-owners, this option can work. If it is possible to work out a partition, you could end up with 100 ownership of a tract of land instead of owning an undivided share. This can prove very beneficial if you become sole owner of acreage, which is also zoned for homesite use. As currently written, the federal regulations for partition that require 100% agreement are burdensome. Partitions require the government to pay for surveys and appraisals, and partitions are not a priority. It is not easy to get a partition accomplished. Some landowners end up paying for surveys and appraisals because they want to partition. Partition is possible if there are a few owners who agree and have the money to pay for surveys and appraisals. While waiting for partitions, it is advisable to gift deed equal shares to one another as was done by the co-owners at Lummi Nation and is contained in your Resource Document CD as Lummi Nation Homesite Subdivision. Estate Planning and Probate 15

16 Partition of Highly Fractionated Indian Lands: (See Appendix B: AIPRA, B-15; defined, B-32) There are now partition provisions contained in AIPRA which apply specifically to the partitioning of highly fractionated interests. As defined in the new law, highly fractionated parcel means more than: (A) 50 or more but less than 100 co-owners of undivided trust or restricted interests, and no 1 of such co-owners holds an undivided trust or restricted interest in the parcel that is greater than 10% percent of the entire undivided ownership of the parcel; or (B) 100 or more co-owners of undivided trust or restricted interests; Partition applies to surface and subsurface interests unless they have been severed (divided) into two separate estates. In order for someone to apply to partition a highly fractionated parcel of land consent is needed from the following: (1) The Tribe s consent when the tribe is a co-owner; (2) Any co-owner s consent who has occupied the parcel as a residence or operated a farm, ranch, or business on it for the 3-year period preceding the date on which the Secretary receives the partition application; (3) Consent from the owners of at least 50% of the interests if any one owner s interest is valued over $1,500. The consent of the Tribe with jurisdiction, number (1) is troublesome because many of the tribally owned interests are 2% interests that should have been returned to the rightful heirs in order to comply with the 1997 Supreme Court decision, Youpee v. Babbitt. This also throws into question calculations of share sizes and valuations in other situations. For example, if an owner of a 3% share in an allotment is the rightful heir of another 2% share which has not yet been returned, the owner s legal share is 5% which may increase the value to greater than $1500. Check your Title Status Reports for unreturned interests. You may have to go back several generations. Those who can apply to the Secretary for partition of highly fractionated parcels and those who can bid on the parcel in a competitive bidding process are the following. Eligible applicant means: (1) The tribe with jurisdiction over the land, or (2) A co-owner in the parcel who is also an eligible bidder. 16 Estate Planning and Probate

17 Eligible bidder means: (1) the tribe with jurisdiction; (2) a member of the tribe with jurisdiction or a person eligible to be a member in that tribe; (3) a person who is a member or eligible to be a member of another tribe; (4) a lineal descendant of the original allottee who is or is eligible to be a member of a tribe; and in California, as to off-reservation land not subject to the jurisdiction of any tribe, eligible bidder means: (1) a person who is a member or eligible to be a member of a tribe; or (2) a person who owns a trust or restricted interest in the parcel. Partition applications will not be approved until one year after the Secretary certifies the AIPRA provisions, which is June 20, As written, the partition applicant pays the cost of serving and publishing notice to parties affected by the proposed partition. This means you will need to make sure that 3 types of notice are given. These include notices which are personally served, notices that are published, and notices that are posted. Each notice must contain: the request for partition; legal description of land; state all individual shares according to existing records ; provide appraisal results; give the right to comment on or object to the partition; set deadlines for responses; provide the address where responses are to be sent; and provide a contact number for additional information. Joint Tenancy With Right of Survivorship If you own land with someone as joint tenants with right of survivorship: Your right to the land lasts as long as you live; As each tenant passes, the surviving joint tenants receive the share of the deceased joint tenant; The last surviving joint tenant owns the entire interest in the land; Only that person can decide who gets the land; Illustration Acres 1 Person Inherits Land As each of the joint tenants die, their share goes to the remaining co-tenants. The last surviving tenant inherits the total. In Illustration 12, the first co-tenant dies and leaves a 6.4 acre share to be redistributed to the remaining 9 tenants. Each co-tenant receives an additional.7 acre share; now each cotenant has a 7.1 acre share. Estate Planning and Probate 17

