Impact of fiscal sponsorship evident in heirs’ property preservation

They can’t secure a mortgage. They can’t use their home or land as collateral. They often have a difficult time tapping into federal emergency funds. Those are just some of the hurdles that can accompany heirs’ property—which may have been handed down informally for decades but hasn’t been probated and doesn’t have a clear title.

Heirs’ property occurs when a landowner dies without a will, and the property under state law is split up fractionally among descendants—with those fractions getting smaller and smaller with each successive generation. Without any formal legal proceedings used to prove ownership, heirs’ property languishes in a gray area where it often can’t be sold, can’t be used for collateral, and may even have thousands of dollars in property taxes piling up unbeknownst to the residents.

The Center for Heirs’ Property Preservation, headquartered in North Charleston, has been attacking the issue on multiple fronts since its founding in 2002.

The center started thanks to the fiscal sponsorship program at Coastal Community Foundation, which allowed the organization to use its nonprofit status until the Center for Heirs’ Property Preservation attained its own from the IRS three years later.

“They incubated us,” Center for Heirs’ Property Preservation CEO Jennie Stephens said of Coastal Community Foundation, which is celebrating its 50th anniversary in 2024. “For those first few years, they stood in for the center in saying that—while they don’t have a 501(c)(3) yet, we’re going to allow them to use ours. They didn’t manage the program work, they managed the money.”

Coastal Community Foundation has served as fiscal sponsor of more than 70 projects, many of which have grown into established and successful organizations of their own. This includes The Lowcountry Food Bank, One80 Place, Reading Partners, and many more. Intended to be short-term, fiscal sponsorships typically convey nonprofit status to a fledgling organization, allowing it to accept donations that are tax deductible to the donors. The foundation also manages contributions and grant payments on behalf of the organization.

 

Education is the foundation

The Center for Heirs’ Property Preservation stemmed from a Coastal Community Foundation rural economic development initiative, Stephens said. “They would hold focus groups to ask communities about their development needs, and inevitably, somebody would say,’ I own land, but it’s heirs property.’ That was a phenomenon most foundation staff were not aware of,” she said. “So they started to dig deep and ask the question, ‘What would it take to fix heirs’ property?’ And that was the beginning.”

From that initial fiscal sponsorship, the Center for Heirs’ Property Preservation has matured into a nonprofit of its own, one that battles the issues of heirs’ property with a staff of attorneys, paralegals, accountants, forestry experts and other professionals. The center’s goals are to prevent the growth of heirs’ property, to help resolve heirs’ property titles, and to help owners find sustainable uses for their land after the legal hurdles are overcome.

“Our mission is about protecting heirs’ property and promoting the sustainable use of land for families so that they can build generational wealth,” Stephens said. “Education is the foundation of everything that we do because we want landowners to make informed decisions. It’s not our job to tell them what to do, but we’re providing them the right tools for them to make that decision.”

The Center for Heirs’ Property Preservation holds regular seminars on what defines heirs’ property and the importance of having a will. Their legal experts will help people draft wills—both to prevent heirs’ property, and to reduce the number of people who might have access to it. Once a clear title is achieved, the center’s forestry team can provide assistance and education on sustainable uses for the land.

The pitfalls of heirs’ property are many. Fractions of the land can be owned by distant relatives “who may not come to family reunions,” Stephens said. If one fractional owner sells to a developer, “that developer literally becomes the newest member of the family,” she added. “Whatever person was in that that fractional interest before, now the developer sits in that spot, and he or she has the same rights as the other family members.”

 

Work that’s never finished

But Stephens and her team do see success stories. One woman who had been attending seminars at by the Center for Heirs’ Property Preservation was offered $45,000 by one buyer for her family’s acreage, and then $90,000 by another. A forestry expert at the center helped her determine the value of the timber on her land was actually $250,000. And of course, when a title search was performed, her land turned out to be heirs’ property.

“She literally walked out of our forestry door into our legal door,” Stephens said, “and we were able to help that family resolve their title issues.”

That’s the reward that can come with untangling the complicated web that heirs’ property often presents. “This is one job where you get to see the impact of what you do,” Stephens said. And that work is never finished—even land with a clear title can fall back into heirs’ property again if the proper precautions aren’t taken.

“If we do it right, we’re planting that seed so that even over generations, that land will not return to heirs’ property again,’ Stephens said. “Because if somebody should die and they don’t probate that estate within 10 years, it could fall back into heirs’ property. We’ve heard, ‘Oh, you guys can solve it all.’ Well, not really. There has to be that constant reminder of what to do, so that land doesn’t return to its former state.”

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