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Oil/Gas/passing mineral rights to husband/daughter

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QUESTION: I own small amount mineral rights in Ok. passed to me by my mother with a Quit Claim. Recently my health has declined and tho my attorney says my husband and/or daughter can transfer those rights to his or herself upon my death. I wonder if this is really the best way to leave it. I am currently receiving small  royalties  monthly. Should I file a quit claim too?

ANSWER: Your lawyer is not incorrect; a will (should you have one that gets probated) can direct that these royalties go to a specific person(s). You do have many alternatives.  

If you are not depending upon the royalties from this interest to live on then you can Quit claim or otherwise immediately transfer the interest to desired recipient.

If you still wish to receive funds during your life but wish to ease the transfer after your passing then you can either transfer the interest into a life estate or place it in Joint Tenancy With Rights of Survivorship.  A life estate would pay the royalties to you - the life tenant - during your lifetime. Upon your passing, the interest would be transferred to the named remaindermen.  Joint Tenancy with Rights of Survivorship works largely the same way. This legally places the item in your name AND that of another named party or parties. The "rights of survivorship" portion then acts similar to life estate in that the items can then pass (without probate) to the remaining owner or owners following your passing.

I am not a lawyer and these are just a few scenarios that I've come across working in Oil & Gas. The three above alternatives may require the help of an attorney to prepare. Also, all documents that change title of ownership must be filed in the county or parish in which the interest/lease/well is located. Please see http://www.naco.org/Counties/Pages/FindACounty.aspx for contact information for the appropriate clerk or courthouse.

The Quit claim option may be easiest and least costly (simple forms can be bought at Staples, Office Max/Depot, etc). Whatever you decide to do; please inform the beneficiaries and other parties so they will know what to do in the event of your passing. You also need to inform the operator/purchaser of any changes so they can update their records and start to pay the interest accordingly. They may then assign your interest a new account and have you (and any remaindermen or joint tenant) sign new division orders.  This communication and preparation can help facilitate a more seemless transfer.

Probate is a slow and time consuming process. It can also be very expensive and stressful on those we leave behind. People sometimes do not handle loss well. It can be prudent then to be proactive in spelling out your final wishes through explicit instructions be that in a very clear will or through acting on any of the other options mentioned here.

Please let me know if you have any follow up questions.

---------- FOLLOW-UP ----------

QUESTION: Thank you very much for the information. Concerning the  Quit Claim, can I have that document notarized and then simply have my  daughter file it with  the  proper county clerk once I have passed on? I  do  not  want to  stop receiving  royalties at this point, so my only other option would  be the life estate.

Answer
So far as I understand; a quit claim or gift deed would need to be prepared, executed and filed prior to your passing. A transfer upon death deed also exists that may be an option for you. I believe that this can be prepared now and filed later. While it couldn't hurt to get legal advice from an attorney on any of these estate planning type measures I would most assuredly consider doing so with a transfer on dead deed or life estate. The life estate, personally, sounds like it might be your best option to assure you benefit now and your wishes are honored after your passing. I do not, of course, know the value of the interest or costs of preparation having only served on the accepting side. I know cost is a factor for some. The straight quit claim is the least expensive. Just remember to be thorough regardless your ultimate choice and include the legal descriptions of any and all leases.  

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Jason J. Alexander

Expertise

I can answer oil and gas division order questions. I am most knowledgeable about as the purchaser side of the oil and condensate production. I can offer suggestions regarding probate and basic transfers of working, override, and royalty interests. DISCLAIMER: I am not a lawyer. I have seem and know what my company for instance accepts pertaining to these matters. Being from the purchasing end (and not the operator side) I do not have much experience with calculations or valuing property or minerals. I do not deal with acquisitions, exploration, or development of leases either.

Experience

I am a Division Order Analyst with a crude oil purchaser. I have worked in the division order and customer relations departments for the past 9 with a first purchaser. My company purchases and transports oil for operators and we make revenue distributions on their behalf. I analyze division order title opinions, prior purchaser pay sheets, probate, and other conveyances related to the set up and modification of pay decks (divisions of interest) in leases (wells) of oil around the county. I have been involved in the set-up of our contract pay leases in conjunction with our marketing and regulatory departments.

Organizations
HADOA: Member, 2013-2014

Education/Credentials
HADOA: March, 2014 Seminar The Land Department: Division Order Analyst Training Course, 2011 & 2007 NADOA 2010 Conference Land Focus: Fundamentals of Leases & Title Ownership, 2006 Northwestern University, BS Communications

Awards and Honors
Eagle Scout Award

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