18 Illustration 7 gives an example of what a joint tenancy with right of survivorship would look like. There are now joint tenancy provisions within AIPRA which provide that: A devise of a single asset to multiple beneficiaries will be construed as a joint tenancy with right of survivorship (JTWROS). This means that if by will an interest is given to more than one person, and the will does not specifically say how each person will receive the interests, then the heirs will receive the interest as joint tenants with right of survivorship. If Sally writes her will and says in it: I leave my 1/ 4 share to my 4 children under AIPRA the children would receive the share as joint tenants with right of survivorship. If Sally wants her children to receive as tenants in common, meaning that as each of her children pass away, their share of the 1/4 interest will pass to their heirs, she needs to say this in her will: I leave my 1 4 share to my 4 children as tenants in common. The joint tenancy rule becomes effective on June 20, Remember: Although joint tenancy with right of survivorship reduces the number of owners to 1, i.e., the last surviving co-tenant, fractionation can easily occur over the next several generations unless the last surviving tenant arranges to transfer this interest to just one person. Pilot Project For Family Entities To Manage Trust Assets AIPRA authorizes pilot projects for the creation of legal entities such as private or family trusts, partnerships, corporations, or other organizations to improve, facilitate, and assist in the efficient management of interests in trust or restricted lands or funds owned by Indian family members and relatives. Untried in Indian Country, this proposed mechanism could give individuals greater control over their lands and assets but needs to be entered into cautiously. The Secretary of the Interior will consult with tribes, individual landowner organizations, and Indian advocacy groups, in the development of a pilot project and in developing the rules, regulations and guidelines to implement the pilot project. Up to 30 entities are authorized to be established under the Pilot Project. The trust duties and obligations of the Secretary towards any entity established under this pilot will not be modified in any respect. Any transaction involving the lease, use, mortgage or other disposition of trust or restricted land or other trust assets administered by or through an entity under the pilot project must comply with federal law. These entities will be able to distribute income that is derived from trust assets, such as lease and rights of way income, in compliance with the regulations to be developed for implementation of this program. Once final rules and regulations 18 Estate Planning and Probate

19 have been adopted, the family entities will be able to begin operation. What are the advantages of establishing such an entity? For one, co-owners and family members could combine their assets and appoint a person or persons to manage the assets. If the entity formed is a family corporation, the family could agree to combine their ownership interests within this entity. If someone passes away, their interests could be redistributed to the rest of the family or passed to the family corporation members in a specific way. Probate could be avoided. A family entity that forms under this section of AIPRA, will need to consider things like recordkeeping; organizational options; interaction with the federal recording process; and income distribution. Although the family entity can take responsibility for management of trust assets, the Department of Interior is very clear that their trust responsibility will continue, i.e. assuring that entities established under the Pilot Project meet federal regulation. This process will be further defined as regulations are developed prior to implementation of AIPRA in June It is clear that along with providing possible freedoms for land use and management, questions about who is liable for things like non-payment of a lease, non-compliance issues and faulty recordkeeping are to date unanswered.these areas must be clearly defined in whatever arrangement families and co-owner entities establish under the Pilot Project provisions in AIPRA. (see Appendix B: page B-35). Owner Managed Interests The Owner Managed Interests, or OMI provisions within the AIPRA, permit owners to enter into certain surface leases, namely agricultural leases, without Secretarial consent (see Appendix B-23). The leases under an OMI cannot be longer than 10 years; and OMI provisions do not apply to mineral leases. Lands would continue to be held in trust by the United States government for the individual landowner and would not be taxed. An individual would be free to manage their own property without participation in the BIA lease approval process. While the land is in owner-managed status, the Secretary would be relieved of the trust responsibility on these lands except for probating of the trust interests. If landowners wish to enter into this type of agreement, it requires the consent of all owners over 18 or the parent or legal guardian of a minor or incompetent person who owns a trust or restricted interest in a parcel. Requests will not be granted if there is any undue influence, force or fraud suspected related to the request. The OMI provision will not become effective until June 20, The Indian tribe with jurisdiction over a land interest that becomes ownermanaged is not affected; such things as grazing ordinances and zoning are not changed by OMI status. Any person leasing OMI interests is also subject to the Tribe s jurisdiction. Lands that are conveyed by gift deed, sale, will, exchange etc., remain in OMI until the owner or owners have all applied to have the owner-managed status revoked. Estate Planning and Probate 19

