In February, USDA Secretary Tom Vilsack tweeted: “We will harness the vast and powerful resources of USDA to target underserved communities and those who have been marginalized to help them realize their dreams”. With that thought in mind, the National Agricultural Law Center is beginning a periodic highlight of new and existing NALC resources that are relevant for BIPOC (Black, Indigenous, People of Color) and other underserved communities. Relevant current events and blog posts relating to these communities are available here. This post will focus on heirs’ property and estate planning.
“Heirs property” has disproportionately affected BIPOC communities, especially in the southern United States. A heirs property situation often occurs when a landowner passes away “intestate,” without a will or other estate plan. If, for example, that unmarried landowner has three children, the laws of intestate succession will typically divide the property so that each of the children have an undivided 1/3 interest as “tenants in common.” That means that each of the children have a right to the use and occupation of the entire property. As generations pass, the number of tenants in common for a single property can increase significantly.
This fractional ownership greatly increases the risk that an heir, in attempting to separate their interests, will force a partition sale of the property, or that the land will be lost to tax default. To combat that loss, 19 states have enacted the Uniform Partition of Heirs Property Act (“UPHPA”), which provides protections to other tenants including notice, appraisal and right of first refusal. If the other tenants choose not to exercise that right, the UPHPA includes requirements for a commercially reasonable sale supervised by the court.
As highlighted by the Center for Agricultural and Shale Law, a NALC partner, in recent blog posts here and here, USDA has begun a relending program for heirs’ property to provide the access to capital that may assist in resolving title issues. USDA announced an initial $67 million in funds for the program, through which heirs may apply for up to $600,000.
Other resources available to learn more about heirs’ property are:
- Intestate Succession and Agriculture, (Mitchell & R. Rumley, 2020)
- Heirs Property in Arkansas (R. Rumley & Keith, 2021)
- When Tenants in Common Own the Farm (Tidgren, Center for Agricultural Law and Taxation (2016, NALC Partner))
- Heirs Property Podcast, (Ag Law in the Field, Tiffany Dowell, featuring Greg Phillips (NALC Partner, 2021)
- Topics: Farmland Ownership and Tenure (Economic Research Service)
- Topics: Farm Household Economics and Well-Being (Economic Research Service)
- Topics: Land Use, Land Value & Tenure (Economic Research Service)
The NALC also has resources for landowners to utilize in avoiding future heirs’ property situations. These resources can be used to form a foundation of understanding before consulting with an estate planning attorney to finalize a plan. These resources include:
- Heirs’ Property State Survey: A compilation of each state’s heirs’ property laws. Includes a chart with statutes listed for each state, and an enclosed in-depth research report with more detailed findings.
- Estate Planning and Taxation Reading Room: An overview of estate planning tools and links to public and private resources and information on the topic. Also includes links to handbooks to begin the information-gathering component of the estate planning process
- Publication: Forms and Filing Information: Business Organizations (Nat’l Agric. Res. Ctr., 2019)
- Publication: Should Potential Long-Term Health Care Needs Be a Part of Your Farm Estate Plan? (McEowen, 2003)
- Publications: An Overview of Organizational and Ownership Options Available to Agricultural Enterprises: Part 1; Part 2 (Goforth, 2002)
The Ohio State University Agricultural & Resource Law Program, a NALC partner, has a series of upcoming “Planning for the Future of Your Farm” workshops that will take place in various areas of Ohio. There is also an online/Zoom option for landowners and producers that are unable to attend in person. OSU also has a series of resources on farm transition planning that is available here.
Additionally, NALC attorneys have spoken to audiences across the country on both heirs property and more general estate planning issues. If you’re interested in having a speaker at an upcoming event, please send an email to nataglaw@uark.edu.