I inherited some producing minerals.....what next?

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Nothing in this life is forever.

Let's take a scenario. Mom and Dad owned some minerals and they have been receiving royalty checks for years.

Mom and Dad went on to their reward and the checks still come to their old address in their name. How do you get them in your name?

First, title must reside somewhere. When a death occurs, the land(s) belong to the Estate of the deceased. In other jurisdictions, it may be called something else (like Succession in Louisiana), but the theory is the same. Title must reside somewhere.

The oil company will not know who to properly pay until they are furnished proof of ownership. Some people think that it is the job of the oil company to keep track of every death and every conveyance and automatically just seem to know whom to pay. It just does not work that way.

The first really operative agreement in the oil business is the Oil, Gas and Mineral Lease. There is a saying, "No grease without the lease."

That document actually makes provision on exactly what to do when lands are transferred. The following comes right out of the most popular lease form in the State of Texas, to wit:

"7. The rights of either party hereunder may be assigned in whole or in part, and the provisions hereof shall extend to their heirs, successors and assigns; but no change or division in ownership of the land, or royalties, however accomplished, shall operate to enlarge the obligations or diminish the rights of Lessee; and no change or division in such ownership shall be binding on Lessee until thirty (30) days after Lessee shall have been furnished by registered U.S. mail at Lessee’s principal place of business with a certified copy of recorded instrument or instruments evidencing same. In the event of assignment hereof in whole or in part, liability for breach of any obligation hereunder shall rest exclusively upon the owner of this lease or of a portion thereof who commits such breach. If six or more parties become entitled to royalty hereunder, Lessee may withhold payment thereof unless and until furnished with a recordable instrument executed by all such parties designating an agent to receive payment for all."

So, there you have it. Look where I added the emphasis.

The burden is on the successor lessor to furnish a certified copy of such instrument translating title into them.

You *inherited* some minerals from Mom and Dad. Did you? Or did title to the minerals go straight to their Estate or Succession? Was a probate opened? Was an Executor or Administrator appointed? If an Estate was opened, was there a conveyance from the Estate to you? Were any Estate or Inheritance Taxes due and paid? If no Estate was opened, why not?

There are lots of questions here that the oil company needs answered before they can release the funds from the Estate (or holding funds) to a third party. The oil company needs to be absolutely certain as to the proper ownership.

To take things in order,

1. If an estate was created and a probate opened, title goes to the Estate. This assumes that the minerals were owned in fee, and not as a life estate or joint tenancy with the rights of survivorship.

2. If an estate was opened, an Executor was either named in the will, or appointed by the court. If there was no will, an Administrator was appointed by the court.

3. The Executor or Administrator will need to contact the oil company and see what documents that they will need to change their records so that checks come to the Estate. Likely, Letters Testamentary, Order opening the Estate, etc.

4. Furnish the oil company with documents that they require to change their records.

5. If you are an heir of Mom and Dad and inherited the mineral rights, you will need to have the minerals transferred from the Estate of Mom and Dad to you. This is generally done by an Executor's Deed. A certified copy of which will need to be sent to the oil company.

Don't just jump in and file an Affidavit of Heirship and expect for it to be automatically accepted by the oil company. Each oil company has their own requirements for changing records concerning the disbursement of funds.

This can all very quickly get past the capability of most successors Lessors to accomplish without legal help.

Therefore, get legal help.

Best,

Buddy Cotten

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Thanks Buddy for spelling this out so clearly. Very important information.

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I would appreciate input about a current situation. Husband's mother passed away and owned several producing leases. Siblings named as executors and have not communicated any intention of dividing this portion of the estate among the four living beneficiaries of the estate. Almost 11 months have passed since death. North Dakota is the state these minerals are located. How can we determine in whose name these minerals are now being held? Thank you.

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Dear JP,

Have the executors opened a Probate? If so, where? This information becomes public information.

Are you an heir of your husband's mother, or is your husband an heir? (This sounds like it might be a silly question, but it does make a difference).

Have you seen a copy of the will?

It could be that the executors are prudently allowing the revenues to go to the mother's Estate to take care of Estate business, such as legal and accounting fees. I do not know.

A well drafted letter to the Executors, or the law firm representing the Executors would bear fruit.

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My situation is there were no Deeded Mineral Rights in the estate conveyance, only surface rights and Real Estate descriptions. The well logs posted right now on M.R.Forum proved there was petroleum notes in the world's deepest diamond drill hole of the time this month 1901. We were exploring these at the time of the estate, and if the Living Trust made no mention of the minerals being present to convey, were they ever conveyed, in Trust Accounting carried as an unvalued asset, or as well as distributable to the heirs as a result of the Attorney not asking enough questions about the presence of minerals when writing the Trust and is his oversight negligence?

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I recommending talking to a qualified oil and gas and probate attorney.

Was there a residual clause in the document creating the trust?

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In my case, there is no estate per se. My spouse deceased intestate--no Will, no nada. In Oklahoma, the minerals and all else revert to the surviving spouse. I am now in the process of filing each mineral description in the counties of record, an arduous process. I have found companies paying royalties very helpful, e.g. Continental. In addition, I will file with each company a Proof of Heirship. I have just recently begun the process. The County Clerks with which I have interacted have also been helpful. Courtesy receives its own courtesy in return. If I run into a bugger, I will come back to this Blog and seek advice. So far, so good.

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Excellent info here. Thank you Clueless in Cali.

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That’s a fine quote if I may say so myself…

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Thank you for this information, I reside in WA State and my father has been receiving small checks (and notices) annually for as long as I can remember. I have tried calling and of course get no where and was told in most cases I needed to show up in person. It has been a frustrating process on the estate and I guess I may be best hiring attorneys located within those oil producing states.