I'm aware that in Texas, a property owner and his/her beneficiaries can avoid probate via an Enhanced Life Estate Deed, a.k.a. "Lady Bird Deed."
I'm interested to hear from anyone who has done this with NPRI rights. Are NPRI rights considered to be property? Can one bequeath them via an Enhanced Life Estate Deed?
I appreciate any information or referral to information that is in the public domain on this issue....not ready to hire an attorney yet...at this point just want more general information.
An NPRI is a property interest that can held either as a present estate or a future interest. As far as I’m aware, Lady Bird deeds are usually only used to achieve favorable Medicaid treatment, but life estates of all kinds are often used to avoid probate. In a regular life estate the transferor would be the life tenant of the NPRI, and the transferee would have a vested remainder in the NPRI (or a contingent remainder if a Lady Bird deed was used). Of course, this is general and the particular situation may vary.
Andrew, thank you for your reply! Not too many folks interested in this one, it seems. Since posting this, I've spoken with a land man with whom I have worked in the past, and he says that he has seen Enhanced Life Estate Deeds used for mineral interests in Texas, and that oil companies do recognize them, which would be consistent with their procedures consistent with Texas laws and statutes. So, I'm assuming I can do this without a problem. We'll probably ask a few of the oil companies and see what they have to say before I proceed. Have you ever used one before, or seen one used for mineral interests, in any other state?
An NPRI is a property interest that can held either as a present estate or a future interest. As far as I'm aware, Lady Bird deeds are usually only used to achieve favorable Medicaid treatment, but life estates of all kinds are often used to avoid probate. In a regular life estate the transferor would be the life tenant of the NPRI, and the transferee would have a vested remainder in the NPRI (or a contingent remainder if a Lady Bird deed was used). Of course, this is general and the particular situation may vary.
This is common in Kansas, although there is a rule against perpetuity so these must be written very specifically to avoid legal issues.
In Texas an NPRI is a vested real property interest, so there is no Rule of Perpetuity issue.
I would discuss the issue with a good title company, but based on the definition of Texas law, it appears you are likely able to convey this interest by lady bird deed.
Kitchen, thank you for your informative reply; this is helpful.
I would be very interested to hear what you have learned regarding an Enhanced Life Estate Deed. I am in the process of attempting to "draw up" the deed that will allow my mother's Royalty Interest (in Texas also) to pass to my sister and I in equal shares upon her death (and not to my brother who is on disability), while allowing her to continue receiving the interest payments and have every right to do with it as she pleases while living. This is the last piece of her "real property" we have to deal with in order for her estate to avoid probate completely, and I am confident from what I have learned so far that this is the instrument we want to use, however, I have yet to find a good sample of an Enhanced Life Estate Deed that pertains specifically to oil and gas mineral interests. Once I have the wording and structure as I think it should be I will consult with an attorney before recording it with the county clerk's office.
I have numerous calls in to the operator for some guidance in this matter, but it is a very large corporation so we haven't had much luck communicating with them.
I will be happy to post what I have so far if you are interested, or, I would greatly appreciate you posting what you have used.
If I don't see a reply I will copy this and start my own discussion regarding this deed.
I do not live in Texas. My estate attorney where I do live had some issues with the TX Enhanced Life Estate Deed because it had some differences from the life estate deed in the state in which I live. So, I have not yet pursued this route. I have a call in to an oil and gas attorney in my state, who is licensed in Texas also, and we've talked briefly, but I was on vacation at the time and we left it that I'd call him when I return. I haven't done that yet.
I did run this by the head land man of one of the companies who holds the lease on one of the properties in which I hold interest. You might be interested to know that he didn't even know what I was talking about when I said "Enhanced Life Estate Deed", but when I sent him some information, he "got it" and said that it would not present any problems to their company, and that they would honor it.
By all means, do start another thread on this subject. As you can see, my post didn't garner many responses. I would love to see more discussion on it, whether in this thread, or another.
TheTX Enhanced Life Estate Deed is a complicated animal, and there’s really no reason to try to do it youself instead of hiring a Texas attorney that specializes in estate planning. A couple hundred in legal fees is a small price to pay for certainty with something as important as family property and inheritance.
Andrew, do you have any experience with the Enhanced Life Estate Deed for yourself, or know anyone who has? If so, would appreciate any details you care to share. And I don't mean to draw one up myself. Just want to know what's so complex about it from your POV. Would be helpful to have as I talk with my attorney. I've found one who is steering us toward another path, but we've got more talking to do before I decide. Thanks for any insights you can give.