My brother and I inherited a number of undivided mineral interests in a number of states upon the death of our mother in 2013. She had received a life interest with her brother upon the death of her father – each shared a ½ undivided interest. Her interest (subject to the life estate passed “to the descendants of my said daughter, XXXX, in fee simple, per stirpes and not per capita.” My brother and I have held our undivided interests since 2013, have leased some of the properties, and sold a few. For estate planning purposes, I am assuming that each of my brother’s and my interest would past either by will or otherwise by law to each of our heirs. Is that assumption correct? Each ½ undivided interest would be valued as a part of each of our estates?
If the deed from your grandfather was to your mother for life, with the remainder to her heirs, then yes you and your brother would now own it in fee simple. That means it is your estate and you can freely sell it, devise it, etc. If you plan to keep some or all of the minerals for future generations, most attorneys would advise you to put it into a trust or entity as it will be easier to manage and pass the interest from one generation to the next.
I trust that you have it correct. Life estate language can be tricky to understand. I don’t know any attorneys who use them for estate planning for a variety of reasons. Unfortunately, you may need an opinion from each state where the deeds are filed to be precise. But by your description it sounds as though the interests would vest (free of the life estate) upon the death of your mother. If that is the case, you should explore creation of Trust with an attorney in your home state.
This post is not legal or tax advice. It does not create an attorney/client relationship.
Your undivided one-half interest in the various properties would be part of your gross estate for federal estate tax purposes. whether any federal estate tax will be owed at your death will depend on the value of your estate, the planning you have done, the the amount of your unused federal estate tax exemption at your death, but keep in mind some states have an inheritance tax that can apply even if your estate would not owe any federal estate tax. You should consider hiring an experienced estate planning attorney with a strong tax background who is well-versed in trust and entity planning.
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