What Happens to Mineral Rights When Someone Dies?

What Happens to Mineral Rights When Someone Dies?

Inherit Mineral Rights Without Losing Money

Mineral rights are complex. If you inherit them without understanding them, you could lose money, or worse, the property itself. Many owners have been conned by one-sided contracts. Others have missed big opportunities they didn’t understand.

With the prominence of the oil and gas industry, especially in Texas, understanding how inherited oil and gas royalties work is crucial to make a profit rather than a loss.

What Are Mineral Rights?

Before delving into the inheritance process, it’s crucial to understand what mineral rights are. These rights pertain to the ownership of underground resources like oil, gas, gold, silver, and other minerals. Owning mineral rights on a property means you own the resources beneath the ground, separate from the surface land. When a landowner drills and extracts these resources, they stand to gain significantly, primarily through royalties.

Inheriting Oil and Gas Royalties: The Transfer Process

When the owner of mineral rights passes away, the rights can be transferred to heirs or beneficiaries. This process is somewhat similar to inheriting real estate, but with some specific nuances.

Will and Probate Process: If the deceased left a will, the mineral rights will be transferred according to their wishes.
No Will: If the deceased does not have a will, the process gets a bit complex. The mineral rights are usually divided according to the state’s intestate succession laws. Often children, spouses, or close relatives inherit the rights.
Trusts: Some mineral rights owners might put their rights in a trust. If this is the case, the trust dictates how the rights will be passed down or managed after their death.

How do inherited mineral rights differ from other inherited assets?

Inherited mineral rights differ from other inherited assets, such as real estate, stocks, bonds, or personal property, in several ways.

  1. Separation from Surface Rights
    Mineral rights are separate from the surface rights of a property. Just because you inherit the rights to the minerals below the ground doesn’t mean you’ll inherit the land above it, and visa-versa.
  2. Legal Complexity
    The legal framework surrounding inherited mineral rights can be more intricate compared to other assets. The rights may be subject to various laws, contracts, and leases, which may differ significantly between states and even within different regions of a state.
  3. Valuation Challenges
    Determining the value of mineral rights can be more complicated than valuing other inherited assets. The value is often tied to factors like the current market price of the resources, potential for future extraction, existing leases, and geological factors, all of which may require specialized expertise to assess.

Before You Receive Inherited Mineral Rights in Texas…

With its vast reserves of oil and gas, Texas has specific guidelines around inherited mineral rights. In Texas, if mineral rights aren’t explicitly mentioned in a will, they typically pass along with the surface land unless there’s a prior legal document that separates them.

For those inheriting mineral rights in Texas, it’s essential to:
Confirm Ownership: Ensure you have clear documentation proving your inherited mineral rights.
Understand the Royalty Process: Know how royalties work. Inherited oil and gas royalties can be a significant source of income, so it’s essential to understand the terms of any existing lease agreements and how payments are processed.
Stay Updated: Texas oil and gas regulations can change. Staying updated ensures you are on the right side of the law and are getting a fair deal.

Ask An Expert

Inheriting mineral rights can be a boon, especially with the potential of oil and gas royalties. However, understanding how mineral rights are passed down, particularly in resource-rich states like Texas, is essential. Whether you are planning your estate or are an heir trying to navigate inherited mineral rights, it’s always recommended to consult with an expert experienced in oil and gas matters to ensure a smooth and beneficial transition.

If you’d like to speak with someone who knows the ins and outs of mineral rights, contact Legacy Royalties today.