Any suggestions on which approach to take that will manage the mineral rights? My grandmother and her 3 sisters had mineral rights in Ok. Each are now deceased and all shares are split at least 7 different ways and possibly more. We have been offered 2 different leases on 2 seperate sections of the property and I am wanting to understand the best way to set this up so it does not creat a hassle to manage individual.
Craig, it’s probably too late now but they should have been divided in probate. We had an 8 way split and when probate was done we each got deeds for our share and we each manage our own leases. You could probably still do this by hiring a good O&G attorney.
Craig,
The reason the Sooners circled the wagons was primarily for the protection of the group as a whole. Family minerals are similar in that every time they are split, the long term potential is reduced exponentially if managed separately or grow to a sum much greater than the parts if managed in unison. Circle your wagons and elect a Wagon Master to manage the family plan. The form of the circle doesn't means as much as having a circle. For those who don't care to join, history tells us what will happen. This isn't rocket science and the minerals aren't going to evaporate. Think 5 years out.
Craig, Gary is a highly respected professional and you should heed his advice. My perspective comes from being part of a family that is way too dysfunctional to be able to circle the wagons!
Hutch,
Most families have their fair share of dysfunction! Putting it into a trust before the death of the owner is not usually that difficult. Building a family trust among 7 or more will be worse than herding a bunch of feral cats. And once they are all tied into the entity, the fights will commence!
Gary is right, if you can get them together even without conveying the properties into a trust or partnership it will be to your advantage. The sum of the pieces are worth less than the whole, but even with separate and distinct ownership you they can be managed together.
I suspect you need more than advice on the trust/partnership. I suspect you have some probate and ownership issues the way you worded your question.
A few thing to throw out there. A (non-living) trust that would be required will have some tax liability that may not be present in other methods. The typical living trust will pass tax liability through to the owner. Once that person passes, it takes on a new roll and is taxed at the maximum rate. Setting up a family mineral trust "should" have the same rate issues.
Assuming there was not a will directing it go into a trust, it will be divided to each heir.
I manage some assets owned by a trust, but the majority of our assets are in LLCs. 2 of which are partnerships, 1 is a sole proprietorship.
95% of the answer is going to depend on much more about the actual situation of each owner, their long term wishes and goals, and even the amount of property owned. Likely much more than you want to get into here. A lot of planning and consulting with attorneys will be needed. You'll want attorneys versed in Estate Planning, business, as well as oil and gas. You'll also want to consult with a CPA that regularly works with oil and gas properties.
Thank you Gary, Michael and Rick for the responses. I feel like I have begun to circle the wagon as I have contacted all heirs. No decisions have been agreed upon and the 2nd lease which is a broker only contacted me and I have not shared contact info with him. My sole purpose is to learn and understand to make an informed decision. To the best of my knowledge, this land has not seen any activity since the early 80's maybe and the well was capped then. No other family members have tried to pursue anything since then and I can only see things get worse as time goes by.
My thoughts are for the elder heirs to maybe agree upon the wording for a trust. Would it be best to obtain a lawyer in Oklahoma for these matters? We all reside in SC, GA, FL, and CA.
Not sure if probate even came into play but I understand that it probably should have at some point. My grandmother passed before I was born and the last living sister passed in 2005.
How can I find out what % of mineral rights were agreed upon when the warranty deed was signed? I did obtain a copy from the clerks office but is not legible 1944.
I'm not an attorney so it may be only worth the amount you paid to obtain it :)
IMO, The trust language would have to comply with Oklahoma property laws. The trust would have to have specific language on how the rights were to be managed. If the manager is not a trustee, the trust would have to have language to delegate those rights and the scope of those rights. Then the manager will be (or should) supplying copies of this documentation for each transaction or at least to each company with which a transaction occurs.
If one of your cousins came to me and said this is what Craig is proposing, I would advise not to enter their property into a combined mineral trust. (only based on what I have heard so far). But I would advise to work with him in getting the rights straight, share in the costs, share in the info, and create a cooperation and agreement when it comes to negotiating with the operators and landmen. Individually a trust or LLC, maybe. And if they want their heirs to held to some method, more than likely. I've seen too many situation where a family member abused his rights in controlling something to his benefit regardless of the wishes of the original owner or the heirs. I don't think this is your goal in any way, but these things usually last more than one generation. They have fiduciary duty to act for the benefit of all of the heirs, not just their own.
