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Video: Thomas Wilson Mitchell, Property Law Scholar & 2020 MacArthur Fellow- Racial Bias and Impact of Intestacy and the Law of Partition

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By Ed Boltz, 12 February, 2021
https://youtu.be/TZtlFa04cbs

Commentary:

The effects of that intestacy and the Law of Partition, which this video  by  Prof.  Thomas Wilson Mitchell   very clearly encapsulates, have,  particularly on People of Color,  is routinely an issue in consumer bankruptcy cases.  Too often the successful,  hard working grandparents overcame incredible obstacles and became substantial landowners,  but made the simple mistake of not having a will.  Now two or three generations down,  all of their descendants have fractional interests  in the property that are so small and confused that the value and usefulness of that property is almost nothing. I've had to work up innumerable family trees for clients to figure out what portion of the "Heir Property"  they own. 

Legislation:

Why North Carolina hasn't passed the Uniform Partition of  Heirs Property Act (UPHPA)  I don't know and am reaching out to legislators and policy advocates.

Bankruptcy:

In the bankruptcy realm,  I can immediately think of  a couple things, some  simple,  some complex,  that could be done to both resolve these fractured properties and to prevent more of this in the future:

  • Encourage  Wills: Trustee often lecture debtors  at the commencement of Creditors Meetings on a variety of topics,  often pertinent and useful,  but occasionally straying into the paternalistic or even into giving legal advice.  One piece of advice that I would not find problematic would be to encourage all debtors to have a Will.  Even better would be if bankruptcy courts made clear in their local rules that attorneys fees for drafting a will  could be paid through a Chapter 13 plan,  which would make the monetary cost easier to bear and would incentivize attorneys,  whether the debtor's regular bankruptcy lawyer or someone that specializes  in wills and estates,  to provide this service.
  • Strong-Arm Powers:  A trustee's  strong-arm powers  can be used to sell fractured interests,  but uniformly trustees  either decide that such effort is not worth the benefit to the creditors (or themselves)  or they do attempt to force a sale,  but without any real consideration for the owners.  (The family's historical and emotional value in the property is frequently ignored completely.)  By recognizing that the co-owners have, because of the complex and confused nature of these properties and how the various family members have taken care of them,  actual claims against a cousin's bankruptcy estate.  This could then be appropriately weighted with the strong-arm powers being used to consolidate the property with the benefit and impact on the co-owners reflected.  Whether trustee handle this themselves or delegate the authority to the debtor and their attorney,  this would require a more holistic approach that could include actively finding other necessary professionals,  including other attorneys,  mortgage brokers,  surveyors,  etc.,  that would help the individual heirs retain  their portion of the property.

I am sure that there are problems with these ideas and also certainly other options, including in bankruptcy, that I have not considered, but Prof. Mitchell's ideas should certainly be grappled with in the bankruptcy world and beyond.

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