How to align tribal systems, federal law in Indigenous estate planning

For Indigenous Americans, the process of estate planning can be particularly complex. 

Difficulties include coordinating traditional cultural practices with the legal framework in the United States and the fact that many Indigenous individuals partake in shared or tribal ownership, intergenerational living or have cultural or spiritual assets. And, in many cases, Indigenous customs around death do not align with state and federal regulations.

When discussing estate planning with Indigenous American clients, it's important that financial advisors take into account both the federal and tribal legal systems. The U.S. federal system presumes individual ownership of property largely based on title. Tribal systems typically underscore shared or tribal ownership of assets with an overarching principle that often prioritizes collective interests and community well-being.

READ MORE: Estate planning for the Land Back Movement is here — it's complicated

AIPRA and trust property

In 2004, Congress enacted the American Indian Probate Reform Act. AIPRA governs the distribution of trust property and restricted land owned by Indigenous Americans and established a uniform probate code for reservations across the United States. It applies to all trust property that is individually owned unless a tribe has its own probate code approved by the Department of the Interior. 

AIPRA mandates that wills be documented in writing and enforced according to federal standards. If an Indigenous individual passes without a will in place on or after June 20, 2006, AIPRA determines who receives trust property.

That said, tribal governments may have their own legal systems that operate alongside AIPRA. The specific rules regarding estate planning and inheritances can vary greatly across tribes. It's crucial for Indigenous Americans to consult with legal professionals who have expertise in tribal law to help them understand how their tribe's specific laws work in conjunction with AIPRA.

Preventing fractionation of land

Fractionation of land interest is a significant issue for Indigenous estate planning. Over time, land ownership has become very diluted. A high number of heirs own a small portion of property, which can complicate the transfer of these lands. 

To help address fractionation, AIPRA limits intestate inheritance (inheritance from someone who passes without a will) of less than 5% of the tract to a single eligible heir. 

Trust property can only be passed on to eligible heirs, which AIPRA defines as children, grandchildren, great-grandchildren, siblings, half-siblings and parents. If a trust land is left to a family member who is not an eligible heir under AIPRA, the act will look for the next eligible heir in line. If there isn't an eligible heir, the land will go to the tribe.

READ MORE: 3 tips to close the wealth gap for Native and Indigenous people

If the heir's ownership of tribal land is less than 5% of the tract, their spouse can receive a life estate only if they live on the land. When the spouse passes, the land can be inherited by only the oldest child or grandchild. This is referred to as the "single heir rule" and was created to prevent fractionation. 

Indigenous individuals should consider strategies to manage and, if possible, consolidate fractional land interests to prevent additional fragmentation. They should work with their attorney to address this in their estate plan. It may also involve working with their tribal land management office or organizations that specialize in these issues.

Planning beyond physical assets

Many Indigenous Americans have cultural and spiritual assets that hold significant value and meaning. These may include cultural artifacts, community practices and traditional knowledge. 

Indigenous individuals should address how these assets will be passed down and preserved in their estate planning. They may want to set up additional trusts or agreements covering how their cultural or non-physical assets will be taken care of to ensure that spiritual beliefs are maintained. It's important that Indigenous Americans outline how they want these assets to be managed when they die.

In helping Indigenous Americans plan their estate, financial advisors should encourage clients to consult with attorneys who are deeply familiar with both tribal and federal laws. 

Clients may also want to bring in cultural leaders or elders for their guidance on how to incorporate traditional practices into the process. Remind clients that estate planning is not a one-time event and that estate plans should be regularly reviewed and updated to reflect life changes.