Video · 4 minutes · captions on
Inherited mineral rights in Texas
Transcript
Introduction
When a mineral owner dies, the royalty checks do not move on their own. Each payor needs to be told, and needs proof of who owns the interest now. Here is the order to work in.
Start with the stubs
Start with the last royalty stubs and 1099s. Each one names a lease or an operator. Look every lease up in the state record, to see its county, its operator and what it produces. Then search ClaimItTexas for the owner's name, in case money has already gone to the state.
What happens when
In the first weeks, gather the papers: death certificates, the will, deeds, leases and stubs. In the first three months, tell every payor. Until it has proof of who owns the interest, it may hold payments without interest. In the first year, settle who owns it. Probate the will, or prove heirship if there is none. Royalties unclaimed for more than three years are presumed abandoned, and go to the Comptroller. And four years after the death, a will can no longer be admitted to probate, unless the applicant was not in default.
Why tell every payor
Why tell every payor? Because Texas law lets a payor hold payment, without interest, while there is a dispute over title. Or a reasonable doubt that the payee has clear title. Money held for a proper reason carries no interest. So give each payor your proof early.
Write to each operator
So write to each operator's owner relations, with the owner's number and the date of death. Please send me your list of the papers you need to pay the heirs, and tell me whether any payments since that date are being held. Send it by certified mail, and keep a copy.
A will, or no will
Next, settle who owns the interest. If there is a will, admit it to probate. The will names who inherits, and in what shares. Mind the four-year limit. With no will, Texas law decides who the heirs are, and in what shares. Prove it with a court order declaring heirship, or a sworn statement of the heirs, recorded in the county deed records. Once that statement has been of record for five years, a court receives it as prima facie evidence. Ask each payor which proof it accepts. Then each heir gets a decimal. Here, one owner's decimal is split equally three ways. Each heir gets a third, and together they add back to the whole. Shares can differ. The will, or the law, sets them. So each check is a smaller share, and small amounts can be held.
Why the checks are small
If the payor owes you a hundred dollars or less, it may pay once a year, for up to twelve months of accumulation. And it may hold amounts under ten dollars until production ceases.
One tax point
One tax point. Your tax basis in inherited property is generally its fair market value at the date of death. That is not what the owner paid. Keep a date-of-death value, because a preparer will usually ask for it.
Seven steps, in order
So here is the order, in seven steps. One: find out what the minerals are. Two: order several certified death certificates. Three: write to every payor. Four: settle who owns the interest. Five: send each payor the papers and a division order for each heir. It cannot change the lease. Six: ask each payor what it held from the date of death, and when it will pay. Seven: once the new decimals are in place, compare each month with the state record.
What to do next
Start with the stubs, and look up each lease with our Texas lease lookup. The sources for this video are on screen.