Do I need an attorney or an accountant?

Law & Legal
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Hello!

I am a looking for advice/guidance on how to look into what seems to be around 900ish different wells, mostly in TX but some in OK, MS, KS and LA that my mother left for her three children (of whom I am the youngest) in a trust that has been established and paying out to us 13 yrs now. The PR of the trust is my Aunt, who also receives oil royalties, along with my mother’s other 2 surviving sisters. Their rights were distributed evenly so they receive their part and the three of us split my mother’s 3 ways; minus some well my mother sold to pay for her treatment upon her cancer diagnosis (not quite sure how much it was, unfortunately).

Long story short; my aunt has been taking care of the trust for us for years and despite my efforts to take it on multiple times previously (and was brushed off each and every time by her) she has decided she no longer wants to be burdened with it. Which is totally fine and understandable.

My mother originally wanted me to be the co-trustee with my aunt because out of the three of us kids; I am the most capable of and interested in numbers and challenges. However, upon her passing; it was all too much for me so my brother (the eldest) was appointed.

Anyway, my aunt and I last spoke in February and it was decided that I would be appointed as the co-trustee and she would teach both my brother and I the ins and outs of how everything worked before stepping away.

I don’t know what changed from then to October or so. All I know is that one day, the checks to our accounts were coming from my brother’s name, not my aunt’s. She had apparently convinced him to keep quiet about them transferring everything over to my brother behind closed doors.

In the end, it’s fine because my brother is completely overwhelmed and happy to let me step in and take this on. But when I contacted my aunt recently with some questions… I found out that she won’t even talk to me? Bizarre, I know. Not only that but she’s been pushing my brother to go sign paperwork at the bank that releases her name off the account. She said that my brother “seems to be doing a great job and doesn’t need her looking his shoulder anymore”?

We haven’t even changed all the addresses with all the Operators and Counties and we still haven’t been able to file our taxes for last year because we’re missing 1099’s?!

I am not yet legally a Trustee, only a beneficiary so I am unable to obtain the things we need and my brother; bless his heart but he’s clueless. And I mean clueless. He picks up the mail and deposits the checks and sends off the taxes owed as soon as he gets them. But he’s not recording what’s coming from where or who he’s done change of address with or hasn’t and I’m left trying to sort it all out.

And now my aunt, after realizing she wasn’t willing to speak to me or help us (which is her legal responsibility as a Trustee - I don’t care what you’re opinion is of me, you have to keep me informed as a beneficiary; that’s her duty). She has never sent us an accounting, despite my asking for it multiple times over several years. She never answered to a deposit discrepancy that occurred a few years back, just cut communication with me, and now she wants off the bank account and trust immediately; knowing full well that my brother has no clue what’s going on and is unwilling to talk to me, who has been researching and learning all of it as best I can.

My aunt is a good, honest person. She really is… but her behavior is making me wonder if maybe there’s something shady she did and is worried that I will find out if I get too involved.

My question is this: do I need an attorney or an accountant to look it over and see if there’s suspicious activity? I know I need an attorney to file my appointment of trustee and her resignation; and from there we have a new Certificate of Trust that lists my brother and I as co-trustee’s; and we will have to send that out to all the counties and operators as well; along with her resignation. But I don’t think I need an attorney to do that for us. I really only want/need to use a lawyer if we find foul play on my aunts behalf. The rest, I figure I can use sites like EnergyLink to communicate with all our Operators.

I also don’t have any deeds or division orders. I have a whole binder of Quit Deeds which is from transferring the properties out of my mother’s estate and into her trust. But ironically, they don’t state the land or properties being transferred…

I feel like I have JUST enough information to maintain the money we are receiving currently but not enough to compare it to what it was originally or previously. And I can’t help but wonder if that’s on purpose.

Any thoughts? Advice? Lawyer referrals?

P.S. I have schedule a consultation with an estate attorney here in Idaho, which is where the trust was orgianted from; but the rights/royalties/wells are not. I still want a ID attorney though yeah?

Oh… and what’s a landman? J/k… kinda!

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You need a lawyer with a license to practice in each state where the properties are. The properties must be conveyed to the trust. And a lawyer needs to prepare the documents and file them in the counties where the minerals are located. A landman is a person the reviews the records at the court house to come to a conclusion on the rightful owners. We also negotiate oil & gas leases, right of ways, & other facets of the oil & gas business. We cannot legally prepare legally binding documents for others. You need a lawyer to help you through your situation.

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Start with an attorney in the state where the trust was created. Hopefully it is in one of the producing states. You may be looking at removing your aunt as trustee and demanding an accounting. Not pretty but may be necessary.

This post is not legal, investment or tax advice, it is for discussion purposes only. Reading or responding to this post does not create an attorney-client relationship.

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As to having your aunt off the bank account, there is no harm in that. In fact, that’s probably a good thing. In the event something nefarious was going on, you want her off the account. But, don’t sign a release releasing her from any liability. I would agree that you start with your Idaho lawyer and then branch out from there to the other states.