20 If the OMI is revoked, leases agreed to under this status will remain in place and the Secretary will again resume responsibility, including the collection of and accounting for all future lease revenues derived from the land interest(s). In summary: The OMI leases cannot exceed ten years and all owners must sign; Current leasing laws continue to be applicable to OMI interests; The Secretary is not responsible for lease revenue, including collection, distribution and accounting for, during OMI status; Revocation, undoing your owner managed agreement, does not affect the current lease; The Secretary assumes responsibility if the OMI is revoked; and The revocation requires agreement by all who agreed or heirs to owner managed status. We would advise landowners to be particularly cautious upon entering into an OMI. This type of agreement may work well for a single owner situation or a lease where there are a fewer number of owners. For more numerous owners, it may be beneficial to form a family entity or lease council prior to using the OMI provision. Establishing these structures will give owners a better sense of the pros and cons involved with managing land within an OMI structure. Leasing Leasing is another option you can choose if you are a landowner. If you do choose to lease your land, you can get very involved in the lease process if you want to. You can negotiate your own lease; make sure you are getting a fair rate for leasing your land; and also make sure the lessee is doing what was agreed to in the lease that s what s known as lease compliance. Remember, it s your land! Here are few leasing facts: There are 9 million agricultural acres of trust land; six million is leased out to non- Indians; 3 million to Indians. Many Indian landowners who take the first step to negotiate their own lease are shut down; they are told that the Privacy Act prevents them from obtaining the names and addresses of the other co-owners. This is misinterpretation of the 20 Estate Planning and Probate

21 Privacy Act. Changes in both the ILCA Amendments of 2000 and the AIPRA of 2004 make landowner access to information THE LAW! Leasing your land to someone else brings you the least economic benefit; someone else gets the highest benefit for the use of your land; usually someone who lives off the reservation, is not from the tribal community, and has been leasing your land for below fair market rates for generations. This means they are not paying for what the land is worth. If you decide to lease your land, it is important to get a fair rate and to be sure that the lessee is doing what has been agreed to in the lease. Leasing and permitting of Indian land began in Today leasing of trust land is governed by 25 CFR Part A copy of Part 162 is included in the Resource Document CD. Now we will cover several leasing related activities that you need to know: the 90 Day Notice; Appraisals; the bid process; power of attorney; trespass, and landowner agreements or lease councils. Most of these topics also involve a form to fill out or information you need to gather. For now we want to discuss some of the steps of the leasing process so you can be sure about the lease you have and maybe get more involved. The 90 Day Notice/Lease Negotiation Before your current lease runs out about 13 months before the current lease ends, or when your land becomes available for leasing the BIA will send you a notice which tells you what you need to do to lease your land. This notice is accompanied by an appraisal which tells you the fair market value of your land. The BIA encourages you to get at least fair market value or higher for your lease; although the BIA is notorious for approving leases for below market rates. Many landowners say the information the BIA uses to come up with fair market value is outdated. It is best to check with your BIA agency and ask them how they come up with these values. It is also good to ask lessees who are leasing lands off the reservation, what rates they are paying. WHY? So you can be sure that you are getting a fair market rate for the use of your land or resources. If you don t check, most likely nobody will. Read the following excerpt; it is taken from an interview with a person who had left the reservation when she was 25 and returned when she was 57 and her family s land was still being leased for the same rate: During this time, I also checked into the appraisal process to see how and when these lands were appraised. I discussed this with the appraiser at that time Estate Planning and Probate 21

