The American Indian Probate Reform Act of 2004 Overview of the Act and its proposed Regulations

2. The American Indian Probate Reform Act of 2004Overview of the Act and its proposed Regulations www.indianwills.org

3. Presentation • Why AIPRA is Important to Tribes and its Trust Landowners • Overview of the Act • Brief discussion throughout of the federal regulations being developed to implement the Act www.indianwills.org

4. Why AIPRA is Important to Tribes and its Trust Landowners www.indianwills.org

5. Important Highlights • First Uniform Federal Probate Code governing Trust Property • State Laws of intestacy no longer apply • The Act’s probate provisions will apply to all Trust Landowners who pass on after AIPRA’s effective date of June 20, 2006 www.indianwills.org

6. Important Highlights • The Act prohibits devise of IRA trust lands to non-Indians in fee • The Act allows devise of Non-IRA trust lands to a non-Indian in fee, however, the Tribe will have the right of first refusal to purchase that interest before transfer • The Act contains probate provisions which allow a co-owner or Tribe to petition for purchase of decedent’s trust land interests at probate, including at times, sales without consent of the heirs www.indianwills.org

7. Important Highlights • The Act does not alter the pre-existing Federal Inheritance Acts of a Tribe. However, other provisions of AIPRA, as did ILCA, will apply to those Tribes. • These include the Inheritance Acts of Yakama, Warm Springs, Nez Perce, Devils Lake, Standing Rock and Lake Traverse www.indianwills.org

8. AIPRA is more than Probate LawThe Act contains many Realty Provisions Important Highlights www.indianwills.org

9. Realty provisions include: • Furthers authority for Tribal Land Consolidation plans • Allows Tribal Purchase of any or interests in a parcel within their jurisdiction with consent of 50% of the co-owners • Allows Co-owner or Tribal Purchase of Fractionated Interests by “Partition” (sale and reconsolidation of all interests in that parcel) www.indianwills.org

10. Realty provisions include: • Provisions for other land transactions such as sales, leases transfers and gift deeds • Fractional Interest Acquisition by Secretary to be made on behalf of Tribes with Federal Buy Back Funds, via Negotiated Sales approved separate from the Realty A & D Program (and on targeted Reservations only); • Buyback Funds may also be used to finance: (1) Tract Purchases for Tribes under Realty Provisions; and (2) Purchase on behalf of Tribes under Probate Provisions www.indianwills.org

11. Existing Tribal Probate Code • An existing Tribal Probate Code will continue to govern real and personal property not under jurisdiction of Secretary • AIPRA’s probate rules will apply to trust and restricted lands under the jurisdiction of the Secretary until a Tribe has a federally approved AIPRA tribal code. www.indianwills.org

12. Overview of the Act 25 U.S.C.§§ 2201 – 2221 The Act is in your materials with a Table of Contents and Index www.indianwills.org

13. Sec. 2201 - Definitions Sec. 2203 - Land Consolidation Plans Sec. 2204 - Tribal Purchase of Trust or Restricted Lands Sec. 2205 - Tribal Probate Codes Sec. 2206 - Descent and Distribution of Trust Lands (Inheritance) Sec. 2207 - Full Faith and Credit to Tribal Ordinances Sec. 2208 - Conveyance Authority and Removal of Trust Status Sec. 2212 - Fractional Interest Acquisition Program Sec. 2216 - Trust and Restricted Land Transactions Sec. 2218 - Approval of Leases, Right of Way and Sales Sec. 2219 - Application to Alaska Sec. 2220 - Owner Managed Interests www.indianwills.org

14. Definitions - Sec. § 2201 www.indianwills.org

15. Land “LAND” means any real property, including improvements permanently affixed to it. 25 USC § 2201(7) Previously, under ILCA, structures built upon the land were undefined and often treated as personal property by the federal courts.This means houses on undivided interests without proper leases may be shared by other undivided co-owners in that parcel, regardless of their legal or financial contribution. www.indianwills.org

16. Potential Exception:Homes are often built on trust lands using tribal or governmental finance contracts. One example is Mutual Help Housing The home may not legally merge with the land until the contract is fulfilled. Additionally, the contract can supersede disposition by a will if the contract designates its own beneficiary. www.indianwills.org

17. Spouse Spouse is not defined by AIPRA. During federal probate, the Judge will look to an approved Tribal Probate Code, then to a Tribal Domestic Code and finally to State Law to define a spouse. A spouse can include a common law or marriage by tribal custom if so defined in one of the above codes. www.indianwills.org

18. Adopted Children Adopted “in” children are considered lineal descendant's and are eligible heirs of their adopted parents. 2206(k)(2)(B)(ii). Adopted “out” children are not considered lineal descendant's and are not eligible heirs of their natural parents, unless provided in other federal or tribal law. 2206(k)(2)(B)(iii). Again, a Judge will apply a Tribal Probate Code that changes these rules. www.indianwills.org

19. Purchase of Trust or Restricted or Controlled LandsSec. § 2204 www.indianwills.org

20. Tribal Land Purchase25 USC 2204(a) • Tribe may purchase for “fair market value” all or part of the interests in a trust or restricted tract within their jurisdiction • 50% consent of co-owners required • Tribally owned interests are included in calculating the percentage for consent. www.indianwills.org

21. Partitioning25 USC 2204(c) • AIPRA allows the partitioning of “highly fractionated trust lands” • Though titled partitioning, this is a sale of all interests in the parcel to one co-owner. • Partitioning reconsolidates the tract into one owner, it does not physically divide a parcel into separate tracts www.indianwills.org

