My mother is the sole surviving child and therefore the present "maintainer" of family mineral rights for a ranch in Montana. There are probably at least 50 children and grandchildren of the family that have inherited a portion of rights over the years, so that we can't really sell or lease the rights without permission from each of them assigning someone as the power of attorney to manage the rights. There is presently family disagreement over who the power of attorney should be. Mom has asked that I consider assuming that role which would probably require determing who all has a legal interest; contacting them for written agreement to make me the power of attorney; and legalizing that agreement.
Has anyone gone thru this scenario or something similar? Do you have any advice or guidance? Should we try to lease the mineral rights considering how many people are involved, or should we try to sell the mineral rights and be done with it (there is a possibility that there are oil reserves on the property)?
Any input and discussion would be welcome. Thanks
Tim,
Depending upon all your circumstances this may be a good thing to do. Though there are many variables. First of all, if your family still owns the ranch (surface) I would discourage selling any minerals. Most Montana ranches still retain "some" of their mineral rights, yet it is becoming more rare for one to retain most or all of them. In fact (if possible) the land owner should let it be known they'll buy when any of the various heirs want to sell their share of the minerals. If none no longer own the surface then selling may be a viable idea for those who need the money.
Everyones minerals can still be leased regardless if one or several refuse to do so. So none of you need to do anything. Yet as years pass and the number of heirs continues to increase, the fractional interests become smaller. This makes leasing more complicated (and therefore a little less likely) for an oil company. Thus everyones interest may become less valuable as 50 heirs become 100, 200, ...
In general someone negotiating lease terms for 100%, 50%, or 25% of the minerals under a tract of land will be able to secure better terms than 50 people negotiating for 2% or 1%. So your idea makes sense if you can find agreement. An attorney can draw up a document where the heirs give their negotiating rights to one party (yet still retain their individual ownership). This does not require anyone signing a blanket "Power of Attorney". It would be a specific document on assigning the lease negotiating rights to someone (or something).
Even without this, I would encourage you to determine the individual ownership of each heir as of today. Then maintain some sort of current contact list for these heirs. This may prove valuable if and when you are approached about leasing in the future.
If you can secure approval from some or several heirs, an agreement should benefit each of you. Though watch out, you may get what you want. In other words, if you're the "one" it may become an endless headache for you personally as 50 relatives are telling you how you should be doing it differently. Good Luck.
Talk to a good lawyer and explore the tax advantages of a Family Mineral Trust.
My advice...FLEE FROM THE IDEA OF MANAGING A FAMILY DIVIDED INTEREST IN MINERAL RIGHTS!!!!!
Greed and foolish pride will stop your good intentions. I tried to do the same thing with just 12 family members. Not only did it not work, I was contacted by one of the family member attorneys to "never contact again".
You can lease your net mineral acre portion through a land man and the remainder of your family can lease to whomever if they want to or not. The total property can be drilled and those who are not cooperative can be put in a "forced pool" where they get paid a royalty whether they like it or not.
Take care of your own interests and cut the others lose to take care of their own.
Depending where your land is located, never sell your mineral rights. Any offer will be a fraction of what your royalty payments could be.....good luck, Thomas
First off, thanks so much to those who replied to my question. Any additional ideas greatly welcomed. Its a
lot for me to comprehend and make a decision on.
I am the “lucky one” who inherited the opportunity to manage our extended Family members mineral interests. I don’t have twelve but do have 9 members to represent. So far, I have been fortunate to keep everyone on the same page and we act in unison. It helped that my dad, who managed the interests of the Family before he passed away, was a geological engineer. He gave me some good guidance. This was important in our case that helped to keep the extended Family together when negotiating and signing mineral leases over the years. Also the Operator’s and Landmen appreciate dealing with one individual and conveying 100% of the mineral interests so we can maximize our terms and get things done sooner than later. So I would encourage being a diplomat, as I have had to be, also learning as much as you can about managing minerals and encouraging all of your extended Family to work together in managing your Family’s mineral interests. If I can put in a plug for NARO, National Organization of Royalty Owners, which has a good deal of material on minerals management, offers seminars and workshops to educate royalty owners and minerals managers. I have been a member for three years now and this also helps other Family members continue to have confidence in my handling of their interests knowing that I have an interest in continuing education and keeping up to date with all the changes going on to represent them appropriately. Good luck.
Either put the minerals in a trust or let everyone handle their own interest. Handling mineral interests for a diverse group of that size is a thankless pain in the ass. Louisiana has a provision in the law that allows for partition by licitation, wherein the lands or minerals are sold to the highest bidder on the courthouse steps and the proceeds are proportionately given to the owners. Usually a group of the owners will buy out the rest of the owners. Check the laws in your state regarding partitioning undivided interests.
I have posted the exact same question with zero response. I'm curious how you resolved this..
Care to share?
Thank You!