Sometimes it is necessary to think about our perspective. Growing up in the United States over the last two centuries has probably encouraged us to think our situation is universal and forever. We assume the right to own property or anything else is somehow endowed by a higher being and unrelated to institutions, which we also assume to be fore ordained. But property rights are only relevant when there is a government (or some other entity like a warlord) to enforce and protect the owner. There are a myriad of laws, regulations, and operators necessary to own and transfer property. And ownership of real estate is often the first step in asset accumulation and building generational wealth. Wealth passed down through generations can sometimes provide stability and prosperity to families. But titled ownership is crucial to using any asset for collateral purposes. That is, to get a loan or access federal programs associated with assets (land, house, etc.) ownership.
In the United States, there is a major issue related to a racial wealth gap and persistent poverty. Several years ago, Janet Yellen, current Secretary of the Treasury and past Chair of the Federal Reserve Bank, cited the increasing wealth gap between the races as “extremely disturbing.” She was concerned with how rising inequality could affect consumption spending as “higher income individuals may spend less of their income than lower income individuals.” Persistent poverty is defined geographically as a county in which 20 percent or more of the population has lived in poverty over the past 30 years according to the Census which occurs every 10 years. Much of the discussion surrounding the racial wealth gap and persistent poverty centers on income or the lack thereof but seldom is beginning wealth cited as an influencing factor.
Heirs’ property is a term that describes property that is held in common tenancy and often has passed through an estate (or multiple estates) to descendants without a will (intestate). Usually, the asset is divided equally between the heirs but without title. This may cause problems not only within a family but also limits the ability of the inheritors to fully utilize the asset (farm, house, land, etc.) In the southern United States, Appalachia, tribal lands, and the Colonias in southern Texas, heirs’ property is a barrier to economic development and contributing factor to persistent poverty, which in turn leads to racial wealth gaps. Most studies of persistent poverty concentrate on income and the factors that enable individuals and families to increase income. But a beginning point also matters and individuals that start from a position of wealth, however modest, are at a distinct advantage. Which is why heirs’ property is an important issue in Mississippi. A modest estimate of the amount of heirs’ property in Mississippi is 1.2% with most counties having 0-1% but some counties having large amounts (3%, 10%, etc.) Recently the Mississippi legislature passed the Uniform Partition of Heir Property Act which instructs a court (and parties appearing before the court) with very specific guidelines for having heirs’ property partitioned. This was an important action and recognizes a stumbling block for many families and communities as they struggle with ownership clarification.
The end message is to leave clear directions (a will) as to how your estate is settled. Otherwise, generations beyond you will not only be denied access to the full benefits of assets left to them but communities will also suffer the loss from the productive capacity of these assets.
Steve Turner is a professor of Agricultural Economics at Mississippi State University.
