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The Roles are Flipped, You Need Information:

When you were young your parents found ways to protect and provide for you.  As your parents age they increasingly need your care.  You need answers including legal realities.  This article and the audio content describes the type of information you need to receive.  It also provides practical tips to create open communication.

Dynamics of Communicating with the “Silent Generation”

People born before 1946 are known as the “Silent Generation”.  Their world was shaped by the Great Depression, WWII, The Cold War and the Civil Rights Movement.  They are often described as less open with personal issues including health and finances.  They value simple concepts and rarely view themselves of wealthy regardless of their net worth.  “Waste not want not” means much to them. 

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      015 The 5 Things Adult Children Of Aging Parents Need To Know NOW (Part 1) With Audrey Earhart - ElderCounsel - Nicole Wipp

 

Mineral Interest Probate:

Often a property is inherited but title is not in the name of the heirs.  Generally, a company will require a probate before they begin paying royalties.  Or, a buyer will make probate a title requirement.  Very often, the process is simple for the heirs.  It is also rare that any heir is needed to make a court appearance or travel to Oklahoma.  Finally, many times a mineral only probate is eligible for a summary process which saves time and money.


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Lease Terms / Negotiation

The devil is in the detail in Oil and Gas leases.  It is important to bargain for the best deal because you can be bound by the contract for decades to come.

Pooling Orders:

Sample heading for an Oklahoma Commission Case.A pooling is a legal process that can force mineral owners to allow development of their minerals.  This is generally used for people who don’t sign a lease or cannot be found.  Fighting forced pooling can be expensive and often futile.  However, a mineral owner still has rights.  If a pooling order is allowed, an owner is given various options.  We explain the pros and cons of the choices offered.  There is typically a time sensitive choice to make.

Simple Probate Avoidance:

People who go through probate often want to save their family from that trouble.  Here are a few ways to avoid probate.

Transfer on Death Deed: 

This is a simple, inexpensive document where you name the person you want to receive your land or minerals after you are gone.  In the meantime, you maintain complete control.  You can lease or sell the property and don’t need anybody’s approval.  After death, the person(s) named files a form with your death certificate and receives the property.  There is no probate or court process.  This works even if you don’t have a Will.

Joint Tenancy:

Joint Tenancy creates an ownership interest in the property in equal shares.  When one joint tenant dies, the other files a form with a death certificate in order.  This removes the deceased person from the title.  However, unlike the Transfer on Death Deed, the person making the deed gives up an ownership interest.  It is generally used by spouses when purchasing a homestead.

Trust:

A trust avoids probate if the minerals (or other real property) is deeded into it. An owner can create a trust the preserves all of his or her rights.  It does not require any separate tax return.

Out of State Trusts:

Too often, out-of-state owners fail to transfer their minerals into their trust.  As a result, those assets become subject to probate.  Creating a mineral deed into a trust is considered the practice of law in Oklahoma. Therefore, an attorney not licensed in Oklahoma cannot prepare the deed.  We can assist in the preparation and filing of the needed forms.

 

  Frequently individuals on the Mineral Rights Forum have posts that involve issues concerning title or the transfer of ownership after death.  The purpose of this paper is to provide some information regarding issues and common questions.  This is not legal advice as your situation may require different actions.

Frequent Questions:

What is probate?

We had a probate in our home state;  why must we probate in Oklahoma?

What if there was a trust?

Why was the company willing to lease and pay a bonus but is now unwilling to pay royalties?

Why won’t the company accept an affidavit of heirship?

What does a probate cost?

What is Ancillary Probate?

What if there has never been a probate?

What is the difference between a Summary and Ancillary Probate?

Will I have to travel to Oklahoma?

How long is the process?

What about Estate Taxes?

What is probate?

As it relates to a person who stands to inherit property, it is a process by which title to property is transferred from the deceased owner to his or her heirs or according to a Will.

We had a probate in our home state;  why must we probate in Oklahoma?

Simply put, it has to do with jurisdiction.  A court of one state does not have authority over real property (including mineral interest) in another.  Therefore, a court outside of Oklahoma cannot award title.  Only an Oklahoma Court can do that.

What if there was a trust?

A trust avoids probate only if property is transferred to the trustee prior to death.  If an interest is titled in the name of the decedent, instead of a trust, then probate will be required.  Typically, those with trusts also create a will.  This will instructs the probate court to transfer assets to the trust.

Why was the company willing to lease and pay a bonus but is now unwilling to pay royalties?

