Family Land: Tips for keeping it from slipping away
The ability to control land is one of the most important elements of wealth creation in America. Early economists extolled the value of land, labor and capital as key ingredients to succeeding in a market economy. Until 1850, the only people allowed to vote in America were registered landowners. The importance of land ownership was not lost on African-Americans in the late 19th and early 20th centuries, and those with resources purchased as much land as they could. Many migrated thousands of miles to build their economic foundation on land that they owned, equating land ownership with freedom.
According to U.S. Department of Agriculture’s NASS Census data on African-American farmland ownership, African-Americans in 1910 owned 15 million acres of farmland. At the same time, according to a report on agricultural land ownership published in the Winter 2002 issue of Rural America, African-American farmers and non- farmers owned between 16 million and 19 million acres of rural land overall. However, African-American land ownership has since declined. According to NASS Census statistics, by 1997 African-Americans owned only 2.4 million acres of farmland. The 1999 Agricultural and Economics Land Ownership Survey found African-American rural landowners owned only 7.7 million acres, less than 2 percent of total land ownership in the United States. Today, African-American families continue to lose valuable land.
If your family owns land, here are six tips to ensure that it stays in the family.
Make sure the landholder has a will. When a person dies without a will, state law decides who inherits the land and how much they may inherit. Having a will ensures that the family member or members who should control the land remain in a position to do so. If you have aging family members who own land, speak with them today about obtaining a will.
Put an estate plan in place. Even with a will, the landowner needs to have a defined estate plan to protect the property. According to a study conducted by the Emergency Land Fund, 80 percent of African-American rural landholders do not have an estate plan. The Fund was established in 1973 to address the issue of Black land loss. Without an estate plan, land can be passed from one generation to the next without a defined structure, creating an ever-increasing level of fractional ownership and diminished control. Ownership conflicts can arise, particularly when heirs do not have any attachment to the land, do not live near each other or simply do not know each other at all. An estate plan can eliminate all of these issues. When discussing family land, you may want to recommend that the land be placed in a trust or in a family limited partnership. A board of overseers can be appointed to manage the land and, in this way, decisions that are made about the land will be made in an organized and thoughtful manner.
Make sure that land taxes are paid. Failing to pay taxes is one of the primary reasons African-American families lose land. When taxes become delinquent, the local government has the right to hold a public auction and sell the land to satisfy the unpaid taxes. If you want to ensure that your family land remains in the family, pay the taxes.
Seek first to sell land to family members. Often, when families sell land, they sell to whoever is interested in buying. According to the Emergency Land Fund, only 38 percent of land sold by African-Americans is sold to family members. Keeping land in the family is one step toward ensuring that land stays within the community. If land must be sold, seek first to sell it to other family members.
Hire quality legal counsel. There is no substitute for solid legal counsel, particularly when it comes to issues of land ownership and retention. Unfortunately, many African-American families either have difficulty obtaining legal counsel, or they do not understand the value of quality legal assistance. Solid legal counsel can be worth its weight in gold when it comes to protecting landholdings. If you desire to protect your family land, make sure that you retain good legal counsel that is knowledgeable about the area or areas where your land is located.
Understand the value of your land. Often, land is lost because the owners simply do not understand the value of the land. If you had a piece of land valued at $10,000, for example, the actual value of the land is $100,000 from a purchasing power standpoint. This is so because you can control a $100,000 asset, a home for example, by using the value of the land as a down payment. Understand that when you own land, you have power.
Remember that to acquire the land that is currently in your family, someone who came before you likely had to endure immense sacrifice. It is important to protect the land in your family, for you are protecting the legacy of sacrifice from which you stand to benefit.
David Hinson is the founder of Wealth Management Network in New York City. Call 646-375-2388, visit www.wmnllc.com or e-mail: email@example.com.