My parents each own half of producing leases in Oklahoma. We are all residents of Texas. They would like to sell or transfer these to me. Can we use a quit claim deed for either of these? If I buy them, will it keep the mineral rights from going through probate in Oklahoma? Also, what is the tax implication? I have read that Oklahoma takes about 28% from out of state owners. Does that mean I would have to file Oklahoma State Tax Return, or would the income be covered under Federal? Any help would be appreciated.
Probate can be avoided in three ways:
Deed now (may trigger gift tax filing requirements for your parents; also you lose a “stepped up valuation,” which could mean increased capital gains taxes if you sell later).
Trust: If your parents have a trust, the property can be deeded into it. The Trust can make you the beneficiary of that property. You achieve stepped-up valuation, which can reduce capital gains if you sell later. If they don’t have a Trust, a simple Oklahoma Mineral Trust can be created.
Transfer on Death Deed: Your parents retain ownership and all rights. Upon death, you would file a simple affidavit and death certificates, and the property becomes yours. Again, a stepped-up value.
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