Can someone recommend a process for adding my only child to the mineral interests I own in Texas, AR and NM. I prefer not to form a trust. I’m looking for ease of maintaining and managing future leases, if I am unable to do so, and ease of transition at my death. Thank you!
All of those states allow for Transfer on Death Deeds (TODD). These deeds allow that upon the grantor’s death, the conveyed interest becomes owned by the grantee. Further, while the grantor is alive, the grantor can lease or even sell the interest without the consent of the TODD grantee. You can even change your mind and revoke it.
Granting power to lease prior to death will require documentation. Alternative to a trust, assign the minerals to an LLC, with yourself as the single member and either you and your child, or just your child, as the manager. Or the LLC can be owned jointly by you and your child (gift of some percentage to child). The LLC should have an agreement empowering the manager to execute leases, sell assets, etc. An attorney can help with this to make sure that everything is covered. Or an LP, with an LLC as general partner although this is a little more complicated. You will need to filed deeds from yourself to the LLC or LP. Your will can assign the interests to your child. There will not be a need to filed deeds at that time. This would also allow your child to discuss issues with the oil company as otherwise the company may refuse to talk with anyone but you. You also need to discuss the income tax treatment with your CPA if you both are owners.