Special Needs Trust and Sell/Don't Sell?

New Mexico Mineral Rights Lea County, NM
1

I am brand new here and I am so glad I found this site. My sister (age 60) who lives with me is developmentally disabled and has a Special Needs Trust which was created in 2004. I am the Trustee/Successor Trustee (age 63). The Trust owns fifteen fractional interests in Lea County (and two in Eddy County) which were originally owned by our great aunt who bequeathed them to her sister/our grandmother, who then bequeathed to our mother (she died in 2002). The Lea interests are described as:

T16S/T18S, R33E/R36E/R37E, Section 3/11/12/13/14/29/20/21/23.24/25/26

and that is followed by N/S/E/W numbers. OK

The purpose of a Special Needs Trust is to use the Trust's assets to enhance the life of a person with a disability without jeopardizing any federal/state benefits, which in my sister's case is SSI and Medicaid. The SNT is properly written so it contains a reimbursement proviso: upon my sister's demise, the government is to be reimbursed for her Medicaid expenses (but not the monthly SSI checks because those are exempt from reimbursement).

Since 2004 the annual royalties have ranged from $1600-$7000. 2010 was an exceptional year: $14,000. Last year the amount was $6200. Her SSI pays her share of our rent/food/utilities and the royalty income pays for extras like her dental care, clothing, books, hobby supplies and the services of a companion for her while I'm at work (although Medicaid pays for a portion of that as well: respite weekends).

If my sister passes before I do then obviously it is my responsibility to make the reimbursement. I am just about paralyzed by ignorance/indecision because of this dilemma: if I don't sell the interests my only recourse is to transfer ownership of the mineral deeds to the government and perhaps I will be reimbursing above the amount demanded. If I do sell the interests is there a possibility that the amount received would be larger than what is owed to the government, resulting in something left for me/my heirs? I also wouldn't mind eliminating the burden of the accounting process/filing taxes/etc.

I have absolutely no clue as to the value of the interests and how to sell them, and absolutely no clue as to the amount the government will demand for reimbursement. I have asked for an accounting thus far but the response was that "it isn't done that way." I've come across some websites which claim that the value of the interests might be the annual royalties x10, although there seems a lot of conflict re which estimates/formulas are correct. And the royalties fluctuate so much from year to year, so there's that.

So, does anyone have any advice/an opinion to share with me? A lot of what I've been reading here is over my head because my brain wants to shut down when numbers are involved :-(

TIA for any responses!

2

I wish I had a answer for you just keep posting on the forum, try posting on blogs to see if you get some feed back

3

Vicki, I hope someone on this site can help you, but there are lot more questions than answers in this forum. Maybe someone will be able to at least tell you where to get advice. Very complex. Good luck.

4

Vicki,

The property descriptions you have given are totally meaningless unless put in a proper sequence, i.e. Sec.3, T13S, R33E, etc. Any prospective leaser or buyer would not be able to locate your interest without a proper description. Your best bet would be to contact a good trust and mineral rights lawyer.

5

Dear Vicki,

Let's sit back on this and get some more answers before you go selling anything. You say if my sister passes before I do then obviously it is my responsibility to make the reimbursement? Now is this true or not? Since you were your sisters caregiver, you may be able to receive her survivor benefits. Assuming always gets me into trouble, so I think you should get answers before. If might be that after you send the government a copy of the Death Cert. that you are set free from sisters debt. We don't know what we don't know. Let's not discuss pricing the mineral interests yet, but work on the other side toward passing these minerals on to your heirs.

The companies you get letters from offering to purchase your mineral interests, where they give in the big print, they take in the small fine print. If you were to deal with any of these companies you would need the advice of a good Oil and Gas Attorney.

I want to tell you my cousin's story, your might be similar, he found the bottle in the 70-80's, and sadly we didn't see him but one day at a time. In 2000 I got a notice from Winkler County that cousin was overdue with taxes, so I called them to see, and then said if they had contact information i would see if I could work out payment plan with him. Turns out, that god saved him from acohol and gave him a wife and 4 kids in the process. The Bad news, The Government irs found him also. They had his minerals, investments, etc. and each week as he drove a truck, they would meet him at the payroll window and instruct the company he worked for to give him $75 and them the rest. Well this went on for many years, but last year, the Irs gave him his money back, and now he pays his taxes like we all do.

