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Purchase options at probate—Article 10
This article about purchase options is the tenth of 13 articles that explain major sections
of the American Indian Probate Reform Act (AIPRA).
If a person passes away without a will, AIPRA provides a process for heirs, co-owners, or
the tribe to purchase the deceased person's undivided interests during the probate procedure. The
proceeds from the sale of the land are then distributed to heirs as designated in the will or, if
there is no will, by AIPRA. The purpose of the purchase option at probate section of the law is
to reduce the fractionation.
This article explains when consent is or is not required if the co-owners or the tribe wants
to purchase a deceased person's interests during probate. Rules to be followed depend on what
category of undivided interests are owned. Is the percentage of undivided interest 5 percent or
more or less than 5 percent in a parcel?
Consent is required for the purchase by a co-owner or the tribe if the undivided interest is
5 percent or more. For example, John passed away with ownership of 15 percent in allotment A,
20 percent in allotment B, and 10 percent in allotment C. If the tribe, co-owners or other heirs
want to purchase John’s interests in the three allotments, they must first obtain consent from
John’s heirs. John’s heirs cannot be forced to sell their undivided interests in the allotments.
No consent is required for purchase by a co-owner or the tribe if a person's interests are
less than 5 percent. Consider an example where Helen passed away with ownership of 4 percent
in allotment A, 3 percent in allotment B, and 2 percent in allotment C. If a co-owner, other heir,
or the tribe wants to purchase Helen’s undivided interests, heirs may be forced to sell because
Helen’s interests were less than 5 percent in each allotment.
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The buyer, whether a co-owner, other heir or the tribe, is not required to seek consent for
the sale of an interest of less than 5 percent. The purchase price must be at least the fair market
value. Proceeds from the sale are distributed to the heirs during probate.
As a result of reading an ITI Report a person may have discovered that he or she is a
holder of interests in one or more allotments on one or more reservations. If a person wants to
avoid passing an undivided interest of less than 5 percent to an heir or heirs who may then be
“forced to sell” their undivided interest during probate, the following can be done.
First, a person can arrange for an heir to live on the parcel where an undivided interest is
owned. If an heir lives in a house on a parcel at the time of the decedent’s passing, then a
purchaser must obtain consent before a sale of the undivided interest where the house is located
can take place.
Second, if undivided interests of any amount in allotments are left to an heir in a valid
will, then consent must also be sought before any sale can take place. Heirs can say no. If heirs
enter into an agreement to consolidate their interests the combined interests cannot be sold
without their consent.
Finally, undivided interests can be consolidated by selling, gifting, or exchanging while
the person is living so that none of his or her properties are less than 5 percent of an allotment.
In summary, if a person passes away without a will, heirs, co-owners or the tribe may
petition the probate court to purchase the deceased person's interests in trust land. If the
undivided interest is 5 percent or more, consent must be obtained by the potential purchaser
before any sale can go through.
On the other hand, an undivided interest of less than 5 percent may be sold without the
consent of an heir (unless the heir is living on the parcel where interest is located). The purchase
price must be at least the fair market value and the payment distributed to heirs after the sale. By
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writing a will and naming beneficiaries a person can avoid the “forced sale” at probate of
undivided interest of less than 5 percent.
This was the tenth of 13 articles explaining sections of AIPRA. Further information on
AIPRA is included in a packet of 14 Fact Sheets that is available without charge from (name and
address of agent). Materials in these fact sheets were developed by the Montana State University
faculty, with funding from the Community Outreach and Assistance Partnership Program of the
Risk Management Agency of USDA. Next week's article will explain how an allotment can be
partitioned.
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