Forgotten Minerals- Grandma’s pearls, Dad’s gun, and your Aunt’s Buick are rarely forgotten in a Will or by the executor in distributing property after they’ve past. However, the same can’t be said for mineral rights. Mineral rights are often forgotten either when a person plans the distribution of their estate or when their estate is being probated.
What problems have you encountered when mineral rights have been forgotten?
When an individual dies owning mineral rights in Colorado, a court action is required in most instances. Sometimes court action or probates can be quick and simple; however, sometimes they are complex and disputed, especially when questions may arise about who is entitled to the minerals or how they should be divided up. When a mineral owner dies who is a resident of another state, there may be multiple court actions—a court action in Colorado where the decedent owned the minerals and a court action in the state where the individual resided when he or she died. The need for multiple attorneys and multiple court actions can be frustrating for grieving family members.
How does your family plan for the succession of the family mineral rights?
What problems have you encountered in transferring family mineral rights? - The death of a family member owning mineral rights often creates practical problems. The family member owning the minerals may have had valuable information solely in their head about the location and history of the minerals that will now require hours of title research to locate. Consider this exchange:
Caller: “My father owned minerals in Colorado and I need to get them transferred into my name.”
Attorney: “Where were those located?”
Caller: “In Colorado.”
Attorney: “Where in Colorado?”
Caller: “I don’t know.”
How does your family keep track of your mineral interests?
From the conversation above, the caller can expect the attorney to spend numerous hours trying to first locate the county where the minerals are located and second the actual mineral interest.
How does your family manage the potential tax issues associated with mineral rights?
What tax problems have you encountered? Taxes also play a role in mineral rights. In Colorado, many counties assess taxes on severed mineral interests (mineral ownership without surface right ownership). If the family doesn’t realize the mineral interest is being taxed, then the mineral interest may ultimately be lost through a treasurer’s deed when the tax remains unpaid. Also, when production explodes, but coincides with an owner’s death, a family may be looking at a federal estate tax liability that was hardly contemplated in previous years. Finally, when mineral rights have been producing unbeknownst to the family and held in suspense, the family must then sort through distributing this income and paying the resultant taxes.
Jenna H. Keller, Esq.
Attorney at Keller Law, LLC. (www.kellerlawllc.com)
Jenna H. Keller defends property rights of land and mineral owners statewide in Colorado. She provides legal services to farmers, ranchers, rural property owners, and severed mineral interest owners all across Colorado in the areas of estate planning/probate, natural resources (including oil, gas, and wind), real estate, and water. Jenna H. Keller was raised on a wheat farm in northeastern Colorado. She attended undergraduate at Colorado College and law school at University of Wyoming.
DISCLAIMER: The information in this article is for general information purposes only. This article should not be substituted for legal advice and should not be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or reading this article does not constitute, an attorney-client relationship. You are encouraged to contact an attorney for legal advice concerning the information provided in this article
IRS CIRCULAR 230 NOTICE: This article may contain provisions concerning a federal tax issue or issues. Under recently issued IRS regulations, this article is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on any taxpayer by the Internal Revenue Service.