Clearing an heirs property title usually requires a lawyer to help draft documents, determine who the heirs are and the size of their fractional interests, and coordinate communication with family members. Once you have decided to clear a title, consider the ownership options through which the land is not sold.

Families with a clear title can choose to own the land individually or wholly as a single legal entity. Each option presented here has advantages and disadvantages. All require performing a quiet title action to determine who the heirs are and ensure that there are no outstanding claims to the land. Before deciding which option is best for your family, contact as many heirs as possible, get everyone’s input, and consult an attorney.

Partition in Kind

Partition in kind is a legal process through which land is physically divided among co-owners based on fractional interests. After the land is surveyed, property lines are drawn for each person. Each co-owner then receives an administrator’s deed for their portion of the land. Partitions in kind are performed under a written agreement signed by all the co-owners and filed and recorded in the local courthouse. In the agreement, each subdivided parcel is described. Partitions in kind may be done by court order if an heir petitions the court to divide the property.

Partition in kind involves the distribution of property shares so that each co-owner has their own divided interest.

Advantages: Because each person has a clear deed to their portion of the land, each can develop it in any way. Each person can get a mortgage, harvest timber, and potentially be eligible for housing programs and funding that require a clear title.

Disadvantages: Because each person has a deed, each has the option to sell their land and does not need the consent of others to do so. Family members do not have a say in who buys the land, how it is managed, or whether it stays in the family.

Tenant-in-Common Agreement

In a tenant-in-common agreement, co-heirs still collectively own an undivided share of the land. In this sense, the legal structure pertaining to the owners remains unchanged, as each heir has equal rights and responsibilities to all the land. However, in a tenant-in-common agreement, heirs join together to create a set of rights and responsibilities by which each owner will abide. This form of family or heir agreement might outline who will manage the property, how the land will be used and by whom, how the taxes will be paid and by whom, and how co-heirs can sell their interest and to whom.

Land Trust

Through a family land trust, co-owners form a trust. A trustee, who may or may not be a family member, is designated and makes decisions regarding the property on behalf of and for the benefit of the beneficiaries (the remaining family members). The title remains clear because the trustee holds the title to the land, and it is not divided among heirs. Although the beneficiaries may change as families expand or heirs die, the land remains the trustee’s property. There is no confusion about who pays the taxes and is responsible for maintenance. These responsibilities are stipulated in the trust agreement. The trust agreement also specifies how any income generated by the land is to be disbursed.

Advantages: Because the title is clear and the trustee owns the land, it is less likely to be sold. The property may be preserved longer than it would be if it were divided.

Disadvantages: There may be restrictions on how the land is managed or developed. It is important that owners take care when selecting a trustee and deciding what the trust allows.

Family Company/Limited Liability Corporation (LLC)

In a family company/limited liability corporation (LLC), existing family members form themselves into a company. The family owns the company and manages the property through their company. Typically, heirs are partners in the business. This structure restricts the transfer of the property to people outside the family company.

Advantages: Transferring the property to the next generation is easier with a family LLC. Taxes are relatively simple because any income made from the property can be passed to the partners individually. Partners can then report the income on their individual taxes. Federal gift and estate taxes are minimal.

Disadvantages: LLCs are riskier and require more effort than other forms of ownership because they have very specific IRS requirements. Partners must be sure not to put personal assets in the family LLC. The LLC is not a preferred way to transfer assets to a minor under age 16.

Back to Heirs Property in Alabama

Portia Johnson, Extension Specialist, Assistant Professor, Human Sciences; Ryan Thomson, Assistant Professor, Rural Sociology; Adam Rabinowitz, Extension Specialist, Associate Professor, Agricultural Economics; and Katie Keown, Visiting Professor, Agriculture Law, all with Auburn University

Revised July 2024, Heirs Property in Alabama, HE-0852