22. Partitioning continued • The Tribe or an individual interest holder in that tract may apply to the Secretary to begin the partition process 2204(c)(2)(A) • The parcel must be “highly fractionated” • Consent is not required from all co-owners www.indianwills.org

23. What is Highly Fractionated? • A parcel that has 50 or more but less than 100 co-owners of undivided trust or restricted interests, and with no co-owner holding an interest 10 percent or greater; or • A parcel with 100 or more co-owners of undivided trust or restricted interests; 25 USC 2201(6) www.indianwills.org

24. Partitioning Consent Requirement • Written consent is required from the Tribe, and from those co-owners residing, farming, ranching or maintaining a business on the land for more than three years prior to partition 2204(c)(2)(D) • Consent is also required from at least 50% of the co-owners in that parcel • After consent is received, appraisal of the land is completed and notice of appraised value sent to the Tribe and all co-owners of the parcel with right to appeal www.indianwills.org

25. Partitioning continued • Once appraised value is accepted, the Secretary will open the parcel to competitive bid. • Eligible bidders are: • the Tribe • any tribal member or eligible to be enrolled tribal member, • any other Indian co-owners in that parcel, and • any Indian lineal descendant's of original allottee. www.indianwills.org

26. Partitioning continued • AIPRA recognizes the rights of the Tribe and its members to maintain ownership over their land. • Once the highest bid is received, the Tribe has a right to match the winning bid made by a non-member Indian if the Tribe has a tribal law or resolution reserving this right. 2204(c)(2)(I)(ii) • Because partitioning is an action outside of probate, the Tribe should consider adoption of a resolution or tribal law reserving this right if one does not currently exist. www.indianwills.org

27. Partitioning continued • Additionally, the largest interest holder in that parcel also has a right to match the highest winning bid of a non-member if they made a bid during the auction. 2204(c)(2)(I)(iii) • If both the Tribe and the largest interest holder assert their right to purchase, the largest interest holder wins under AIPRA 2204(c)(2)(I)(ii)(II) www.indianwills.org

28. Tribal Probate CodesSec. § 2205 www.indianwills.org

29. Descent and Distribution of Trust Lands Sec. § 2206 www.indianwills.org

30. This section determines who may receive trust or restricted lands and how they can be received www.indianwills.org

31. Purchase of Trust Lands during Probate Sec. §2206(o) www.indianwills.org

32. Purchase requirements • The Tribe or a co-owner may purchase any interests at probate with the heirs consent. • An individual or the Tribe must pay no less than fair market value for the interest purchased at probate www.indianwills.org

33. Consent Requirements • Without a valid will, the trust land interests passing in probate may be subject to sale without consent of the heirs • Consent is required from the heirs for trust land interests 5% or greater 25 USC § 2206(o)(3) • No Consent is required from the heirs for the sale of interests less than 5% when there is no valid will and the heir does not live on that parcel at the time of death. 25 USC 2206(o)(5) www.indianwills.org

34. How will the Heir’s Interest be Calculated at Probate? The probate judge is required to look at the interest to be received by the heirs, not the percentage held by the decedent www.indianwills.org

35. 25 USC 2206(0)(5)(A) 2206(0)(5)(A) Subject to subparagraph (B), the consent of a person who is an heir otherwise required under 2206(o)(3)(b) shall not be required for the auction and sale of an interest at probate under this subsection, if – • The interest is passing intestate; and • Prior to auction the Secretary determines in the probate proceeding that the interest passing to such heir represents less than 5% of the entire undivided ownership of the parcel of land as evidenced by the Secretary’s records as of the time the determination is made. (B) Exception – Notwithstanding subparagraph (A), the consent of such heir shall be required for the sale at probate of the heir’s interest if, at the time of the decedent’s death, the heir was residing on the parcel of land of which the interest to be sold was a part. www.indianwills.org

36. Current 43 CFR 30.163 Interpretation of 25 USC § 2206(o)(5)(ii) • Under the interpretation of the 43 CFR 30.163, the “interests passing” under 25 USC § 2206(o)(5)(ii) are not the decedent’s interests, but the future vesting interests of the heirs. • This means that not only those interest that the decedent holds less than 5% at the time of death, but those interests 5% or greater that fall below 5% with application of AIPRA’s intestacy rules at probate. • The following charts illustrate this interpretation  www.indianwills.org

37. 43 CFR 30.163 Interpretation www.indianwills.org

38. 43 CFR 30.163Interpretation - Another Example www.indianwills.org

39. Example of Consolidation Agreement www.indianwills.org

40. VII. Fractional Interest Acquisition Program www.indianwills.org

41. Acquisition by Secretary 25 USC 2212(a) provides the Secretary may acquire, with the consent of the owner or heir at probate and at fair market value, any fractional interest in trust or restricted property. The Secretary would then hold the interests in trust for the Tribe with jurisdiction over the land, except see 2212(c) www.indianwills.org

42. Acquisition by Sec. Continued 25 USC 2212(b) Secretary may give priority to 2% interests or less and shall consult and coordinate with the Tribal government to the “extent practicable” and shall minimize the administrative costs associated with the land acquisition program through policies and procedures designed to accommodate voluntary sale www.indianwills.org

43. Acquisition by Sec. Continued 2212(c) At the request of any Indian, the Secretary shall convey an interest acquired under 2212(a) if the Indian land owner pays the price the Secretary paid or promises to pay with revenue from any source 2212(d) authorizes appropriations of millions in funds for each fiscal year from 2005 to 2010 for this program www.indianwills.org

44. For more information on The Institute for Indian Estate Planning and Probate, this presentation, or our projects:www.indianwills.orgor call 206.398.4284 www.indianwills.org