22 .. He showed me a list of lands he was working on and told me that appraisals had not been done since This discussion took place in 1997 so these appraisals were more than 30 years old. Using yield data from the 1960 s is inappropriate It is obvious that these Area and Agency employees, including supervisors, have not been held accountable in fulfilling their trust responsibilities to the landowners. Because the government has leased Indian land for below fair market value for a number of years, a leasing cartel or stronghold of lessees who lease Indian land for cheap rates - has been built up. You must be aware that because of this situation, when you try to negotiate a lease for the fair market value- you are up against a policy which has been maintained by the federal government for generations, which is Lease Indian Land Cheap!. This policy puts landowners at a real negotiating disadvantage. Here s just one example: at Pine Ridge during one of the ILWG strategic land planning sessions, one of the participants told us how she was trying to bring her lessee into lease compliance. There were several issues she wanted to discuss with the lessee: the lessee had put a landing strip on her allotment without her permission; her lease rates were half of the going rate; and the lessee was grazing cattle in a spring/ riparian area that was supposed to have been fenced off. When she approached the lessee on these issues his response was your grandparents didn t treat us like this! It takes courage and knowing your rights to negotiate leases that have been out of compliance for generations. It is also good to visit with your county and state agencies about what land like yours is appraised at, and how they make this determination. Some of the offices you might contact are: the USDA Farm Services Agency; the U.S.Fish & Wildlife: your State Forestry; Game & Fish; your County Assessor s Office; and Planning & Zoning. Local banks can be helpful too; they make business loans and know land values. Ask around. It may be a lot of work to negotiate your lease, especially if there are many owners. But negotiating your own lease allows you to negotiate with someone YOU CHOOSE. You can use the power of attorney form to get the signatures of coowners who will allow you to negotiate for them. More on this later. Recent Leasing Changes There are several new leasing provisions included in the American Indian Agricultural Resources Management Act (AIARMA - P.L ), the ILCA Amendments of 2000 (P.L ) and the AIPRA of 2004 (P.L ). The AIARMA: Authorizes tribes to develop policies for leasing trust land (including individually owned trust lands) which may include (a) Indian preference in agriculture leases, (b) 22 Estate Planning and Probate

23 waiver of bonding requirements. Requires the Secretary to waive federal regulations which conflict with tribal land use laws, unless such waiver is barred by federal statute or court case or would conflict with the trust responsibility. Authorizes agricultural leases of up to ten years, or where the Secretary determines that the investment involved so requires, for up to 25 years. The ILCA Amendments of 2000 and the AIPRA of 2004 contain new percentages required to approve a lease. The following are the leasing percentages provided in ILCA Amendments of 2000: Percentage interests the applicable percentage referred to in subsection (a)(1) shall be determined as follows: 1.If there are 5 or fewer owners, the applicable percentage shall be 100% (changed to 90% in AIPRA); 2. If there are more than 5 such owners, but fewer than 11 such owners, the applicable percentage shall be 80%; 3.If there are more than 10 such owners, but fewer than 20 such owners, the applicable percentage shall be 60%; 4.If there are 20 or more such owners, the applicable percentage shall be a majority of the interests. The leasing percentages approved within AIPRA are the same with the exception of the requirement for 5 or fewer owners which is now 90% (see Appendix: B-32 ; also Appendix: A-11). Remember! When you lease your land you do not give up your right to go on your land for hunting, fishing or gathering purposes. You, as the landowner, give the lessee - the person who is leasing your land certain use rights. These are spelled out in specific terms in your lease. You do not give up any of your owner rights unless you have agreed to this in your lease. Lease Compliance Lease compliance means that the person who is leasing your land is doing what you have agreed to in your lease agreement. The Bureau of Indian Affairs is responsible for making sure that the lessee is living up to the terms of the lease. If the lessee is not living up to the terms of the lease, the lessee is out of compliance with the lease agreement and may be cited and fined for these actions. Estate Planning and Probate 23

24 Once you have a copy of your lease and understand the conditions or terms of your lease it is good to make a site check on your property. Many landowners find activities that are not in their lease, taking place on their land. For example, a lease provides for grazing 100 cattle and there are 250 cattle on the property. Or, the lease says that the creek and spring (riparian) areas are to be fenced off and you find cattle and horses have damaged the riparian area because it has not been fenced. Your lessee may not only be using your land without the required lease provisions, but may also be violating a tribal ordinance, such as a grazing ordinance which prohibits lands from being subleased where a lessee leases to another person without the landowner knowing and in violation of a tribal ordinance. These violations should be reported to your BIA agency and your Tribal Land Department in written form. Pictures of the violations, if possible, are helpful. This will assist you in taking action to correct these violations; and receive compensation if it is determined that your lease agreement has been violated. Lease Councils The option to form a lease council is currently available under 25 CFR Section A lease council can be formed by a landowner agreement among allotment owners from several allotments and/or among co-owners of one allotment. The landowners can elect a lease council to manage and administer the affairs of the landowners in regard to a lease, rights of way or some action on their land. Because of the complexity of some leases and the need for modifications, research, and changes, landowners may choose to enter into a lease council arrangement for negotiation and administration of their leases. The lease council arrangement establishes a procedure by which the lease administration and management can be delegated to a lease council several individuals determined by the owners which will be elected by the owners each year(s). Lease rates, length of a lease, and other terms can be negotiated by this team for the benefit of the landowners. A sample lease council agreement is included in the Resource Documents CD. Trespass If someone is using your land and you have not agreed, they are in trespass. Under the American Indian Agricultural and Resource Management Act new opportunities are provided to landowners when there is a trespass. In most situations of trespass, the individual landowner needs to find an attorney to represent them in court since the BIA s efforts to press on trespass violations is extremely limited. Under the AIARMA, the fees for the attorney who represents you are paid for and if the trespass is proven, you are eligible to receive triple damages for the 24 Estate Planning and Probate

