The check that I have been receiving each year comes from the trustee (which is my uncle's) bank account. It seems like he receives multiple individual checks from these oil properties and then he deposits them to his bank account that is specifically used for our trust assets. He is the “Executor” as well as the “Trustee” appointed by my Mother. I addressed my interest of making an offer to him; and, below is his response:
I don't think you will want to work through the tedium of documenting the transaction. I certainly will not document it as it is doubtful that I could so without spending time and money. It will require a trip to Texas and finding counsel to work through. There are too many individual properties to make the transaction simple and I'm presently negotiating a bid that may not be the best price but the buyer is very knowledgeable and will carry the entire burden of documentation so that we net a straight and clean amount of $26,000.
I certainly cannot recommend that you acquire the property as it will be a continuing burden of management for you and as more of the wells are capped the revenue is totally dependent upon the world market price going higher on what will be a diminishing volume. There are buyers for the units now at a price of 5 times annual income with a reserve for diminishing volume of about 10% to 20%. There also remains a taxable capital gains tax due on the sale, even if it is to you. The original estimated value in the estate was about $5,000. So a sale at say $25,000 will require you to realize a capital gain of ½ of $20,000, even if you buy it.
My thought on the first paragraph:
I don’t think another trustee outside of the family would be interested to manage a trust with such a small amount of money (having to find another trustee that may be interested will not be easy, and most likely will not be a good one). If I am going to make an offer to match the current offer on the table, why does this trustee need to find another trustee to replace himself?
My thought on the second paragraph:
This trustee has never made any trip to Texas himself, in order to find out what the details are about these wells. He had stated many years ago that these wells would be drying up and that would be the end of it. Instead, around 8 years ago, the annual revenue of these oil properties started producing income of about $5,000 - $6,000 annually. Recently, when this trustee wished to remove himself from this duty, he had already received 6 offers on the table. I am just thinking…somebody must know something is happening on these wells; otherwise, no corporation would want to put in an offer at 5 times the whole lot’s accumulated annual income. Unfortunately, it will be hard to reason out with this trustee. He is approaching 80 years old, and I have to be sensitive about challenging his decision on what is best for these properties. However, I don’t want to just sign the document and let the sale go through without understanding exactly the situation of these wells.
How should I go about it? Why is there a need for a replacement trustee? Can I just find a certified person to process the document transfer, along with sending a check to cover the one other beneficiary’s (which is my sister's) share? In this situation, what kind of expertise should a person have in order to handle documenting all of this? Should I look for an oil and gas attorney in my area or should I look for an attorney in Texas? Do I need to find a landman, if so, how much approximately will it cost?