So this tells me, that after sister dies, government will make loan on value of what is owed and let you make payments so that it does not upset the donkey cart, or your living to make the payments. or 2. they may take the mineral interests till they have been satisfied then simply return the leases and royalties back to you to pass to your Heirs. Please don't try to place in a Trust, unless their is more than $50,000 as the Trust will eat the money in fees. I know as I'm a trustee baby.

Look about your town, or state and see if free attorney advice is available, then seek answers there. Also CPA's offer free services in each town, seek that advice as well. once you sell the minerals, royalties, or overriding mineral interests or royalty interests, they do not come back. So while you can sell the land, as long as it's not PSL land, Public School Land which you must maintain surface to receive the 1/2 of the minerals underneath the earth.

If you haven't done it, go to Texas or what ever state you live in unclaimed funds and look up both you and your sister and then other heirs.

Our trust started in 1923, and I have found several oil royalty checks from Oil Companies that got disconnected from trust. Some as high as $9000.

Lea County in New Mexico, is where most of the oil in that state comes from, so another reason not to sell.

Good Luck and God Bless, seek those answers and let us know what you fine.

We have family lands that have never been drilled on or leased since 1927, but we still pray everyday that one day an oil and gas company will come calling.

Sincerely,

Chris

6

Thank you. I think I found this forum for a reason. No one I know wants to discuss this, their eyes just glaze over :-(

vicki vannuis said:



Vivian Morrow Jones said:

Vicki, I hope someone on this site can help you, but there are lot more questions than answers in this forum. Maybe someone will be able to at least tell you where to get advice. Very complex. Good luck.

7

Thank you. I spent most of the day online and some of it is starting to make sense. It's just that I can't find a situation enough like mine so far. I will keep reading further back on this site as well.

e dubose said:

I wish I had a answer for you just keep posting on the forum, try posting on blogs to see if you get some feed back

8

Thank you. I wasn't sure if I should post the exact property descriptions so I erred on the side of caution. But I realize I'll have to do that if/when I offer the rights for sale online.

j richardson said:

Vicki,

The property descriptions you have given are totally meaningless unless put in a proper sequence, i.e. Sec.3, T13S, R33E, etc. Any prospective leaser or buyer would not be able to locate your interest without a proper description. Your best bet would be to contact a good trust and mineral rights lawyer.

9

Thank you. Hmmm, it sounds like your situation is/was very complicated. Your reply makes a lot of sense.

The Trust consists of the mineral deeds and the mineral income; there are no other assets. The mineral deeds list the Special Needs Trust as the owner. The royalty checks are payable to the Trust.

The exact wording of the payback clause is "upon the death of the beneficiary the appropriate Medicaid agency shall receive all assets remaining in the Trust up to an amount equal to the total medical assistance paid on behalf of that individual."

It sounded good at the time the Trust was created but I had no idea what I was getting into back then. Now that wording sounds sufficiently vague that I can't determine exactly how the payback should/will be accomplished.

The last letters I received re lease/purchase offers were in 2007. What got me going currently was a phone message last week from a guy at Turner Gas/Oil Properties in OKC, "offering a lease," and he cited two of the section numbers correctly. Haven't returned his call 'cause I have no idea what to say to him.

While researching online today I found an atty in my state (90 miles away) who lists Trusts and Oil & Gas in his areas of expertise. I'm going to call tomorrow and see if I can pre-pay for a phone consultation with him. (My dad who lives with me is on hospice care and I can't take him that far/leave him home while I go that far).

There are royalties of about $10,000 which got mis-directed into unclaimed funds (in Cali) during the time we were closing our mother's Trust/creating my sister's Trust. I'm working on that, although the wheels of bureaucracy grind exceedingly slowly. I'm in Utah now, and discovered online today that our Cali trust may not be as portable an entity as I was assured it was. Oh, joy, a new can of worms!

