In estate planning for an owner of Indian trust property, you must be mindful of federal law regulating who may take a devise of such property and whether it may be taken in fee or in trust, as described in §§14.4 through 14.6, above. Federal law also controls other aspects of estate planning and probate, including gifts of trust property, the creation of private trusts over trust property, and the role of personal representatives. Avoiding further fractionation of Indian land also requires special attention. This section reviews these uniquely federal planning and drafting issues.
(1) Avoiding fractionation
One of the principal benefits of estate planning for Indian people is the opportunity to avoid further fractionation of allotments. There are several techniques a testator may use to limit further fractionation and help correct existing problems.
(a) Life estates and future interests
Life estates and future interests can spread enjoyment of land across multiple beneficiaries without further fractionating ownership. In some circumstances, life estates can also be used to provide for non-Indian heirs. On a reservation not subject to the Indian Reorganization Act of 1934 (IRA), 25 U.S.C. §§5101-5144, trust land may be devised to a non-Indian, 25 U.S.C. §2206(b)(2)(A)(ii), but will come out of trust. A devise of the fee to a non-Indian is not permitted for IRA lands unless an approved tribal probate code provides otherwise. 25 U.S.C. §5107. A devise of a life estate is allowed under the IRA, and if made with remainder to an eligible heir, allows the non-Indian to use the land without further fractionation or loss of trust status.
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(b) Devise of all interests in an allotment to one person
The testator may avoid fractionation by devising all his or her interest in an allotment to a single person. This technique is most useful when the testator owns enough comparable interests in comparable allotments to permit a devise to each desired beneficiary or when there is a sufficient nontrust estate to provide comparably for all desired beneficiaries.
Arelated device is the testamentary option, in which all interests are devised to one person, conditioned upon that person paying a specified amount or fair value to other beneficiaries during probate. See Estate of Williams, 13 IBIA 35 (1984). If the payment is not made, the will can provide an alternative disposition, such as splitting interests among all beneficiaries or sale of the land to another buyer and distribution of the proceeds. See Estate of Soulier, 2 IBIA 188 (1974). The last option risks sale of the land into non-Indian fee ownership. Because of that risk, such a devise might be ineffective on lands of an IRA tribe unless the will requires sale to a buyer eligible to take in trust.
(c) Devise of part of an allotment held in single ownership
When the testator has a 100 percent interest in a parcel, he or she can devise a described portion of the parcel to a single beneficiary. For example, the owner of the northwest quarter of Section 3 might devise the western half to A and the eastern half to B. Accurate description, preferably using legal subdivisions, is imperative, and the testator must also consider geography and ensure access to the new parcels. It would be safer to survey and have the BIA plat out new sub-allotments while the testator is alive, and then devise each new lot separately.
(d) Devises are presumed to create joint tenancies with right of survivorship
In a joint tenancy with right of survivorship, each owner's interest passes upon his or her death, without probate, to surviving co-owners, until but one survivor is left. This technique allows one generation of heirs to have equal use of the land but limits fractionation thereafter. Prior to passage of AIPRA, federal Indian probate followed the usual common-law rule, under which a conveyance to two or more people was presumed to create a tenancy in common, with each person's share passing in his or her estate. AIPRA, however, provided that any devise to more than one person will be presumed to create a joint tenancy with survivorship, absent "clear and express language in the
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devise stating that the interest is to pass to the devisees as tenants in common." 25 U.S.C. §2206(c)(1).
AIPRA did not specify whether the presumed joint tenancies under 25 U.S.C. §2206(c)(1) are subject to the "four unities" of time, title, interest, and possession, which are required for a joint tenancy with survivorship to be valid under the common law. See 17 William B. Stoebuck & John W. Weaver, Washington Practice, Real Estate: Property Law §1.29 (2d ed. 2004 & Supp. 2017). If the four unities are required, then the conveyance of one joint tenant's interest to a third party would destroy the unities of title and interest, and the joint tenancy would be severed and converted into a tenancy in common. See Lyon v. Lyon, 100 Wn.2d 409, 411, 670 P.2d 272, 274 (1983). This result would defeat the purpose of the AIPRA provision to limit fractionation.
(e) Inter vivos transfers
Indian landowners may sell, give, or exchange allotment interests prior to death, with the approval of the BIA. 25 U.S.C. §392; 25 C.F.R. §§152.17, 152.22, 152.23. Inter vivos transfers between co-owners can consolidate the testator's interests, allowing devise of larger shares in fewer parcels. Inter vivos transactions in trust land can be time consuming. Federal approval entails a number of steps by the BIA, Office of the Special Trustee (OST), or tribal realty office, including title reports, lease income verification, and field inspection. Information regarding Interior practices and forms used to process trust land transactions can be found at the website of the Indian Land Tenure Foundation. See RESOURCES, Indian Tenure Land. Found., https://www.iltf.org/resources (last visited Apr. 24, 2019).
An appraisal requirement for inter vivos transfers, 25 C.F.R. §152.24, can create significant delays, and significant expense if the landowner seeks to avoid delay by commissioning a third-party appraisal (which must be developed in consultation with, and later approved by, OST). To reduce delays, the BIA may use an "estimate of value" rather than a full appraisal. 25 U.S.C. §2216(b)(1)(A). The estimate may be based on standard values for certain geographic areas or types of lands rather than, for example, comparable sales. See 25 U.S.C. §2214. The owner can waive in writing the requirement for an estimate of value if he or she proposes a transfer to specified close Indian family, 25 U.S.C. §2216(b)(1)(B)(i), or transfer of an interest less than five percent of the parcel to an Indian co-owner or to the tribe with jurisdiction over the land, 25 U.S.C. §2216(b)(1)(B)(ii).
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The Indian Trust Asset Reform Act of 2016 (ITARA), in addition to providing...
