Fairness of family trust?

General Mineral Rights Discussion
1

Greetings all. Our family owns mineral rights in ND. The rights are from my Grandparents ranch, they are deceased. My Uncle wants the heirs to begin a trust. The money is to go to eight cousins. I am one of the eight. My Uncle claims the money is to always go to a blood relative. The seven other cousins have children. I am gay and do not have children. Therefore, Uncle's rule of only blood relative is unfair to me. I have asked him about the fairness and he claims I am being petty. I believe this new trust could be written to give each cousin control of their monies. For instance, at my death my share go to my partner and or my neice. However, Uncle claims my Grandparents wanted the money to go to only a blood relative. He says me being childless is simply bad luck. He is pushing me to sign the trust. We expect the land to be leased sometime in the near future and I don't want to lose out. That said, I really feel I should not be in the trust. I don't know the ramifications of that decision.

Am I being a sore loser? Does the trust have to be written in only one way? I believe my Uncle could have the trust written to accomodate me. He is the last of four children. I know if my Mother was alive..... Anyway, this forum has many brilliant members. I look to all of your for help. I am unable to hire an attorny as I live in disability. Thank you, Rod

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I'm not fond of trusts in any case. I suggest that you not put your minerals in the trust to the benefit of people not of your choosing. I don't see a downside to not putting your minerals in the trust unless you consider the displeasure of family members scheming to secure your mineral rights for themselves and their progeny. To my way of thinking there is no downside, you can still join with the trust in lease negotiation. As for what ancestors wanted, if they wanted a trust they could have formed one way back. You should also consider that you might not agree with a lease that the trustee would sign. Just because someone wants to administer a trust doesn't mean they have any talent for it. If you have a financial institution administer the trust, there are posts on this site about lease offers being ignored and fees that eat up the greater part of the income from the trust. Once in a trust you may not be able to get back out. I recommend a post by chris wilson, google search and go to the third page at the bottom, where he tells of his experience with their trust. Locked in, fees, ignoring offers and if you hire a lawyer to break the trust the trust hires a lawyer with your money to fight you, a no win situation. Do what is best for you.

3

I don't think you can be forced into the trust against your will, but I'm not that familiar with the law and don't know the details of how your grandparents left their estate.

RW, can you find the URL and past a link in a reply? Google personalizes search results for location and where the person searching has been before. We might not find the same article as easily as you.

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We have around 3000 acres of mineral rights in wyoming that is divided between 13 siblings; one of the sisters wanted everyone to join in a trust with her, however, the dialog was unacceptable to several of us, so we did not sign; she was a bit greedy to say the least and wanted to much control for herself and her persona; family! In our's and our lawyers opinion the way her Trust was worded she would have a claim to more than half of it all for herself! Unacceptable! We developed an LLC for the rest of us! however, as long as you have proof documenting your ownership of a share, you do not need to be a party to either a Trust or an LLC. If you do not want to be a part of their wantings you can go it alone with no problem. If an oil company is interested in your holdings they will lease yours, from you, regardless of what anyone else does! Be sure to check your share ownership; if need be have an attorney advise you on the ownership status of your share! Fred

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Rod, unless the minerals have been divided and each cousin owns a 1/8 interest at a certain depth, your part will go into the Trust. As a simple way to explain ... On an undivided interest, what 1/8 would you say is yours? The 1/8 that's 100 ft under the surface ... the 1/8 that's 1,000 ft under the surface, or the 1/8 that's deeper than 1,000 ft under the surface, etc., etc. That's right, you can't say. None of the owners can say what undivided 1/8 belongs to them.

I believe that what your Uncle is referencing with his "blood relative only" issue is referred to as a Joint Tenancy with Rights of Survivorship (JTWROS) ... a way to convey ownship.

But, in this case, when an owner dies, I don't believe their interest goes to their children ... I believe their interest is equally divided among the remaining living owners, and so on ... providing no severance has occured before the death (see Survivorship Agreement).

Survivorship Agreement ... I believe that your Uncle's type of conveyance can be overridden through a simple Survivorship Agreement. It's a document that lists provision(s) that everyone agrees to and would like to make part of the Trust. This agreement can be made binding on Owners’ respective heirs and personal representatives. All owners have to sign, have notarized and two witnessess.

For example: if an owner wants to sell, gift or assign, exchange, convey, mortgage, encumber, partition, subdivide, etc. their interest or part of their undivided interest (to anyone ... children or significant other), it can be conveyed through a provision in the Survivorship Agreement. The provision can state with everyone's mutual consent and in writing.

If you want to carry this a little further, if any owner wants to sell their partial interest (land or minerals) they will have to give written notice to the others of all the details of the offer, at the same price and terms as the offer set out in the notice. In other words ... a Right of First Refusal.

I don't think your Uncle has to change the Trust, and I don't think you should leave yourself out of the Trust ... no way! Maybe you can implement a Survivorship Agreement that will, hopefully, allow you to dispose of your interest(s) any way you see fit.

This is talk from Texas, and according to the little bit I know about Texas law.

Pat
6

Rod, I understand what your uncle is attempting to achieve (prevent dilution of the interests, and keep the minerals within the family). However if you don't want to participate in his trust you should not need to.

The full answer to your question depends upon the current status of the title to the minerals. Yet in general, if your Mom was an heir to the Gparent's minerals, and you are an heir to your Mom, you do own some of those minerals (regardless if title is in your name now, or not). Period. You can decide to deed them into this trust, or not. Period. So decide what is most important to you before you sign anything.

Though to claim your share of the minerals you may need to go through some legal work to convey that interest out of the name of your Mom & Gparents. This is where it's important to know what the current status is on those minerals. There will be time and costs involved if you need to do probate work on one or both. So the size of your interest (your NET acres) will dictate if it is worth going that route. Good Luck.

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The post by Chris Wilson was posted Feb 11 - 2011 in Alan Herauf's "Mineral rights in a family trust" thread. I am grateful to Mr. Wilson for sharing with us his experience. I had no idea what was going on.

Reagan "R.T." Dukes said:

I don't think you can be forced into the trust against your will, but I'm not that familiar with the law and don't know the details of how your grandparents left their estate.

RW, can you find the URL and past a link in a reply? Google personalizes search results for location and where the person searching has been before. We might not find the same article as easily as you.

8

Rod, there are many types of Trusts ... an Revocable and Irrevocable are two of them. Since you have a disability, a Trust could prove to be a "supportive" tool, depending on how it's structured. Trusts are managed in a fiduciary manner.

Sounds as though you need to know more details about your Uncle's estate plan before making a decision. And, yes, it is important to know what the current status is on those minerals. Know the size of your NET acres.

Thank you.
Pat

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Ms. Malone, in Mr. Wrights case, with the purpose of the trust to make certain that the mineral rights pass only to blood relatives, I think it likely that the proposed trust is going to be an irrevocable one.

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Here's the link http://www.mineralrightsforum.com/forum/topics/mineral-rights-in-a-family

Thanks RW