Transfer oil royalties via life estate deed

Ownership and Title
1

I am trying to help my Mother (she is 90 and living on Social Security) find a low cost way to be able to pass her royalty payments to me when she passes, but have her continue to receive the checks during her lifetime. From what I have been able to gather this could be accomplished using a deed with a reserve for life estate. She and I live in Alabama, but the oil well is located in Michigan.

Could I use something similar to what is shown below to transfer royalty payments at my Mother’s passing?

LIFE ESTATE ROYALTY DEED

KNOW ALL MEN BY THESE PRESENTS

That ____________________________hereinafter called Grantor, for and in consideration of love and affection has granted, sold conveyed and assigned unto ___________________________, hereinafter called Grantee, an undivided 100% royalty interest in, to, all oil, gas and other minerals produced, saved and made available for market from the following described lands situated in Osceola County, Michigan, to-wit:

(Legal Description here)

For and during the natural lifetime of said Grantee.

Signed by the “Grantor”, _________ on October 10, 2019.

“Grantor”

THE STATE OF ALABAMA MADISON COUNTY

I, the undersigned, a notary public in and for said County and in said State, hereby certify that “Grantor”, whose name is signed to the foregoing conveyance, and who is known to me, acknowledged before me on this day that, being informed of the contents of the conveyance, she executed the same voluntarily on the day the same bears date.

Given under my hand and official seal on October 10, 2019.

Notary Public

2

Often DIY=PAF (pay attorney to fix). A life estate may be a really bad idea for many reasons. Contact a Michigan Attorney for assistance. A simple land trust may be the best option.

3

Hello deed_questions. I cannot offer advice, but I can share my recent experience.

(1) You may be able to contact a lawyer in Michigan (location of royalties) for a free phone consultation. But have your notes organized so you don’t waste their time or yours. They may have options you haven’t considered and may provide a quote for their services. It might not be as expensive as you think to get professional help.

(2) I talked to a lawyer (in a different state) who suggested “deed with life estate” as one of several solutions for our situation. We decided not to go that route for personal reasons. But I’m just saying that it could be an option if the situation is right in your scenario.

Good luck! I’m still new at this minerals ownership, but I have found many knowledgeable and helpful folks on this forum. I’m sure you will too.

4

Thanks for the input. I did contact an attorney here in Alabama and explained the situation and he agreed that the life estate route would be a good way to go. I asked him what would be the cost to do the life estate deed and he said it shouldn’t cost much more than a thousand dollars. Now perhaps it is because I have not had many dealings with lawyers in my life, but I thought that seemed like a lot to pay just to pass oil royalty payments from a mother to a son.

5

You may also want to consider just setting up an LLC with both of you as members, then there will be no paperwork to deal with, no estate taxes, etc. Might be a cleaner way to get things transferred, but a 10 min call with an attorney (which should be free for a quick consult like this for a one off thing) would give you an answer. Good luck!

6

This document reads oddly. Are you the mineral owner / Grantor who is giving your mother / Grantee the royalties for her life? Or is she the mineral owner / Grantor who is giving you as Grantee the royalties? Do you really mean for her to sign a deed to you of all her rights, reserving the royalties during her lifetime? Do you have siblings who might want some of the minerals? You should consult an attorney in the state where the minerals are located to make sure your document is in line with state law.

1 Like
7

Sorry, I see now it was not very clear. My Mother would be the Grantor and I (her son) would be the Grantee. My Mother would receive all the royalties in her lifetime and then they would go to me at her passing. There are no other siblings involved, 100% of the royalties would pass to me.

8

In that case, the language does not reflect your intent. You could consider a deed of gift by Grantor (mother) to Grantee (son) in which the Grantor reserves the royalties for her lifetime. But what does the Grantor own? Minerals or an NPRI or an ORRI or another form of royalty interest. That can affect the document wording. Also, you may need to limit her reservation to the existing lease(s). Otherwise you will need to have a procedure for handling future leases. Do you sign as mineral owner when your mother would receive the royalties and who gets the bonus or delay rentals? This is what an oil and gas attorney can help you with.

9

Thank-you for your response. As you can probably tell by now I know next to nothing about the oil and gas industry and even less about legal matters. The only information that I do have is a copy of the oil and gas lease that was filed by my great grandfather in 1939 for 1 well in Osceola County Michigan and a copy of a division order from 1996 showing my Mother with a fractional share of the Royalty Interest. I just know that my Mother has been receiving monthly royalty checks from an oil company for about as long as I can remember. Unfortunately, her memory is going now and she does not remember anything about any of this.

I contacted the oil company that is sending the checks and they said all they need is a copy of a quitclaim deed filed in Osceola County to be able to transfer the payments to me. I wanted her to continue to receive the checks for her lifetime and then have them transfer to me. The best I could tell from my research is that a quitclaim deed with a reserve for life estate would accomplish this.

10

Seek a Michigan attorney now pay a couple hundred. DIY is great, I have about a 80% success rate when I attempt plumbing repairs. If I get something wrong, I go back to the hardware store or call a plumber A mistake made in an estate plan may be irreversible.

11

Hello. A couple hundred we could probably afford. Do you know of any good Michigan attorneys that would only charge that much?