I have checked with the County offices on which is the best form to use in giving/deeding my mineral rights to my children. I know the "right" one should be online but I haven't found it yet. I want to do this while I am still above ground. Any recommendations? Thank you.
Pamela:
You might want to consider a "Quit Claim Deed". You can google this and learn more about this instrument. If you will google this in the space provided at the top of this Forum, you can view various posts dealing with this matter.
Quit claim deed, that documents and severs them from the surface rights
You might want to consider reserving a life estate. You would benefit from lease bonuses and royalty payments (if any) while you are still living, and the children would be the remaindermen of those interests at you death. I don't really understand the quitclaim suggestions. Typically, people use that to convey to someone an interest that they may or may not own. Meaning, it doesn't warrant anything. I would just use a standard Mineral Deed form and reserve a life estate. I make this suggestion because your primary concern seems to be making sure that your kids get them before they put you in the ground, and not immediately. The second reply may be superfluous in that you never mention any surface ownership in your post.
I agree on the Quit Claim Deed issue ... Quit Claim Deeds make no warranties for a clear and legal title. I am, currently, involved in such an issue now with my seller.
Good luck,
Pat
As Mr. Quincy said, use a regular Mineral Deed form since you are giving it to your children. Quit Claim Claim deeds are use when you do not know whether or not you own anything. If you are worried about Warranties, you can strike the Warranty clause. Reserving a Life Estate is a good idea.
Pamela,
If you have over 100 net mineral acres, currently have production, contemplate production from Kingfisher Co in your lifetime, and want your children and grandchildren to think fondly of you for the gift, consider putting the minerals into an LLC with conditions that keep the minerals together for your family's benefit. then distribute shares to the children. Every time minerals are split up, they lose value geometrically to the exploration industry and often become more of an emotional liability than an asset. The conveyance from you to the LLC should be done in a manner that does not allow the shareholders of the LLC to look a gift horse in the mouth.
I think this link will be helpful for deeding your mineral rights to your children
http://www.mineralrightsforum.com/forum/topics/deeding-mineral-rights-to-children
My grandmother made it a part of her will. My mother on the other hand had a trust set up for my son. That was a disaster. You can also do it as a living trust, which is simple paperwork and allows you to set up someone to be in charge. My grandmother, who I view as very smart, said the minerals and land could not be divided...the profits would be divided but not the land itself. This way any land or minerals will not get sold off in small pieces. In addition, it makes fewer people necessary to contact when and if someone wants to lease the land. Just some thoughts for you.
Your financial advisor should give you some reference. If they are producing, then gifting in stages may have a tax advantage. If non-producing, then a nominal value can be allowed and then simply use a Mineral Deed to transfer them. And do use a lawyer. People over-convey mineral rights for a lack of understanding what they are doing.
Mr. Hutchinson, the LLC sounds like the way to go, but couldn’t the same be used for ownership of less than 100 acres of minerals or is there a reason why you quoted 100 acres?
Also, are you familiar with the pitfalls (if any) for Life Estates? Thanks!
KAYE,
I pick 100 acres to show that it will be worthwhile to get the LLC set up for larger estates In some areas of hot production one may be justified in setting one up for 40 or even 20 acres. If you are the MOM IN CHARGE and know what you want to have happen down the line, an LLC is pretty inexpensive to set up. If done by committee, it gets expensive.
Life estates are great and expedient if there are to be one or two beneficiaries max with requirements to share. From the point of view of maintaining mineral value within the family long term, Life estates don't really get the job done as the estate must close someday putting the devaluing and mistrust between beneficiaries back in the forefront. In my experience with valuable mineral estates, the beneficiaries end up never speaking to each other after the distribution is make. With an LLC set up with firm rules beforehand, everybody seems to get along and reveres the originator. When an LLC is set up by siblings after the fact, they rarely agree on the rules and end up selling and going their own ways. It is easy to split cash even though the grandchildren may suffer.
Both method of distribution have tax advantages so talk to an accountant as to which is best for you. I'm a "keep the minerals and peace in family" manager not a "tax for tax sake" manager.
Gary L Hutchinson
Kaye said:
Mr. Hutchinson, the LLC sounds like the way to go, but couldn't the same be used for ownership of less than 100 acres of minerals or is there a reason why you quoted 100 acres?
Also, are you familiar with the pitfalls (if any) for Life Estates? Thanks!
Gary L. Hutchinson said:
KAYE,
I pick 100 acres to show that it will be worthwhile to get the LLC set up for larger estates In some areas of hot production one may be justified in setting one up for 40 or even 20 acres. If you are the MOM IN CHARGE and know what you want to have happen down the line, an LLC is pretty inexpensive to set up. If done by committee, it gets expensive.
Life estates are great and expedient if there are to be one or two beneficiaries max with requirements to share. From the point of view of maintaining mineral value within the family long term, Life estates don't really get the job done as the estate must close someday putting the devaluing and mistrust between beneficiaries back in the forefront. In my experience with valuable mineral estates, the beneficiaries end up never speaking to each other after the distribution is make. With an LLC set up with firm rules beforehand, everybody seems to get along and reveres the originator. When an LLC is set up by siblings after the fact, they rarely agree on the rules and end up selling and going their own ways. It is easy to split cash even though the grandchildren may suffer.
