Native assets require special treatment

One of the things that makes estate planning interesting in Alaska is the high percentage of Native Americans here, compared to other states. Natives come from a different background culturally, which can be a little bit challenging but is usually pretty easy to deal with. What is really interesting, though, is that there are certain types of assets many Natives own which require special treatment.

The first are Native Corporation shares. Most older or middle-aged Alaska Natives have these shares in corporations formed under the Alaska Native Claims Settlement Act (ANCSA). Most of the time there are two different corporations which a particular person will have shares in, a regional corporation and a village corporation. However sometimes they have only one, typically because it is in one of the regions where they merged the village corporations into the regional. And sometimes they have more, because they have inherited shares from various relatives.

Typically people who have ANCSA shares will have a beneficiary designation, also called a “stock will,” on file with the corporation itself. These are useful because if the corporation has a stock will, all they need to see is a death certificate and they can transfer the shares.

However like all other types of beneficiary designations, ANCSA stock wills have to be updated regularly, and clients often do not keep a copy for themselves. In those situations I always advise them to go get a copy from the corporation, so they can make sure it still does what they want.

The other thing I have to be careful of is to not inadvertently override the stock will. Normally the last will and testament is going to say that it revokes any prior wills. If the corporation sees the will with that language, and if they think of their beneficiary designation as a stock will, they might think the stock will was revoked by the last will and testament. Since that is usually not what the client wants, I always clarify in the will, in those situations, that they are not revoking any stock will or beneficiary designation for ANCSA shares.

The other tricky asset, although most Alaska Natives do not have them, are land allotments. The federal government calls these “Indian allotments” (which some of my Eskimo and Aleut clients do not like, but that’s what the law calls it). These are parcels of land which are, technically, held in trust by the Bureau of Indian Affairs, but they are used by the Native person however they like, and that person can transfer their rights by will. Even though allotments are generally addressed in the will, they don’t go through probate, the transfer is handled administratively by the BIA.

The most important thing with the allotments is making sure the will is clear about who gets the allotment. Also, as a precaution I always send a copy to BIA with a request for them to pre-approve it. Most of the time it is no problem, but occasionally the agency sees something it does not like. I would rather know that while my client is still alive and can sign a new one, instead of finding out later that BIA is not going to honor the will.

I do a lot of living trusts in my practice, but neither of these types of assets can be put into trust. There are a few ANCSA corporations which will allow a shareholder to transfer their shares into a trust, but most of them won’t. And you can’t put allotment land into a trust, because it is officially held in trust by the Secretary of the Interior.

One of the planning difficulties with these specialized Native assets, is that Alaska Natives tend to have a lot of children, and tend to want to leave these assets to all of their children. That is not a problem with ANCSA shares, but it is a problem with allotment land.

Over a few generations, the property ownership can become splintered, to the point at which you may have dozens of people with interests in the same piece of property. That makes it difficult to use or maintain the land because they all have to agree. I often try to encourage Native clients to leave allotments to a particular heir, but for personal and cultural reasons they often want to leave it to all of them.

There are a lot of technicalities with regard to both types of assets, ANCSA shares and Native allotments, so it is very important to make sure this is done right. If you are a planner, make sure you have read up on these assets before you blunder in and potentially commit malpractice. If you own any of these, make sure the attorney you are using has some experience with these types of assets.

And for heaven sakes, don’t try to use some do-it-yourself computerized estate planning program, because I can almost guarantee the program won’t know how to handle these assets correctly. These assets are part of your heritage; get it done right.

Kenneth Kirk is an Anchorage estate planning attorney. Nothing in this article should be relied on as legal advice in a particular situation.

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