My wife and I recently gifted our mineral rights to our 3 children. Our attorney executed a mineral deed listing our children as "Tenants in Common", can that be changed to ownership to each of them of 1/3 of our interests? How is that done.
Thanks JW
The Language “Tenants in Common” achieves exactly what you are wanting. Tenants in common means they are co-owners of an undivided interest in the property. Tenants in common each own a separate and undivided interest in the same property and each has an equal right to the possession and use of the property. Upon the death of one tenant, his or her undivided interest passes to their respective heirs through the probate proceedings and the interest does not pass to another tenant in common unless the surviving co-owner is an heir.
Jake Marbach
Jake-There have been no Division Order completed by the Oil company yet. Our concern is that we want each child to receive a check for their part of the royalties instead of 1 person getting a check and having to disperse the proceeds to the other kids. Plus having to send each a 1099 at the end of the year. Our daughter (who is listed 1st on the mineral deed) did get a mineral tax bill from the county already.
JW
Did you send a copy of the filed deeds to the operator so they can update their records and send new division orders?
Kitchen - Yes, but that takes at least 3 months according to the Oil company. See my previous reply
jw
That is not uncommon. Sounds like once you have the division orders taken care of things should be in line as you had wanted them to be. The only other thing you may need to make sure of (if you are not in Oklahoma) is that if you receive property tax bills on your minerals that the county gets the ownership updated. From my experience here in Texas, the change of mineral ownership for property taxes can take significantly longer than changing the ownership of "normal" property. Many counties hire third parties to handle the mineral ownership / valuation and sometimes mineral deeds are misplaced, lost, or neglected when the appraisal office processes stacks of deeds.
Kitchen - Oil rights are in IL, mineral tax were billed in June (normal for IL) to and paid by our daughter only. When we inherited rights there 3 times each inheritor was billed for mineral tax. This is different. This is mineral taxes, since we don't own the actual ground.
jw
That makes sense. I get used to questions on this board being directed towards Texas and that is where the majority of my knowledge is. I will have to look up the Illinois mineral tax process when I get a chance. Every state is different!
Mr. Flowers,
Are just the producing Mineral rights in Illinois being taxed? We own non-producing rights and I don't have any records of taxes being paid to Illinois.
Kitchen,
Oklahoma Mineral rights are not taxed directly. They place a 7% (floating scale) severance tax at production. There are some tax incentives for directional and horizontal wells which in most cases reduce it to 1% until the well pays out or 4 years (first event). Recent legislation changed this to 2% for 3 years beginning July 2015 and I believe it will cover all wells.
Non-resident owners subject to 5% income tax withholding on royalty payments. A well can be searched here to see if an incentive was approved.
https://www4.oktax.onenet.net/GrossProduction/PublicSearchPUNbyLegal.php
Rick - these are producing wells and have been since the 1940's. They have been handed down several times through inheritance.
Rick,
Thank you for the information. I have been keeping up slightly with Oklahoma. Personally, I like the way Oklahoma taxes compared to other states. It eliminates "delinquency" for local property taxes on minerals, and it is uniform. For a mineral owner I believe it is one less worry since taxes are taken before you are paid. Oklahoma is known for keeping it simple in other business taxes as well (from my experience). I read about the recent legislation changes in a NARO newsletter. That is good news for mineral owners.