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Your post Is confusing. This is clearly a complicated situation. Do you have a copy of the trust document? Do you have copies of the recorded deeds into the trust? Most often the royalties are paid in the name of the trust and deposited into a bank account in the name of the trust. The trust makes distributions to the beneficiaries by checks in name of trust. Oil companies issue 1099’s to the trust, not to the beneficiaries. And the trust files federal and state tax returns and it issues K-1’ s to beneficiaries to report on their tax returns. You indicate that royalties are being deposited into your aunt or brother’s personal bank accounts and paid by them individually to you. You need an estate attorney to review the trust document and deeds and advise you about rights as a beneficiary. And the former trustee should have retained the check stubs, 1099 forms and tax returns and should be required to give them to the new trustees.

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IMO, having a person in a position of trust (trustee) that takes the position seriously and understands their obligations to the beneficiaries of the Trust is imperative to not only keep all of the participants informed as to what is happening within the Trust but also to minimize the chance of having Trust assets be misappropriated in manner where some or all of the beneficiaries are financially harmed.

There are five main do’s and don’ts for a trustee. 1)The Trustee must not mix trust assets with their assets. The trustee must always keep their checking accounts and investments separate from the assets of the trust. 2) The Trustee must not use assets contained in the trust for his or her benefit unless the owner authorizes the trustee to do so. 3) The Trustee must treat all trust beneficiaries equally; they may not favor any one beneficiary one over another (unless the owner of the trust allows it). 4) The trustee must ensure that trust assets are invested in a way that is both prudent and conservative, in such a way that will result in reasonable growth while exposing the assets to the minimum amount of risk. 5)The trustee is responsible for keeping full and accurate records, filing all necessary tax forms and making reports to beneficiaries as the trust requires. If the current trustees are violating any or all of these obligations, you may have a problem that needs to be corrected.

IMO, most family members do not take on these types of obligations with the express purpose of mishandling and/or misappropriating funds in a manner which harms the beneficiaries. However, if the family Trustees are not aware and/or ignorant of their obligations, problems can very well crop up that does harm to some or all of the beneficiaries.

Given some of the concerns you have in respect to the management of the Trust it may very well be time for someone to step into an oversight position and do an audit of the Trust and the manner in which it is being administered. This can be done by a CPA that has experience with Trusts are through an attorney with experience in Trusts. It may even require assistance form both.

Although the Trust will have to incur the cost of such assistance, you need to think of it as an investment not an expense, since the damage being done if improperly administered can far exceed the investment that would yield a written audit report for you and your other family members that have an interest in the assets of the Trust. Depending upon what is determined in the report, a clear course of action going forward will become evident.

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Agreed. You also need to check your mother’s probate proceedings. Hopefully the Inventory & Appraisement has a schedule identifying all of the mineral properties (and maybe even the specific mineral interest your mother owned in these properties). If there is no such schedule, then the trust documents should identify these interests. Since mineral rights are an interest in real property, there must be recorded deeds into the Trust in the counties where the minerals are located.

