fractionated heirships

Recent Focus on the American Indian Probate Reform Act

Adrea Korthase

The following article focuses on a hearing that took place earlier this month. The webcast for that hearing can be found here.

A copy of the 38 page American Indian Probate Reform Act can be found here.

From Indian Country Today:

WASHINGTON – Indians are once again telling Congress that a 2004 federal law aimed at solving tribal land fractionation problems caused by the federal government has created problems of its own.

Tribal officials explained to members of the Senate Committee on Indian Affairs at an oversight hearing in early August that the American Indian Probate Reform Act (AIPRA) and the Department of the Interior’s administration of it need better oversight for many reasons, including cultural concerns, tax consequences, and property control issues. These problems have arisen in spite of the law having good intentions, namely to create a uniform federal Indian-focused probate code to help address one of the major problems created by the General Allotment Act of 1887, land fractionation. Continue reading →

Brian Sawers on Tribal Land Corporations

Matthew L.M. Fletcher

Brian Sawers (Harvard Econ) has posted “Tribal Land Corporations: Using Incorporation to Combat Fractionalism” on SSRN. Here is the abstract:

Allotment has not provided individual Indians with economic opportunity; instead it has weakened tribal structures and shrunk the tribal land base. The administrative burden is significant, absorbing Federal monies that could be used elsewhere in Indian Country. In addition, transaction costs inhibit economic development and depress the returns to individual Indians. Congress has attempted to reduce fractionation through regulating devise and descent. Unfortunately, the Supreme Court has set off-limits the quickest mechanism for consolidating land ownership. However, any consolidation program that relies solely on inheritance will take decades to reduce fractionation.

Instead, tribes should rely on the incorporation and eminent domain to consolidate ownership and control of allotted lands in a tribal enterprise. Interests in allotted lands can be exchanged for shares in the TLC, limited the cost of formation. Eminent domain should be used to prevent uneven tender and quickly expand to an efficient scale. Since funds are limited, compensation for the taking of allotted interests should be interest of equivalent value in other parcels. The Rosebud TLE is just such a TLC, although with several structural defects imposed by the OIA. Even with weak shareholder control, the incentives facing the TLC are closer to the individual Indians than the BIA. Economic theory suggests that the TLC should provide better management of trust land.

Very interesting. My recollection is that one of the purposes of an IRA Section 17 corporation was to do exactly this.