Buddy,
Thanks for the fine explanation. It turns out that I have inherited both situations to manage mineral right for but never knew the legal pitfalls for either. I personally liked the Legally produced Remainderman concept for management. We created an LLC and my job was with the LLC and much easier to realize big income. The Conventional life estate with Remaindermen fee ownership was more difficult. The surviving spouse with the entire right was fearful of doing the wrong thing for the children and the future owner's (5) didn't want to make decisions for the other siblings or Mom so nothing got done and hundreds of thousands of dollars of value that could be realized just sits in the ground. Life estates are a wonderful idea but, in my experience, the Remainderman should me limited to one or two and the authority to make decisions should be specified in the Life Estate transfer. But you already know that.
Gary H
Buddy Cotten said:
Dear Gary,
It is generally accepted that there are two types of life estates. A conventional life estate and a legal life estate.
The conventional LE is a Life Estate that was created on purpose. For example, I transfer mineral properties to my wife for her lifetime and upon her death, to my children. Keeps it in the family, so to speak.
A legal life estate is one that is created by operation of law. An example would be a probate code for intestate descent and distribution that read something like this: "As to separate property, the surviving spouse has a 1/3 life estate and the heirs at law have a remainerman in 1/3 and fee in 2/3rds"
Buddy Cotten
Mineral Manager
Gary L. Hutchinson said:Pete,
I bow to your superior and broader knowledge of the subject. When I knew there was a Remainderman, It indicated to me that there was a Trust since I've never heard of a remainderman named in a will. Guess it could happen. In the hypothetical death of lessor making a lease invalid, I wouldn't pay a nickel for a lease that the ramaindermen didn't sign. That is what forced pooling is for.
Pete Wrench said:Gary, do you mean the Trustee of the Testamentary Trust? For an Estate, I know of only an Administrator or an Executor. It is possible, of course, that there is no Trustee involved here. The Life Tenant could have received the life estate from a deed, or as a devisee, not as the beneficiary of a Testamentary Trust, in a Will.
Anyway, I did some research on this matter last night. Everywhere that I consulted said that a Lease signed by a Life Tenant without ratification or contemporaneous lease by ANY of the Remaindermen would become null and void upon the death of the Life Tenant. There seems to be consensus on that. What is still unclear, and what is the topic of this thread, obviously, is what happens if some, but not all, of the Remainderman ratify or lease.