I looked for this topic at some length in previously posted questions and didn’t see anything about it, so I’m asking my questions here.
My mother owns mineral rights in Oklahoma in 32 counties. She deeded all these mineral rights into a trust in 2005 that leaves her mineral interest to her three children equally. I am one of her children and the executor (or successor trustee) of her trust, and need advice on how to proceed after her death, whenever that may occur.
I was told that after her death, the trust can continue in her name and I can, as the successor trustee, divide the royalties each month between myself and my two siblings. This would avoid having to split already small holdings any further, and the lawyer fees that would accompany doing so. My siblings have agreed to this arrangement after our mother passes.
My question is: Assuming that a trust can continue indefinitely in the deceased’s name after that person’s death, does that mean I can continue to receive royalty checks just as they are now, in my mother’s trust name, after her passing? (Some checks are made out to her name followed by the word “Trust” and some checks also include her trust name, and then her name again as “Trustee” on the check.)
I assume that after her death, I will need to contact each oil company that pays royalties with her death certificate and a copy of the pertinent pages of the trust to change my status to “Trustee.” Is this correct? Will I also need to file a document with each county where my mother owns mineral rights to reflect my status as Successor Trustee after my mother’s passing?
Any help you can provide on this matter is appreciated, and thank you in advance for your help.
Hello Angela- I’m not a lawyer so can’t give you legal advice. You should talk to an estate planner/oil & gas lawyer about setting up a family LLC if you want to continue holding the properties under one account after you mother’s passing. There are reasons to do so and reasons not to do so. Nobody can predict the wants & needs of you or your siblings or heirs in the future. Splitting small holdings can be a headache for one person administrating them the same as if each party had to do it themselves.
I put all my holdings into a revocable trust, so as you mentioned, to prevent a lot of fractional shares as time passes. The trust has explicit language as to 1. chain of executors (down to grand kids) and 2. distribution rules. I opened a trust account at a local bank so as to not mix the $'s with any personal funds. That way, for tax and distribution purposes, the account shows 100% of income and distributions. All checks are direct deposited.
The trust is under my SS# for tax purposes but after I pass at some point, to my understanding, the revocable trust will convert to an irrevocable trust. My SS# will be replaced by a TIN (tax identification #) and the trust become a separate entity and will file its own tax return. The trust rules says the income should be 100% distributed each year so, technically, the trust should have 0 $'s of taxable income. The properties and bank account should all have the same name and tax id #.
I had some problems in the past with my mothers name not matching EXACTLY between some documents like passport, drivers license, investments, bank accounts, etc. I urge you to get all the names on all the wells to be the same. It will be much easier to do while you mother is alive.
Her lawyer used her first initial on her will and the banks had a fit with that. Her death certificate has 3 AKA’s (also known as) on it.
As everyone here always suggest: You should always consult a lawyer, and maybe even a CPA, as the best way to proceed for now and future tax considerations. You don’t want the IRS to come a calling.
I went through a normal attorney (not oil/gas). He did all the paperwork and filed all the forms with the appropriate counties at a very reasonable cost.
First of all thank your mother for taking care of this. The trust document will have some instructions regarding how, if and when the distribution is to occur. The attorney who assisted her in setting up the trust is your first resource. Upon her death you will likely need an tax id for the trust. A CPA is an invaluable resource to have to keep you out of trouble. While your mother is alive, you may want to make sure that no minerals were missed. This can happen with a legal description that is too narrow or incorrect. Of course there is the problem with missing a mineral interest here and there.
This post is not legal, investment or tax advice, it is for discussion purposes only. Reading or responding to this post does not create an attorney-client relationship.
Angela_Havel - one other thing. the bank account was opened with the trust being the owner.
They (bank and properties) all have the same name and same tax id #.