Houston Estate Planning and Elder Law Attorney Blog
Oil and gas royalties feel like passive mailbox money, yet probate treats them as complex real property interests. Each royalty check stems from a lease that must be located, interpreted, and confirmed for accuracy. Executors must verify the decedent’s percentage ownership in every producing well, then track revenue back to the correct decimal interest. Missing even one small override carved out decades ago can cost heirs thousands of dollars over the life of a field.
Untangling Title Chains Across Generations
Many mineral interests travel through families without updated deeds, leaving fragmented title. Landmen search courthouse records, but handwritten conveyances or lost probates can leave gaps that stall division-order approval. Executors often need to file curative documents, such as affidavits of heirship or corrective deeds, to satisfy operators. Clearing title early prevents suspended royalty payments and stops operators from placing funds in escrow while they wait for proof of ownership.
Division Orders and Payment Timing
Before operators release funds, they issue division orders spelling out each owner’s decimal share. Executors must review those orders for accuracy and sign on behalf of the estate, but only after letters testamentary are in hand. If a dependent administration drags on, royalty checks can back up for months, creating cash-flow stress when the estate needs to cover debts or taxes. Timely communication with operators and prompt filing of probate paperwork keep money flowing to the estate instead of sitting in suspense.
Mineral Interests vs. Surface Rights
Texas law separates mineral and surface estates, and prior owners may have severed one from the other. An executor who sells land without reserving minerals could unintentionally divest heirs of valuable royalty income. Conversely, retaining mineral rights means ongoing accounting obligations that last far beyond final probate distributions. A clear plan—sell both together, lease minerals separately, or place royalties in a family trust—avoids accidental loss and sets expectations among beneficiaries.
Valuing Royalties for Tax and Distribution
The IRS wants a fair-market value for mineral interests as of the date of death, even though production volumes and commodity prices swing wildly. Professional appraisers use decline-curve analysis and comparable sales to assign a number, then executors list that value on the estate inventory. Getting it wrong invites tax penalties or shortchanges heirs who split assets by equal value rather than item count. A well-documented appraisal anchors probate figures, keeps auditors at bay, and supports future sales if heirs prefer cash over monthly checks.
How a Dallas Probate Lawyer Keeps Royalties Flowing
A lawyer familiar with Dallas-area operators understands local lease terms, pooling agreements, and production histories. They coordinate with landmen, accountants, and appraisers to assemble a complete mineral portfolio, then draft the conveyances needed for smooth transfers. By monitoring division-order status and pushing operators for timely releases, the attorney ensures heirs receive income without needless delays. When disputes arise—such as competing claims from distant cousins—a Dallas probate lawyer tackles negotiations or court actions before checks disappear into suspense accounts. To learn more, call McCulloch & Miller today to schedule a no-obligation consultation.