Thanks again to all who replied. I will keep reading the forums here and will post my progress as I go along.

Chris Wilson said:

Dear Vicki,

Let's sit back on this and get some more answers before you go selling anything. You say if my sister passes before I do then obviously it is my responsibility to make the reimbursement? Now is this true or not? Since you were your sisters caregiver, you may be able to receive her survivor benefits. Assuming always gets me into trouble, so I think you should get answers before. If might be that after you send the government a copy of the Death Cert. that you are set free from sisters debt. We don't know what we don't know. Let's not discuss pricing the mineral interests yet, but work on the other side toward passing these minerals on to your heirs.

The companies you get letters from offering to purchase your mineral interests, where they give in the big print, they take in the small fine print. If you were to deal with any of these companies you would need the advice of a good Oil and Gas Attorney.

I want to tell you my cousin's story, your might be similar, he found the bottle in the 70-80's, and sadly we didn't see him but one day at a time. In 2000 I got a notice from Winkler County that cousin was overdue with taxes, so I called them to see, and then said if they had contact information i would see if I could work out payment plan with him. Turns out, that god saved him from acohol and gave him a wife and 4 kids in the process. The Bad news, The Government irs found him also. They had his minerals, investments, etc. and each week as he drove a truck, they would meet him at the payroll window and instruct the company he worked for to give him $75 and them the rest. Well this went on for many years, but last year, the Irs gave him his money back, and now he pays his taxes like we all do.

So this tells me, that after sister dies, government will make loan on value of what is owed and let you make payments so that it does not upset the donkey cart, or your living to make the payments. or 2. they may take the mineral interests till they have been satisfied then simply return the leases and royalties back to you to pass to your Heirs. Please don't try to place in a Trust, unless their is more than $50,000 as the Trust will eat the money in fees. I know as I'm a trustee baby.

Look about your town, or state and see if free attorney advice is available, then seek answers there. Also CPA's offer free services in each town, seek that advice as well. once you sell the minerals, royalties, or overriding mineral interests or royalty interests, they do not come back. So while you can sell the land, as long as it's not PSL land, Public School Land which you must maintain surface to receive the 1/2 of the minerals underneath the earth.

If you haven't done it, go to Texas or what ever state you live in unclaimed funds and look up both you and your sister and then other heirs.

Our trust started in 1923, and I have found several oil royalty checks from Oil Companies that got disconnected from trust. Some as high as $9000.

Lea County in New Mexico, is where most of the oil in that state comes from, so another reason not to sell.

Good Luck and God Bless, seek those answers and let us know what you fine.

We have family lands that have never been drilled on or leased since 1927, but we still pray everyday that one day an oil and gas company will come calling.

Sincerely,

Chris

10

Dear Vicki,

You have gotten some good advice and looks like you have done your part as you have found it's ain't easy, but it is worth it in the long run for your heirs. Your right no situation on here will be like yours, as it was done different than most others. Trust is a vehicle our Grandparents used in the 50's still using today in different forms, to pass large sums of money from one family to another. You mentioned in your newest note about how the Government would take their money in the settlement. I would rather investigate that upfront so that it is not like my cousin,

See if you can just get a repayment plan. Seems that your sister might have lived a long life, if your worried about paying back.

There are other oil and Gas Energy companies that just purchase Mineral Deeds, they send you checks which look like large amounts but when you get to the nuts and bolts of the deal, they are not paying you anything, and they will take everything. So since the Trust has lasted this long, keep her on Cruise Control for awhile longer. Keep reading, one of the folks here will have something to help you along your journey.

I see you found an attorney to speak with, remember you need this guy in your corner, so if you don't feel comfortable speaking with him, seek out another till you do, like you would do with a Doctor. You have to trust the guy that is going to help you.

I belong to Prepaid Leagal, that may be near you, I pay $26 a month for the privilege to be able to talk to a attorney on subject, and they usually call me back faster than I can call my banker.

In the Past Bill Swanson, the Oil and Gas Attorney there has helped me with many a Mineral Lease. This is for Texas. They operate in all states.

Continued Success on your journey, and prayer for Patience.

Chris