Heir question

Law & Legal
1

My 85 year old aunt has just started receiving her royalty check for her mineral rights to a small parcel in LaSalle County Texas. She does not have a will as she says she does not need one with what little stuff she will leave (I know, I know--she needs a will and I have told her that but she does not want the expense). Anyway, her question is what can she do, short of getting a will, that leaves her 2 children these mineral rights when she passes away????

Is there something she can do now to put their names on the deed but lets her still receive the royalty checks???

Thanks.

Terry

2

Check if a transfer on death deed can be used in Texas. Normally you file the deed now. After death an affidavit with a copy of the death certificate is filed.

3

Rick is correct. In Oklahoma she can file a deed to anyone and reserve a life estate. When she passes, the minerals go to whoever she acknowledged on the life estate deed. No attorneys will be involved.

4

It looks like Dave deleted his reserving a life estate answer.

A TOD and Deed with a reservation of a life estate are a bit different.

A TOD is revocable until death. A life estate is not revocable.

Say mom wants to give it to Jim and Sally.

Jim later becomes a drug addict and mom does not want to participate in the financing of his habit after she dies.

TOD is revocable, Life estate reservation is not.

http://www.sai.ok.gov/Search%20FormsPubs/database/TransferOnDeathDeed.pdf

But as I was searching for details, according to this article, TX does not use them.

http://www.legalmatch.com/law-library/article/transfer-on-death-deed.html

Terry she needs a will. Explain how much of a burden it is to her heirs if she does not have one.

This link will hook her up for $29 plus a few bucks to have someone notarize it. She needs a will even if she own nothing.

http://www.uslegalforms.com/dave/

Regardless, using things like the TOD and a deed with a life estate reservation will keep from having to probate the estate.

A properly drawn will can also take care of property she does not know she has. Hopefully someone that has more knowledge of Texas law.

But you have to be careful, some of the conveyances prior to death could require the Life Tenant and the remainderman (heirs) to enter the lease agreement. (again state dependent)

Note: I am not an attorney (and I only occasionally stay in an Holiday Inn Express)

5

Hey, Terry -

I am not a Texas Attorney, and suggest that you contact one experienced in oil and gas matters for situations like this, but it is my understanding that the mineral rights would pass down to her children whether she leaves a Will or not.

If the income is minor at present, Deeding it to her children and reserving a Life Estate might not be a bad idea.

At age 85, however, she may be using Medicare to cover her medical bills. Which, depending upon her health, may be a substantial amount.

If so, then it might be advisable to Deed the Mineral and Royalty Payments over to her children as soon as possible. The amount of the royalty income or any increased royalty income in the future might make her ineligible to continue using Medicare.

If she has interests in LaSalle County, Texas, the income could be or become fairly substantial over the coming years. LaSalle County is in the heart of the Eagle Ford Shale play, one of the most productive ever seen in the country. Even a smidgen of interest can bring in a fairly substantial amount of royalty income.

Something to note is that many of the Units being formed in the Eagle Ford start out with just one well, which holds all of the land in the Unit, while the companies move over to drill additional Units so they can hold those lands as well. Each of the companies has thousands upon thousands of acres under lease and want to drill as few wells as they have to to hold as much acreage as possible before the undeveloped leases start to reach the end of their Primary Terms.

Eventually, however, they will come back and drill the remaining wells planned for all of their units, which could be anywhere from one additional well for a small Unit to a half dozen additional wells for a large Unit - depending upon the size of the Unit and the Well Spacing allowed for which part of the Eagle Ford the Unit is in.

And each additional well that is successfully completed will increase your Aunt's royalty income.

If you will send me the legal description of the property her interests are in, I will be happy to show you what is happening on the ground. What drilling has already been done and what future drilling might be in store. If you would prefer to send the legal description privately, accept my invitation to become "A Friend" on The Forum and send it to me that way.

Also, I know of several very qualified and experienced Texas Oil and Gas Attorneys if you need a recommendation. Several even answer questions here on The Forum.

