[Congressional Record Volume 148, Number 150 (Tuesday, November 19, 2002)]
[Senate]
[Pages S11553-S11554]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   INDIAN PROBATE REFORM ACT OF 2002

  Mr. INOUYE. Mr. President, I ask unanimous consent that the 
Congressional Budget Office letter to accompany S. 1340, which was 
reported out today and a letter from the Department of the Interior, be 
printed in the Record.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:
                                      Congressional Budget Office,


                                                U.S. Congress,

                                 Washington, DC, November 4, 2002.
     Hon. Daniel K. Inouye,
     Chairman, Committee on Indian Affairs, U.S. Senate, 
         Washington, DC.,
       Dear Mr. Chairman: The Congressional Budget Office has 
     prepared the enclosed cost estimate for S. 1340, the Indian 
     Probate Reform Act of 2002.
       If you wish further details on this estimate, we will be 
     pleased to provide them. The CBO staff contacts are Lanette 
     J. Walker (for federal costs), who can be reached at 226-
     2860, and Cecil McPherson (for the impact on the private 
     sector), who can be reached at 226-2940.
           Sincerely,
                                                 Barry B. Anderson
                                   (For Dan L. Crippen, Director).


               CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

     S. 1340--Indian Probate Reform Act of 2002
       S. 1340 would amend laws that govern how an individual's 
     interest in Indian allotments (certain parcels of land that 
     are owned by individuals or groups of individuals) is 
     transferred upon the death of the owner. Based on information 
     for the Bureau of Indian Affairs (BIA), CBO estimates that 
     implementing S. 1340 would cost about $1 million in fiscal 
     year 2003, assuming the availability of appropriated funds, 
     to train BIA estate planning assistants and to notify 
     individual allotment interest owners and Indian tribes of the 
     changes in this law. CBO estimates that enacting S. 1340 
     would not affect direct spending or revenues.
       S. 1340 contains no intergovernmental mandates as defined 
     in the Unfunded Mandates Reform Act (UMRA) and would impose 
     no costs on state, local, or tribal governments.
       S. 1340 would impose new private-sector mandates, but CBO 
     estimates that the total direct costs of those mandates would 
     not exceed the annual threshold established in UMRA ($115 
     million in 2002, adjusted annually for inflation) for any of 
     the first five years that the mandates are in effect.
       By placing new eligibility and distribution requirements on 
     the inheritance of interests in Indian trust and restricted 
     lands, S. 1340 would impose new private-sector mandates on 
     those persons who might otherwise inherit such interests 
     under current law. The loss of inheritance (or a portion of 
     an inheritance) would impose direct costs on people who would 
     otherwise receive an interest in such property. CBO expects 
     that the mandates would affect only a limited number of such 
     people in the near term. At the earliest, mandates in the 
     bill would take effect only upon the death of an owner of 
     land interests. Further, the mandates would only apply to 
     interest in trust or restricted land of someone who died 
     without a will. Although requirements in the bill would 
     affect some

[[Page S11554]]