25 trespass violation. This means that if the trespass on your property was calculated at $2,000, you would receive $6,000 for the trespass violation. Check the Resource Documents CD under Retrieving Lost Sovereignty: Trespass Actions In Indian Country by Tom Nelson for detailed information on these AIARMA trespass provisions. Power of Attorney A power of attorney is a notarized agreement stating that you give someone permission to do something on your behalf. One of the most extraordinary examples of the use of power of attorney involves the Ft. Hall Landowners Alliance. Coowners from 17 different agricultural allotments, gave the FHLA power of attorney to negotiate 5-year agricultural leases on their allotments where leases were coming up for renewal. From this the landowners realized a combined $2.5 million increase on the 5 year leases negotiated by the FHLA. (A sample Power of Attorney form is included in the Resource Document CD). Don t let the phrase Power of Attorney confuse you. The person you give this power to does not have to be a lawyer/attorney; they can be someone you trust to represent you in activities such as negotiating a lease. Ernee Werelus, member of the Ft. Hall Landowners Alliance and Shoshone Bannock tribal member, is a self-educated expert in negotiating fair and equitable lease agreements using power of attorney. She had to fight a fierce battle to enable the members of her Alliance to use the power of attorney option. She is an example of what just one individual landowner can do. Another Example: In implementing her land use plan on her allotment in Pine Ridge, Geraldine Bluebird gives power of attorney to Darwin Apple, also from Pine Ridge. Geraldine found that it was too overwhelming to gather all the necessary documents and meet with various persons in her effort to establish a childrens home. Darwin s assistance, through power of attorney, helped her to continue her efforts. Right of Way Many individual land owners have a right-of-way on their land. A rightof way may be the right to build a road across your allotment; the right to run telephone or telecommunication cables across your land; the right to put a landing strip on your allotment; etc. It is important to be sure that anyone who uses your land for any purpose has a legal right to do so. This means that you have agreed to let this entity (person or company) use your land for certain purposes. To make this kind of arrangement legal, you need to have an agreement that is signed by you and the person using your land for these rights of way purposes. Many landowners give power of attorney to individuals/entities that can help them Estate Planning and Probate 25

26 negotiate a right of way. Also, check into the use of the Opportunity Cost Method in negotiating a right of way. This method was used successfully by the Ft. Hall Landowners Alliance and the Laguna Pueblo in negotiating rights of way agreements with the Idaho Power Company and the Gas Company of New Mexico, respectively. There are several individuals that are experts and can offer you advice on the use of power of attorney and how to establish rates when negotiating rights of way agreements. Check Appendix C. Appraisals And Fair Market Value The terms appraisal and fair market value are often confused. When something is appraised, an estimate is made of the value; an appraisal is often referred to as an estimate of value. For instance, the ILCA Amendments of 2000 provide that the estimate of value can be waived on certain real estate transactions with family members or when a special relationship exists. When someone appraises something, they put this information in writing. The fair market or market value is the price that goods or property will bring in a market of willing buyers and willing sellers, in every day business or trades. Market value is generally established on the basis of sales of similar goods or property in the same locality. You might have heard of a house or land being appraised at a certain value, but someone was able to get much more than the appraised value. That s because the appraisal is based on certain known facts that are used to come up with a value. But that does not mean that someone out there is not willing to pay much more for land or goods because they really want a particular house, or the buyer wants a particular mountain view or location, etc. The Financial Institutions Reform, Recovery and Enforcement Act of 1989 recognizes USPAP (Uniform Standards of Professional Appraisal Practice) as the generally accepted appraisal standards and requires compliance for appraisers in federally related transactions. State Appraiser Certification and Licensing Boards; federal, state, and local agencies, appraisal services; and appraisal trade associations require compliance with USPAP. Standards for real estate, personal property, business and mass appraisal are addressed in the USPAP. Both the Indian Land Consolidation Amendments of 2000 and the Indian Probate Reform Act of 2004 make specific mention of fair market value related to real estate transactions, Within ILCA 2000: Section 2203 provides that within a tribal land consolidation plan, the sale price 26 Estate Planning and Probate