The attorneys working this should all be fit the description in my previous message and be well versed in how the situation would apply in all of the states listed.
What you are proposing may be a task where the return on investment is not worth it.
The deed on file at the courthouse should be legible. I'd press the clerk on it. However, the deed is still only a piece of it. You'll need all of the previous associated transactions on the property to clearly define it. And even what is on file in directly in the County Clerks office may not have all of the pieces of the puzzle. A good copy of that source deed would be the start.
Thanks Rick!
None of the property thus far has been divided, so it is all still one unit. One of the sisters had no living heirs to pass her portion to. I would assume this portion would basically go back into the pot and be divided amongst the other 3 sisters living heirs.
I did read an article on mineralweb that suggested splitting ownership as Michael implied in his response. The more and more I dig into this, it gets deeper and deeper. At some point I believe we have to determine if all of this is even worth the hassle.
As for abusing rights, this is all too familiar to us. All of us that have an interest in these mineral rights are currently receiving a royalty check (nothing significant) from these sisters aunt. This aunt's 2nd husband had a relative that took advantage of them while caring for them. As the story goes, she had the wording changed in this trust so the royalties can only be passed down 1 time and once they die off or have no heirs to be able to pass it down that this persons % is divided amongst her 2 sons; so basically a none blood relative ends up with everything. We all wish there were a way to contest the trust.
There is no doubt you have multiple issues to resolve. Oklahoma property laws will apply even though the owners were not residents at the time of death. Wills introduced to the probate will have to conform to Oklahoma law to be valid. For instance if a will is not signed by two witnesses, it will not be valid within Oklahoma. If both these witnesses are not disinterested parties, it could impact the validity of the will or the beneficiary of the individuals who are interested parties.
The absence of a will subjects the estate to Intestate Distribution, see below.
Again..... do some research as your definition of living heirs and the legal definition may be different. This is going be quite a genealogy task as well as everything else! :)
Again.... don't take this as legal advice, only guidance to start obtaining such advice and opinions.
_________________________________________________________
Intestate Succession Distribution
R.L.1910, § 8417.
§84213. Descent and distribution.
A. Prior to July 1, 1985, if any person having title to any estate not otherwise limited by marriage contract, dies without disposing of the estate by will, it descends and must be distributed in the following manner:
First. If the decedent leave a surviving husband or wife, and only one child, or the lawful issue of one child, in equal shares to the surviving husband, or wife and child, or issue of such child. If the decedent leave a surviving husband or wife, and more than one child living, or one child living and the lawful issue of one or more deceased children, onethird (1/3) to the surviving husband or wife, and the remainder in equal shares to his children, and to the lawful issue of any deceased child, by right of representation; but if there be no child of the decedent living at his death, the remainder goes to all of his lineal descendants; and if all the descendants are in the same degree of kindred to the decedent they share equally, otherwise they take according to the right of representation: Provided, that if the decedent shall have been married more than once, the spouse at the time of death shall inherit of the property not acquired during coverture with such spouse only an equal part with each of the living children of decedent, and the lawful issue of any deceased child by right of representation. If the decedent leave no surviving husband or wife, but leaves issue, the whole estate goes to such issue, and if such issue consists of more than one child living or one child living, and the lawful issue of one or more deceased children, then the estate goes in equal shares to the children living, or to the child living, and the issue of the deceased child or children by right of representation.
Second. If the decedent leave no issue, the estate goes onehalf (1/2) to the surviving husband or wife, and the remaining onehalf (1/2) to the decedent's father or mother, or, if he leave both father and mother, to them in equal shares; but if there be no father or mother, then said remaining onehalf (1/2) goes, in equal shares, to the brothers and sisters of the decedent, and to the children of any deceased brother or sister, by right of representation. If decedent leave no issue, nor husband nor wife, the estate must go to the father or mother, or if he leave both father and mother, to them in equal shares: Provided, that in all cases where the property is acquired by the joint industry of husband and wife during coverture, and there is no issue, the whole estate shall go to the survivor, at whose death, if any of the said property remain, onehalf (1/2) of such property shall go to the heirs of the husband and onehalf (1/2) to the heirs of the wife, according to the right of representation.
Third. If there be no issue, nor husband nor wife, nor father, nor mother, then in equal shares to the brothers and sisters of the decedent, and to the children of any deceased brother or sister, by right of representation; if the deceased, being a minor, leave no issue, the estate must go to the parents equally, if living together, if not living together, to the parent having had the care of said deceased minor.