     heirs, many such cases would involve only a small fractional 
     interest in land. Thus, CBO estimates that the costs of 
     private-sector mandates in the bill would not exceed the 
     annual threshold established in UMRA in any of the first five 
     years that the mandates are in effect.
       The CBO staff contacts for this estimate are Lanette J. 
     Walker (for federal costs), and Cecil McPherson (for the 
     impact on the private sector). This estimate was approved by 
     Peter H. Fontaine, Deputy Assistant Director for Budget 
     Analysis.
         United States Department of the Interior, Office of the 
           Secretary,
                                     Washington, DC, Jun 24, 2002.
     Hon. Daniel K. Inouye,
     Chairman, Committee on Indian Affairs, U.S. Senate, 
         Washington, DC.
       Dear Mr. Chairman: This letter sets forth the views of the 
     Administration on S. 1340, a bill to amend the Indian Land 
     Consolidation Act of 2000 to provide for probate reform with 
     respect to trust or restricted lands. We support the bill.
       S. 1340 will provide the American Indian people who own 
     trust and restricted assets with one uniform probate 
     intestate code that can be applied throughout Indian country. 
     The legislation is clearly the product of a lot of hard work 
     by Departmental employees and members of your staff in order 
     to achieve the common goal of reforming the Department's 
     Indian probate program.
       During tribal consolidations held in July and August 2000 
     on the proposed probate regulations, many Tribes recommended 
     and supported a uniform probate intestate code. At the 
     present time, federal statutes provide that the law of the 
     state where the land is located be applied in the 
     distribution of the estate. See 25 U.S.C. Sec. 348. As a 
     result of inter-tribal marriage, it is not uncommon that an 
     Indian decedent owns lands on reservations in several states. 
     The effect of applying up to 33 different state laws to the 
     restricted and trust lands of a decedent results in disparate 
     and unfair treatment of the distribution of the entire estate 
     to the same heirs.
       For example, in Nebraska a surviving spouse is entitled to 
     receive the first $50,000 of the estate. Thereafter, the law 
     provides that the surviving spouse receive \1/2\ and children 
     get \1/2\ of the remainder of the estate. Minnesota law 
     provides that a surviving spouse's share is the first 
     $150,000 plus \1/2\ of the balance of the intestate estate if 
     all of the heirs are also heirs of the surviving spouse. In 
     contrast, Wisconsin law provides that a surviving spouse 
     receive 100 percent of the estate unless one or more children 
     are not the children of the surviving spouse, then the 
     surviving spouse receives only \1/2\. New Mexico law differs 
     from the previous examples in that a surviving spouse gets 
     all the community property, then \1/4\ of the estate if there 
     are descendants of the decedent.
       Another area of concern is the inheritance rights of 
     adopted children and the inconsistencies in state laws. 
     Minnesota law provides that an adopted child may inherit from 
     his/her natural parents, while Montana law provides that an 
     adopted child may only inherit from the adopted parents.
       The enactment of a uniform intestate code for trust and 
     restricted estates is of great benefit to both the heirs and 
     the Department. The benefit to the heirs is that the same law 
     will be applied to all the trust and restricted estate of the 
     decedent no matter where the real property is located. A 
     uniform intestate probate code will provide for the division 
     of shares of the entire estate and will be the same 
     throughout the United States. The heirs may disclaim their 
     interests or otherwise agree to a settlement to distribute 
     the estate if the children want to give a larger share to 
     their surviving parent. The federal government's cost to 
     update and maintain land records will be reduced. The 
     Department will be able to decide cases and issue orders in a 
     more timely manner. A new body of federal law will be created 
     and decisions will be more consistent across the Nation, 
     resulting in fewer appeals. The necessity of thoroughly 
     researching state laws will no longer exist, it will take 
     less time to issue an order determining heirs. Finally, a 
     uniform intestate code may encourage Indian tribes to adopt 
     their own inheritance codes. The uniform intestate code will 
     serve as a model for Tribes to develop their own tribal 
     probate codes.
       The proposed uniform intestate succession facilitates the 
     consolidation of interests to remain in trust or restricted 
     status and complements the provision of Indian Land 
     Consolidation Act to minimize further fractionation of 
     Individual Indian interests in trust and restricted lands. 
     For estate planning purposes, one uniform intestate code will 
     provide a foundation to encourage the execution of wills for 
     disposition of trust or restricted assets. For example, the 
     proposed section for pretermitted spouses and children will 
     necessitate specific estate planning if the decedent marries 
     after the execution of a will but intends to leave nothing to 
     a new spouse. S. 1340 at Sec. 232(d). Similarly, if the 
     testator divorces after executing a will and has left 
     property to the former spouse, the devise is revoked by law 
     unless the will provides otherwise. S. 1340 at 
     Sec. 232(e)(2).
       State probate laws are often amended and likewise affect 
     long term estate planning. A change in state law may also 
     necessitate the execution of a new will. Thus, frequent 
     amendments of state laws frustrate the purposes of promoting 
     estate planning among Indian landowners. There will obviously 
     need to be considerable community education on the new 
     sections of the proposed uniform intestate law that will 
     require more comprehensive estate planning.
       We recommend that Senate Bill 1340 include a provision that 
     excepts the application of the uniform intestate code to the 
     Five Civilized Tribes of Oklahoma until such time as the Five 
     Nations bill is enacted. The Five Civilized Tribes are 
     subject to the state district courts of Oklahoma and Oklahoma 
     probate law is applied to determine intestate succession. 
     Thus, the removal of the exception should be reflected in S. 
     2880, the Five Nations legislation.
       We would like to suggest amendments to portions of existing 
     federal statutes relevant to inheritance prior to the passage 
     of S. 1340. The amendments are:
       25 U.S.C. Sec. 348--After the second ``Provided,'' strike 
     the words, ``That the law of descent in force in the State or 
     Territory where such lands are situate shall apply thereto 
     after patents therefor have been executed and delivered, 
     except by the'' and insert ``the Indian Land Consolidation 
     Act, as amended, shall apply where such trust or restricted 
     assets are located''. See S. 1340 at Sec. 234(c).
       25 U.S.C. Sec. 372--Insert before the word ``hearing'' in 
     the words ``upon notice and hearing'', the words 
     ``opportunity for a''. Insert the words ``probate the 
     decedent's trust estate, and pay valid creditor's claims out 
     of funds in such estate or funds that may accrue up to the 
     date of death of the decedent'' after the word ``decedent,''. 
     Insert ``Provided, That in the payment of claims, 31 U.S.C. 
     Sec. 3713(a)(1)(b) shall not apply.'' after ``section 373 of 
     this title.''
       25 U.S.C. Sec. 373--Insert ``Provided also, that the 
     Secretary shall pay valid creditor's claims out of funds in 
     such estate or funds that may accrue up to the date of death 
     of the decedent except that 31 U.S.C. Sec. 3713(a)(1)(b) 
     shall not apply:'' after the words ``or use it for their 
     benefit:''
       The Office of Management and Budget has advised that there 
     is no objection to the presentation of this report from the 
     standpoint of the Administration's program.
           Sincerely,
                                                  Neal A. McCaleb,
     Assistant Secretary for Indian Affairs.

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