27 or exchange value shall be no less than within 10% of the fair market value as determined by the Secretary. Section 2205 says the tribe may purchase at no less than the fair market value part or all of the interests in land within that tribe s reservation with owner consent. All interests may be purchased by the tribe, at fair market with the consent of 50% of the owners. Section 2205 (c) the tribe may acquire interests willed to non-indians at fair market. If life estate is retained, the payment required by the tribe will be reduced to reflect the value of any life estate retained. Section 2212 Pilot program for the acquisition of fractional interests provides for purchase of fractionated interest at fair market value. Section 2214 Establishing a fair market value provides that the Secretary may develop a system for establishing the fair market value of various types of lands and improvements. Such a system may include determinations of fair market value based on appropriate geographic units as determined by the Secretary. Valid appraisals that meet federal standards are a critical part of complying with trust standards. All the aforementioned provisions currently within the ILCA Amendments of 2000 and AIPRA of 2004 involve assessing fair market values that should rightfully comply with USPAP standards. The cost of a single appraisal for each interest acquired within the Acquisition Pilot Project begun under ILCA 2000 would be between $300 to $800 for agricultural land and $1500 to $10,000 for commercial land. Most fractionated interests have values of less than $100. A single appraisal for each land interest is not a practical solution. The use of Market Studies, which provide evidence of the range of values for general land types located in various areas, is not a substitute for an appraisal of an undivided fractional interest in a specific tract. Market Studies are provided to the agency realty staff who are required to select a price within the market study range for a specific undivided fractional interest. This selection is not reviewed nor approved by the authorizing authority. It does not comply with USPAP. It is in violation of most state laws because the realty staff is exercising the rights of a licensed appraiser. The only practical and legal way to prepare appraisals for the ILCA Pilot Acquisition Program is to use a Mass Appraisal, which is in compliance with Standard 6 of the USPAP. In order to meet the fiduciary obligations of the trustee the Mass Appraisal must be completed according to USPAP. Section 2214 shown above allows the Secretary to act outside of the USPAP standard. Estate Planning and Probate 27

28 Also be aware that often appraisals used to determine lease rates are outdated. It is to your benefit to check with your BIA or tribal realty representative to find out how upto date your land appraisals are. It also helps to contact different reliable sources to help you determine an appraised and market rate. Illustration 8 Illustration 8 shows Average cash rental rate of South Dakota range land and pasture the average cash rental rate land by region, 1994, dollars per acre and dollars per AUM. of South Dakota rangeland and pasture land. It is important to base your lease rate on information that is not only up to date, but is from legitimate sources. The USDA Farm Services Administration and the Agriculture and Natural Resource Departments within the Source: 1994 South Dakota Farm Real Estate Market Survey, SDSU State University systems are good sources available to the general public. Each State University entity studies the resources within their area, whether it be timber, oil & gas, or agriculture. It is important for you to gather this information because getting fair market value lease rates on Indian land continues to be a problem as is detailed in the following excerpt: In August 2003, Allen Balaran, the Special Master overseeing the Cobell v. Norton suit filed a report with the U.S. District Court alleging that the Bureau of Indian Affairs was approving lowball deals for pipeline companies using Indian property on the San Juan Basin of New Mexico. These deals were at times 90% less than what private and tribal landowners were receiving for comparable rights of way payments, the report charged. Balaran found that Indian allottees on the Checkerboard generally received $25 to $40 per rod to rights-of-way easements crossing their land. (A rod, a unit for measuring pipeline length, is 16.6 feet.) Tribal and private landowners, however, often received compensation at rates ranging from $140 to $575 per rod, according to the report. A rancher with land in Bloomfield, NM, told SmartMoney.com that he received more than $1000 a rod for three major pipelines crossing his property. It is becoming clear that individual landowners must take an active role in determining fair market rates on all types of leases agriculture, oil & gas, timber, rights-of-way to assure that these rates are fair and equitable. 28 Estate Planning and Probate