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Hello, Thank you for your reply and apologies for taking so long in getting back to you. Yes, I have a copy of the trust document. No, on the recoreded deeds into the Trust; I think. I have a big binder titled Quit Deed Claims which appear to be Quit Claims from my Mother’s Estate INTO her Living Trust… are those the deeds? The bank account the royalty checks get deposited into is our trust account. I say my the checks used to come from my aunt because as beneficiaries; we use Zelle for the monthly disbursements and my aunt was the Signor of the account, as she is the Trustee. She and my brother are co-trustees actually. My brother just doesn’t know what’s going on and my aunt is sick and getting older; so she no longer wants or really should be overseeing our money for us. Instead of bringing me in (i.e. making sure I became co-trustee in her place, so we could do a change of ownership ALONG with all the change of addresses we’re still working 6 months after this transition began) while transferring everything over to my brother; which is less complicated because again; the Certificate of Trust lists both of them - but she never really listed him on any of the leases or anything up until now that she wants off. So when I say the checks are coming from my brother; I mean my October Zelle disbursement suddenly had my brothers name and not my aunt’s because they swapped to make him the Signor on the account. She initally stayed on the account to check in on how he’s handling it; but has recently decided that he’s doing a great job and there’s no reason for her to be on the account anymore. My first thought on this was that this was due to potantial foul play on her part but I have come to the conclusion that it’s likely due to the fact that she is wanting to make sure everything is set within her own will and having her name on our trust account may complicate things as far as her list of assets and probate stuff goes. I have spoken with an estate attorney and am currently in the process of retaining a trust attorney. The estate attorney is retired but he is also the one who help establish the trust to begin with. We have all the documentation that we for getting her off (resignation of Trustee) and putting me on (Appointment of Trustee; the appointment coming from my brother, which is valid), my Acceptance of Co-Trustee and a new, updated Certificate of Trust listing my brother and I as co-trustees. The problem now is that my aunt has given us a box of paper work relating to the trust; but it’s mostly apprasials for the past few years, maybe 2 years of bank statements, and change of address forms and addresses? Oh, and that Quit Deed binder. I’ve been working to create a list of all the Companies we get checks from that includes our owner # and the companies contact info. But there’s still quite a few companies that still haven’t received a request for change of address - leaving me to assume those checks aren’t coming to us. You’d think she would have already had something like this already in place after overseeing the trust for 13 years right? A list of Companies and owner #'s? So there’s no lease documents, at all. No acccounting has ever been sent to us, ever, even after specifically requesting one in recent years. We have no division orders, no records of bonuses received from leases over the years, no excel spreadsheets; whatsoever and no willingness to communicate; with me in particular via any form except just recently; email. And even then she isn’t giving me direct answers to very specific questions; just generalized info?! The attorney I am hoping to hire (hasn’t returned my phone call for 3 days after leaving her a VM indictating I would like to employ her services said that once she resigns; she will have no fiduciary responsibility to provide such documentation so we can’t let her resign until she provides it. Which also means, I can’t be added on until then either. And contacting these companies to verify change of address without the authorization to do so has been hit or miss. The attorney did say that if there were any (and I’m not even trying to go there just yet) self interest or benefit that may have occurred; she would still be held accountable for something of that nature beyond her resignation; so that’s good. My concern at this point is; what if she just doesn’t have these documents we need? With no real reason to suspect there was any mishandling of our assets; do I really want to slap a court order on my aunt who was doing us a favor the past 13 years? Especially when she’s in bad health? At the same time; we’re talking about a woman who sued her oldest sister for mishandling their trust and took it over for all four sisters; then broke that trust; in m y grandmother’s name and created individual trusts for all four of them as well. I think it’s fair to say she knows trust stuff pretty extensively. Yet she doesn’t have annual accountings? That’s like trustee 101! I am apprehensive to send an informal request for the documentation we need; but she has to understand that if she won’t speak with me; I need the proper paperwork to figure it out without her. So i don’t know what to do. She says she has sent us any and all paperwork she has. But how does 13 yrs of paperwork for 600+ mineral royalties fit into one box? I’m starting to think that by best way of obtaining control until we are able to sort this out with her is having my brother give me Durable Power of Attorney so I can act in his name as Co-Trustee to get the information I need. He will still manage his bank accounts and money obviously; but if I am able to contact the county assessors and companies to obtain records of transactions, division orders and active or inactive leases; I can do a lot of this without my aunt. Which I think might be my best bet for now?

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Agree with you totally Jim . These things tear families apart . Best to catch it sooner than later.

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Just my 2 cents. I had a trustee of my mothers estate. The trustee had been my mom’s mutual fund advisor. We were not dealing with mineral rights but a sizable amount of cash, properties and investments. My Mom sold her business shortly before she got sick and put everything into a living will. It was a disaster. My Aunt was granted a life estate in a big property and she and the trustee colluded and used up most of the estate. Everything was to pass to me after my Aunt’s death. My Aunt was my Moms identical twin and had my Mom’s I.D. they didn’t report her death to any of the investments and were selling off properties and spending the money. I ended up going through 3 different law firms trying to get it straightened out. The problem was the lawyers would start out helping me with clear goals of litigation. Then before long I could feel they were not helping anymore. I assume with the Trustee having access to my Moms money they were being paid more than I could. This went on for over 3 years. I was trying to get an accurate accounting and was suing the Trustee for breach of fiduciary duty. This was in Az. while I lived in CA. As you can imagine this was an emotional drain that took a huge toll on me. I ended up going to the library learning how to write motions for order and went pro per in court. I wrote a brief and also an appeal, all hand written because I didn’t have access to a computer. I did not prevail even though I was clearly in the right. So my point is unless you really trust your attorney get a forensic accountant first. Find out where the money went and what happened and then get an attorney.

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Thank you for your reply. My mother passed 13 years ago, which is when probate happened and her assets were then turned into an Estate; which was then transferred into a trust. All the mineral rights have been claimed and transferred into her Trust. My question was more a matter of how to go about finding ALL the assets of the trusts. It seems to me that we have only been giving what she wants to give us; not everything. Nonetheless, thank you for that guidance.

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You can do a search of the county clerk’s offices for those counties/states where you suspect she may have owned minerals. Most should have online search capabilities but may not go back far enough so you would have to actually go to the county clerk’s office. Some abstract offices will do a search for a fee.

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For Oklahoma, try www.okcountyrecords.com. It has most of the OK counties. You can hunt for free, a small amount to print.

For TX, try www.TexasFile.com, www.courthousedirect.com, https://www.idocmarket.com, http://mineralholders.com You are looking for not only producing minerals, but also non-producing.
Other states? Other folks can help.

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