I am the executor of the estate for both my father and mother-in-law. They both passed in 2021 and both had minerals in their names as individuals. The two beneficiaries would like to sell the rights instead of taking possession. The wills are going through probate and I should have the letters of administration in the next month or so.
Can someone give me a quick answer/guidance on how this is done. Do rights get transferred to the estate or as the Executor do I have the right to sell on behalf of the owner(s).
If you are in Texas, the mineral rights already belong to each estate upon the owner’s death. However, the wills must be probated in order to transfer the mineral interests. Once you file an application for probate, you have been appointed as executor by the probate court, and your letters testamentary have been issued to you, you can convey mineral interests of the estates directly to the buyer. You need an attorney to file the application for probate, to assist you at the hearing on the application, to get the letters testamentary issued and to prepare the deeds in proper form. It’s not really a do it yourself project if you want it done correctly. If it’s not done correctly, you could have future problems that will cost you much more than the attorney’s fee to probate the will.
Aimee, thanks for the quick response. I am working with a lawyer on the probate and should have the letters shortly. It is good to know that as the Executor I can convey the interest to the buyers. Thanks again.
A couple of other items to consider before going to a sale.
Depending upon the size of the estate, the beneficiaries may want to consider getting the minerals appraised. They will own them whether they take possession or not. A sale may trigger capital gains, so they need to know their basis or the IRS will consider it zero. If they have them appraised, they can take advantage of the step up value and not have as much in potential capital gains.
They could gift the minerals and get a tax deduction. Also need the appraisal for that.
They might want to see if they have any outstanding royalties due, future potential drilling, etc. The answers to those questions might change their minds.
Not giving legal or tax advice, but just have gone through several probates and those are the questions our legal and accounting advisors brought up.
Sorry that you have to deal with this. The ability to sell the minerals varies by state. In some states, like Oklahoma, court approval is required. Visit with your attorneys regarding the pros and cons of having the property sold vs. conveyed to the beneficiaries. Generally, you will not “take possession” as with the surface interest of a property. Depending on where the minerals are located they can be easy to own and may not need immediate decisions.
One of the executor’s duties under Texas law is to determine the fair market value of the decedent’s property on the date of death, or on the alternate valuation date if the estate is eligible to elect alternate valuation. You would only receive a tax deduction for gifting minerals if the gift was to charity.