Hope this helps -

Charles

Charles Emery Tooke III

Certified Professional Landman

Forth Worth, Texas

6

I am sorry that I neglected to note that my aunt lives in Missouri.

For Charles--my aunts primary income is only SS so the royalty income is a godsend for her. Her share of the 320 acre oil lease is less than an acre---they have averaged about 15,000 barrels per month so far from the one well and her royalty is about $750---definitely a good sum for her but not a fortune.

I will again suggest getting a will and include the info Rick mentioned on the inexpensive will.

Thanks for everyones help.

Terry

7

Terry,

Even though she lives in Missouri, the property will follow Texas laws.

Charles provided some excellent advice! While the will info I provided is not substitute for one created for her situation for an attorney, it is far better than none at all!

8

Terry -

With no Will (Intestate), the interest simply passes to her natural heirs, which you say is her two children. They will probably only need to prepare an Affidavit of Heirship, file it in LaSalle County and send a certified copy to the company. The company might also request a copy of her Certificate of Death or something like that, but the paperwork is relatively simple.

I have a favorite friend who is also 85 and living only on SS, so I can certainly see how thrilled your Aunt must be to have the extra income. But my friend is on Medicare for a variety of issues and would not live more than a few months longer should it ever be terminated.

If your Aunt is on Medicare or might need it in the future, you need to have her or her guardian check with the Medicare people or their website about maximum allowable income limits.

The smidgen royalty interest I have in the Eagle Ford presently makes me just under $600 per month, but that's with only one Well in each of three separate Units. Two of the Units have room for only one additional Well; the third Unit has room for an additional three Wells. As those additional Wells are completed, my royalty income with increase substantially. And that's just from one zone of production in an area of the country with six or seven potential zones of production.

That's why I want to look at the Unit(s) she is in. If they drill additional wells and her income increases beyond the maximum allowable income limit, they'll cut her off or, when the time comes when she needs it, she won't be eligible.

Please send me the legal description so I can show you what I think you should keep an eye on.

Charles

9

I left it up long enough for you to see that your advice does not apply in Texas. It worked out really well. You later wrote that "TX does not use them". Most Texas clerks don't like to accept instruments like birth and death certificates as attachments, especially if they contain a social security no. It stems from an Attorney General ruling a few years back that was not made clear to them. There was total chaos. Several clerks even shut it down, and allowed no one entrance to the vault.

Rick Howell said:

It looks like Dave deleted his reserving a life estate answer.

A TOD and Deed with a reservation of a life estate are a bit different.

A TOD is revocable until death. A life estate is not revocable.

Say mom wants to give it to Jim and Sally.

Jim later becomes a drug addict and mom does not want to participate in the financing of his habit after she dies.

TOD is revocable, Life estate reservation is not.

http://www.sai.ok.gov/Search%20FormsPubs/database/TransferOnDeathDe...

But as I was searching for details, according to this article, TX does not use them.

http://www.legalmatch.com/law-library/article/transfer-on-death-dee...

Terry she needs a will. Explain how much of a burden it is to her heirs if she does not have one.

This link will hook her up for $29 plus a few bucks to have someone notarize it. She needs a will even if she own nothing.

http://www.uslegalforms.com/dave/

Regardless, using things like the TOD and a deed with a life estate reservation will keep from having to probate the estate.

A properly drawn will can also take care of property she does not know she has. Hopefully someone that has more knowledge of Texas law.

But you have to be careful, some of the conveyances prior to death could require the Life Tenant and the remainderman (heirs) to enter the lease agreement. (again state dependent)

Note: I am not an attorney (and I only occasionally stay in an Holiday Inn Express)

10



Dave Quincy said:

I left it up long enough for you to see that your advice does not apply in Texas. It worked out really well. You later wrote that "TX does not use them". Most Texas clerks don't like to accept instruments like birth and death certificates as attachments, especially if they contain a social security no. It stems from an Attorney General ruling a few years back that was not made clear to them. There was total chaos. Several clerks even shut it down, and allowed no one entrance to the vault.


