Good day to all. I've been receiving royalties since late 2014. My wife and I were separated at the time and are in the process of reconciling (I praise God for this!). How can I make sure that my children will get the royalties when I'm gone?
Also, is there a way to pass them on to my children while I am alive? For example, my wife and I reach a point where we are financially secure and would rather have the kids receive them than I.
At first I thought I would just give them the cash, then I thought I would still be responsible for the taxes. Then I thought that if they get the royalties, they can pay the taxes.
Any help would be very much appreciated and I pray you all have a blessed day!
If the underlying asset is your separate property, the you can leave it directly to your children in your will upon your death After probate, the probate record can be filed in the Texas county or you will need ancillary probate in most other states. To avoid this process, you can deed the asset to your children and retain a life estate in the revenues that will automatically terminate on your death or at a specified date. Or you can file a gift deed to your children at any time. Depending in the value, you may need to file federal gift tax return in the year you file. Unless you are positive that you want to permanently give up the income and/or control, it would be better to make annual cash gifts. You cannot give the royalty income on an annual basis as you want. You can also give only a portion to your children at one time and more later. I urge you to consult an attorney to make sure you consider all the options and implications of each choice and that any transfer is done correctly depending on the state where the assets are. It is best to use an oil and gas or real estate attorney in the state where the asset is, rather than where you live. I refer to asset as you may own minerals, an overriding royalty, term royalty, npri, etc. Finally, if it is joint asset or marital property, then you will need your wife's consent with respect to her share.
Thank you for answering my question. It does however leaves me with another, one I am embarrassed to ask in light of this tech age, but I’m not sure what I am in regards to our oil and gas lease.
My older brothers got all the paperwork and I was extremely naive at the time. I was given the gist of the docs and told “sign if you want money every month.”
I receive the Mineral Rights Newsletter but it’s like a foreign language sometimes.
You mentioned “owning minerals, overriding royalties, term royalties, npri’s, etc.” All I know is that the land belonged to my Great, Great Grandfather who homesteaded the land in Texas, which is still in the family, none of which I know, and that in 2014 someone from Chesapeake Energy tracked down some 150± of us Chilton’s (and others) and presented my brothers, who represented 5 of us, with a lease deal.
Knowing all that, what would that make me? I don’t personally own the land. I never knew who did. I don’t even know who owns the land now, I just know we have the last names.
I truly appreciate your depth of knowledge and your answer. I will take your advise about getting a Texas attorney for help. I realize just how little I know, and that’s just about this topic!
It’s tragic, when I was 18 I thought my dad were dumb. Now that I’m over a half century I realize that my dad was genius! I sure miss him.
By the way, when I filled out my profile, which I just re-read, I put “Mineral owner” as a guess.
You are a mineral owner. If the surface is no longer in the family, the minerals were severed. If the surface is some but not all descendants the family, then the minerals are at least partially severed. You at least own mineralss and maybe you do have some surface interest. Ask your brothers for copies of the lease and other information. They may have a title run from Chesapeake landman showing the descendants fro your great great grandfather through the generations. Get a legal description of the gross acreage. Did you sign the division order and are receiving royalties directly? If not, ask for the division order(s), copies of check stubs and royalty allocation. Then you can identify wells on RRC gis viewer and find copies of permits, completion reports and look up production volumes. It is easier to learn when you are looking at your own wells.
You could also deed the minerals to your kids now and reserve a life estate to the income. However TennisDaze raises some tax and gifting issues you need to look at before deciding.
TennisDaze recommends getting a Texas oil/gas attorney but because I’m in California, wouldn’t I need a local attorney that is familiar with California laws regarding wills, trusts, and deeds?
Deed them now and reserve a Life Estate, Have a current Will denoting anyone you do not want included,
My parents did this year before their demise.
I'm not licensed to offer legal advice, but I think you would be wise to think about "what ifs." Like, what if things don't work out between you and your significant other? She may not, then, feel so financially secure!
So while everyone is in a "giving" mood, I will suggest that you deed your minerals now .... a wise and simple strategy!
Good luck,
Pat
Thank you all for the information! You all are a great community of people. the only problem I have is the language. When Tom an you say to "Deed your minerals" and "Reserve a life estate."
Are these things I can google? Is there a better source of info? Also, are these things that should be done in the state I live in or the state where the minerals are?
Again, thank you all so much!
P.S. Does anyone know how I can find out just how financially secure Chesapeake Energy is in Texas?Last year they had a period of about 4 months were they stopped production and when the started back up there were 5 new wells. I fear it will happen again, especially in light of taking many rigs out and the depressed oil production vs demand.