How are Mineral Rights Passed Down?
A will is a legal document expressing an individual’s wishes about how they would like their property managed and distributed after death. It is common to think of these properties as things you can see and physically touch. But mineral rights can also be passed down, giving the recipient ownership of resources under the ground.
Understanding what mineral rights are and how to pass them down is imperative in Texas, where the resources underground are at least as valuable as the land above them, if not more valuable. The experienced oil and gas lawyers of Lovell, Lovell, Isern & Farabough, LLP have extensive experience helping Texas landowners and mineral estate holders with the transfer of mineral rights. Our legal team can help you work through discrepancies and develop a risk management plan to prepare for passing down mineral rights.
What are Mineral Rights?
Individuals can own underground resources, such as fossil fuels, mineable rock, and metals. This ownership is known as mineral rights. The owner has rights to the resources that are under the surface.
Mineral rights differ from surface rights. A person can own the surface rights of a property, including the land, structures, and vegetation, but not own the mineral rights.
If you own mineral rights, it is essential to understand how these rights or ownership can be passed down, just like the ownership of other properties, and the steps you should take to make the transfer to the recipient more manageable.
Passing Down Mineral Rights
Mineral rights fall under two categories, producing and non-producing. One or more active wells regenerating royalty revenue refers to yielding or producing minerals. Non-producing minerals generate no royalty revenues and have no active wells.
If you intend to pass down mineral rights, it is advantageous to do so before death. This process can happen by deed, will, or transfer.
Preparing to Transfer Ownership of Mineral Rights
It is essential to understand what type of mineral rights you own. The most common mineral rights in Texas are the rights to oil and gas deposits. You can better understand the kind of mineral rights you own by speaking with a lawyer that is Board Certified by the Texas Board of Legal Specialization in Oil, Gas and Mineral Law, like firm partner Brian Farabough.
Transfer By Deed
Confirm that you have the title to the mineral rights. You can do this through the registrar’s office or check online if there is an established database in your area. Consider hiring a landman to do this research for you.
If you own the land, verify that the mineral rights have not been sold through a previous sale or transaction. Once the transfer rights are confirmed, an attorney will begin drawing up the new document for mineral rights deeds transfer and any other applicable forms.
The documents must be signed before a notary, and your identification must be verified with a driver’s license or another form of acceptable identification. Once the deed is approved, copies of any paperwork are sent to the person granted the mineral rights.
Transfer By Will
It is also possible to transfer or pass down mineral rights by will. The right to minerals transfers at the time of death to the individuals named as beneficiaries. If no specific beneficiaries to the mineral rights are designated, ownership passes to the property and real estate heir. It is also possible and often easier to create a family holding company and assign mineral rights to this company, creating a limited liability company (LLC) or partnership.
Again, it is advantageous to ensure you have an updated will and start the process if you do not have one or if anything with your financial status has changed. A lawyer can help with both a will and estate planning to organize your finances, making it easier for your family or executors to handle your estate.
Transferring Mineral Rights After Death
If the deceased owned mineral rights in Texas but resided in another state, ancillary probate becomes necessary to transfer the property. It is always best to seek the guidance of a knowledgeable oil and gas attorney, especially in these circumstances.
An individual must claim heirship with the governmental office responsible for titles and deeds in the municipality where the property is located. The oil and gas operators would then be contacted to determine the documentation required to take ownership of the minerals. Once the operator receives the transfer of ownership order and reviews the documents, ownership will be transferred to the approved requesting party.
The new owner is responsible for completing the transfer of ownership order. Once the documents are submitted, the new owner is entitled to the royalty checks from producing mineral rights.
Have a Plan
Planning can lift a tremendous burden on your family. Mineral rights can be passed down just like most other property that is owned. It can be challenging for your family to coordinate with all of the parties involved with mineral rights without a deed, will, and/or if a family holding company or partnership has not been created.
Also, Texas has a Look-Back Policy, so you may want to contemplate the ownership of mineral rights and how this can impact your long-term care plan. During the look-back period which immediately precedes a Medicaid application date, the state will assess all asset transfers by the applicant and/or their spouse to understand if assets were gifted or sold below market value. This period applies to Texas Medicaid long-term care.
Experienced Legal Guidance Regarding Texas Mineral Rights
At any age, it is essential to consider what we own and make a plan to pass down belongings to family and the significant people in our lives. It is imperative to take account of everything we own to prevent confusion in a time of grief and loss, granting our families a sense of order through the process. If you own mineral rights in Texas, having a plan to pass down this ownership is just as crucial as a plan to pass down your home and land.
Transferring mineral rights in Texas requires a precise understanding of the law and how to execute this process. Place your trust in the highly qualified property dispute lawyers of Lovell, Lovell, Isern & Farabourgh, LLP, with lawyers dedicated to handling mineral rights disputes, by allowing them to assist you in establishing an objective and guiding you through every step of the process in planning how to pass down mineral rights.