Both method of distribution have tax advantages so talk to an accountant as to which is best for you. I'm a "keep the minerals and peace in family" manager not a "tax for tax sake" manager.
Gary L Hutchinson
Kaye said:Mr. Hutchinson, the LLC sounds like the way to go, but couldn't the same be used for ownership of less than 100 acres of minerals or is there a reason why you quoted 100 acres?
Also, are you familiar with the pitfalls (if any) for Life Estates? Thanks!
Mary Lee Shinn Scalf said:
I must be doing something very wrong. I cannot get to the second page of the discussion. On the second page as I recall there is a site that provides information on how to obtain a form to be filled out so my mineral rights can be passed on to my children at my death. I want also to put the sites on favorites
Gary L. Hutchinson said:KAYE,
I pick 100 acres to show that it will be worthwhile to get the LLC set up for larger estates In some areas of hot production one may be justified in setting one up for 40 or even 20 acres. If you are the MOM IN CHARGE and know what you want to have happen down the line, an LLC is pretty inexpensive to set up. If done by committee, it gets expensive.
Life estates are great and expedient if there are to be one or two beneficiaries max with requirements to share. From the point of view of maintaining mineral value within the family long term, Life estates don't really get the job done as the estate must close someday putting the devaluing and mistrust between beneficiaries back in the forefront. In my experience with valuable mineral estates, the beneficiaries end up never speaking to each other after the distribution is make. With an LLC set up with firm rules beforehand, everybody seems to get along and reveres the originator. When an LLC is set up by siblings after the fact, they rarely agree on the rules and end up selling and going their own ways. It is easy to split cash even though the grandchildren may suffer.
Both method of distribution have tax advantages so talk to an accountant as to which is best for you. I'm a "keep the minerals and peace in family" manager not a "tax for tax sake" manager.
Gary L Hutchinson
Kaye said:Mr. Hutchinson, the LLC sounds like the way to go, but couldn't the same be used for ownership of less than 100 acres of minerals or is there a reason why you quoted 100 acres?
Also, are you familiar with the pitfalls (if any) for Life Estates? Thanks!
And of course, that is based on the false assumption that they lived in perfect harmony prior to being disrupted by having their remaindermen interests vest. Not much surprises me anymore, but at one time it did surprise me a little as to how many family members I have contacted over the years are estranged.
I think an LLC set up in advance is a weird brainchild of a mineral manager. One of those things that sounds good on paper to some degree, but that you hardly ever see implemented. By and large, the vast majority of minerals are individually owned. The originator may also realize that it will benefit the remaindermen by allowing them to exercise greater right of control and autonomy over their respective undivided interests, independent of what the others decide to do.
Mary Lee Shinn Scalf said:
Gary L. Hutchinson said:KAYE,
I pick 100 acres to show that it will be worthwhile to get the LLC set up for larger estates In some areas of hot production one may be justified in setting one up for 40 or even 20 acres. If you are the MOM IN CHARGE and know what you want to have happen down the line, an LLC is pretty inexpensive to set up. If done by committee, it gets expensive.
Life estates are great and expedient if there are to be one or two beneficiaries max with requirements to share. From the point of view of maintaining mineral value within the family long term, Life estates don't really get the job done as the estate must close someday putting the devaluing and mistrust between beneficiaries back in the forefront. In my experience with valuable mineral estates, the beneficiaries end up never speaking to each other after the distribution is make. With an LLC set up with firm rules beforehand, everybody seems to get along and reveres the originator. When an LLC is set up by siblings after the fact, they rarely agree on the rules and end up selling and going their own ways. It is easy to split cash even though the grandchildren may suffer.
Both method of distribution have tax advantages so talk to an accountant as to which is best for you. I'm a "keep the minerals and peace in family" manager not a "tax for tax sake" manager.
Gary L Hutchinson
Kaye said:Mr. Hutchinson, the LLC sounds like the way to go, but couldn't the same be used for ownership of less than 100 acres of minerals or is there a reason why you quoted 100 acres?
Also, are you familiar with the pitfalls (if any) for Life Estates? Thanks!
Hate to say it, but I totally agree with Dave on this one. Mineral Deed WITH warranty language for more marketable title for Grantees, and reserve a Life Estate. Then if at any time Mom decides she doesn't even want the Life Estate anymore, she can convey that to the kids as well, giving them fee simple title.
Why not a revocable trust set up with the mineral deed assigned to it? Is it much more expensive to put all your assets in the trust? Then you would assign an ownership percentage to the beneficiaries & the mineral interest would remain in a chunk. And you would still have control of it. Or are you wanting to give them all the mineral interest now?
why did you change the group format? I'm having a tough time using this. Hope I can stay with it. Why do you fix something that is not broken?