11



Rick Howell said:



Dave Quincy said:

I left it up long enough for you to see that your advice does not apply in Texas. It worked out really well. You later wrote that "TX does not use them". Most Texas clerks don't like to accept instruments like birth and death certificates as attachments, especially if they contain a social security no. It stems from an Attorney General ruling a few years back that was not made clear to them. There was total chaos. Several clerks even shut it down, and allowed no one entrance to the vault.


12

Here is a copy (with personal data deleted) of a mineral transfer deed my Mother just had implemented. Maybe it might help and/or save you some $$.

Good luck,

Pat

***********************************************

NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.

GENERAL WARRANTY DEED

THE STATE OF TEXAS §

KNOW ALL MEN BY THESE PRESENTS:

COUNTY OF ___________ §

THAT THE UNDERSIGNED, ______________, hereinafter referred to as "Grantor", for and in consideration of the sum of TEN DOLLARS ($10.00) cash, and other good and valuable consideration in hand paid by the Grantee, the receipt and sufficiency of which is hereby fully acknowledged and confessed, has GRANTED, BARGAINED, SOLD and CONVEYED, and by these presents does hereby GRANT, BARGAIN, SELL, and CONVEY unto _________________, and _______________, herein referred to as "Grantee", all that certain tract or parcel of land, together with all improvements thereon, situated in the County of _______________, State of Texas, and described as follows, to-wit:

Legal description; and which tract is described by metes and bounds on Exhibit “A” attached hereto;

This conveyance is made subject to any and all restrictions, covenants, mineral and/or royalty reservations, covenants, maintenance or similar charges, and easements, if any, relating to the hereinabove described property, but only to the extent that they are still in force and effect, shown of record in said County, and to all zoning laws, regulations and ordinances of municipal and other governmental authorities if any, but only to the extent that they are still in effect, relating to the hereinabove described property.

TO HAVE AND TO HOLD the above described premises, together with all and singular the rights and appurtenances thereto in anywise belonging unto the said Grantee, its successors and legal representatives. And Grantor does hereby bind herself, her heirs, executors and administrators, to WARRANT AND FOREVER DEFEND all and singular the said premises unto the said Grantee, its successors, assigns and legal representatives, against every person whomsoever claiming or to claim the same or any part thereof.

EXECUTED this ____ day of _______________ 20__.

____________________________

THE STATE OF TEXAS §

COUNTY OF __________ §

This instrument was acknowledged before me on this the ____ day of

__________, 20___ by ___________________.

_____________________________________

NOTARY PUBLIC State of Texas

GRANTEE ADDRESS:

EXHIBIT “A”

13

Ms. Malone--very kind of you to post that form. Appreciate it very much.

Terry

14

Terry -

That is a Warranty Deed, not a Mineral Deed.

If you need a Mineral Deed form or example, let me know.

Charles

15

Mr. Tooke, that's the same thing I said to the Real Estate Attorney when I read this document. He has since had it recorded in the county the minerals are located, and it's now part of my Mother's irrevocable trust.. This is the legal description that conveyed my Grandmother's minerals to my Mother. I am going on what my RE attorney said.

Sorry, that's all I know.

Pat


Charles Emery Tooke III said:

Terry -

That is a Warranty Deed, not a Mineral Deed.

If you need a Mineral Deed form or example, let me know.

Charles

16

No, I have run title in Texas for a decade and never encountered a Transfer on Death Deed. I like the Mineral Deed reserving a Life Estate for this scenario because the title will be "more marketable," for lack of a better phrase this early in the morning, for her Grantees than if she kept it and her heirs-at-law filed an Affidavit of Heirship after she passes away.

If there is a concern about busting income levels for some king of entitlement program, what about conveying the minerals to an Irrevocable Trust for her benefit until her death, with the corpus to be paid to her heirs or heirs-at-law thereafter, could that be a possibility?

17

I believe Transfer on Death deeds are invalid in Texas, but are very common in other states, like Kansas.

18

In Oklahoma, the minerals go with the surface on a warranty deed unless they are explicitly reserved on the deed.

19

...but only if the minerals were available to convey in the first place.

20


Pete,

I should hope that is understood.