Fourth. If the decedent leave no issue nor husband, nor wife, nor father and no brother or sister is living at the time of his death, the estate goes to his mother to the exclusion of the issue, if any, of deceased brothers or sisters.
Fifth. If the decedent leave a surviving husband or wife, and no issue, and no father, nor mother, nor brother, nor sister, the whole estate goes to the surviving husband or wife.
Sixth. If the decedent leave no issue, nor husband, nor wife, and no father or mother, or brother, or sister, the estate must go to the next of kin in equal degree, excepting that when there are two or more collateral kindred, in equal degree, but claiming through different ancestors, those who claimed through the nearest ancestors must be preferred to those claiming through an ancestor more remote.
Seventh. If the decedent leave several children, or one child and the issue of one or more children, and any such surviving child dies under age, and not having been married, all the estate that came to the deceased child by inheritance from such decedent, descends in equal shares to the other children of the same parent, and to the issue of any such other children who are dead, by right of representation.
Eighth. If, at the death of such child who dies under age, not having been married, all the other children of his parents are also dead, and any of them have left issue, the estate that came to such child by inheritance from his parent descends to the issue of all other children of the same parent; and if all the issue are in the same degree of kindred to the child, they share the estate equally, otherwise, they take according to the right of representation.
Ninth. If the decedent leave no husband, wife, or kindred, the estate escheats to the state for the support of common schools.
B. Beginning July 1, 1985, if any person having title to any estate not otherwise limited by any antenuptial marriage contract dies without disposing of the estate by will, such estate descends and shall be distributed in the following manner:
1. If the decedent leaves a surviving spouse, the share of the estate passing to said spouse is:
a. if there is no surviving issue, parent, brother or sister, the entire estate, or
b. if there is no surviving issue but the decedent is survived by a parent or parents, brother or sister:
(1) all the property acquired by the joint industry of the husband and wife during coverture, and
(2) an undivided onethird (1/3) interest in the remaining estate, or
c. if there are surviving issue, all of whom are also issue of the surviving spouse:
an undivided onehalf (1/2) interest in all the property of the estate whether acquired by the joint industry of the husband and wife during coverture or otherwise, or
d. if there are surviving issue, one or more of whom are not also issue of the surviving spouse:
(1) an undivided onehalf (1/2) interest in the property acquired by the joint industry of the husband and wife during coverture, and
(2) an undivided equal part in the property of the decedent not acquired by the joint industry of the husband and wife during coverture with each of the living children of the decedent and the lawful issue of any deceased child by right of representation;
2. The share of the estate not passing to the surviving spouse or if there is no surviving spouse, the estate is to be distributed as follows:
a. in undivided equal shares to the surviving children of the decedent and issue of any deceased child of the decedent by right of representation, or
b. if there is no surviving issue, to the surviving parent or parents of the decedent in undivided equal shares, or
c. if there is no surviving issue nor parent, in undivided equal shares to the issue of parents by right of representation, or
d. if there is no surviving issue, parent, nor issue of parents, but the decedent is survived by one or more grandparents or issue of any grandparent, half of the estate passes equally to the paternal grandparents if both survive, or to the surviving paternal grandparent, or to the issue of any paternal grandparent if both paternal grandparents are deceased, the issue taking equally if they are all of the same degree of kinship to the decedent, but if of unequal degree those of more remote degree take by representation and the other half passes to the maternal relatives in the same manner; but if the decedent is survived by one or more grandparents or issue of grandparents on only one side of the family, paternal or maternal, the entire estate shall pass to such survivors in the manner set forth in this subsection, or
e. if there is no surviving issue, parent, issue of parents, grandparent, nor issue of a grandparent, the estate passes to the next of kin in equal degree;
3. If the decedent leaves no spouse, issue, parent, issue of parents, grandparent, issue of a grandparent, nor kindred, then the estate shall escheat to the state for the support of the common schools; and
4. For the purpose of this section, the phrase "by right of representation" means the estate is to be divided into as many equal shares as there are surviving heirs in the nearest degree of kinship and deceased persons in the same degree who left issue who survive the decedent, each surviving heir in the nearest degree receiving one equal share and the equal share of each deceased person in the same degree being divided among his issue in the same manner. The word "issue" means lineal descendants.
R.L. 1910, § 8418; Laws 1984, c. 233, § 3, eff. July 1, 1985; Laws 1994, c. 8, § 1, eff. Sept. 1, 1994.