It is not uncommon for a company to take certain risks in order to secure a lease because it provides it with valuable rights.  However, if there is production a “division order analyst” will examine the title to the property.  If there are defects, such as an unprobated estate, the analyst will place payment of royalties in suspense.  This means that the monies will be held until the title issue is resolved.

Why won’t the company accept an affidavit of heirship?

In Oklahoma, an affidavit of heirship must meet five criteria to be deemed to provide “marketable title”.[i]  The biggest hurdle is the requirements is that an affidavit must be on file for 10 years.   Therefore, it is usually best to go forward with a probate if royalties are in suspense.

 

What does a probate cost?

There are several components that make up the expenses related to a probate.  These are:

  • Filing fees
  • Publication Fees
  • Postage
  • Attorney fees
  • Recording fees

Often attorneys are willing to probate mineral interests on a flat fee basis.  That means the expenses listed above are rolled. Into one price.

What is Ancillary Probate?

Generally, this is available if there has already been a probate in another state.  It requires certain documents from the original court.  Once these are assembled, then the process is very quick.

What if there has never been a probate?

If there has not been a probate, generally a shortened “summary probate” procedure is used.  It is available if:

  • The decedent has been dead five or more years; or
  • The decedent lived outside Oklahoma at his or her death; or
  • The value of property within Oklahoma is valued at $200,000 or less.

What is the difference between a Summary and Ancillary Probate?

For the client, there is really no difference.  The summary probate requires a slightly longer timeframe and requires slightly different publication requirements.  In short, it is something that the attorney, as opposed to the client, handles.

Will I have to travel to Oklahoma?

While we would love to have you, the answer is no.  It is extremely rare that anybody other than the attorney need attend a hearing.  Paperwork can be handled through mail or email.

How long is the process?

Once the paperwork is signed and filed, the process can take as little as 30 days (for an ancillary probate) or about 75 days for a summary probate.  These estimates may vary depending upon court availability.

What about Estate Taxes?

Oklahoma abolished its estate tax beginning January 1, 2010.  For those who died prior to 2010, often a release can be obtained or the tax expired due to the lapse of time.

Federal estate taxes are rarely an issue since the taxable amount begins at relatively high levels.

 

[i] 17-O.S. §67(C) says:  . In order to establish marketable title pursuant to this section:

 

  1. The affidavit or recital must state that the decedent died without a will, or if the decedent had a will, that the will was never probated in Oklahoma and a copy of the will is attached to the affidavit or recital, or if the will was probated that the severed mineral interest was omitted from the final decree of the decedent and a copy of the will and final decree is attached to the affidavit or recital;

 

  1. The affidavit or recital must list the names of the decedent’s heirs and their relationship to the decedent;

 

  1. The affidavit or recital must state that the maker is related to the decedent or otherwise has personal knowledge of the facts stated therein;

 

  1. The affidavit or the title transaction that contains the recital must have been recorded for at least ten (10) years in the office of the county clerk in the county in which the real property is located; and

 

  1. During the ten-year period following the recording of the affidavit or the title transaction that contains the recital, no instrument inconsistent with the heirship alleged in the affidavit or recital was filed in the office of the county clerk in the county in which the real property is located.

 

Many mineral owner receive paperwork that looks like a lawsuit with the name of the Oklahoma Corporation Commission.  The application seeks relief called pooling.  This article is designed to explain some basic about the process.  This is general information and should not be used as a substitute for legal advice.

What Does “Relief Sought Pooling” Mean?

Sample heading for an Oklahoma Commission Case.

Quite simply, this is a process that allows a company to drill for oil and gas even if they don’t have leases (permissions) from everybody that owns an interest in them.  Basically, it is almost impossible for everyone to agree to drill or to agree upon the company who should take on that task.  The company who filed the “Pooling Application” is seeking governmental permission to drill.

If an interest owner has not signed a lease, the company that applied will be required to pay the mineral interest “Consideration” or Bonus in the form of a lump sum plus a fractional interest in the oil and gas produced from the well or wells.

Is This the Same as “Forced Pooling”?

Yes.

Why did I get This Application?

The most likely reason you received the application is because your minerals are not subject to an active lease.  Either there was never a lease or a previous lease expired.

What is the Oklahoma Corporation Commission?

The Corporation Commission is an Oklahoma Agency that regulates various industries such as utilities, railroads, pipelines and oil and gas production.

Why did I get This Notice From the Corporation Commission?

You probably have a mineral interest in an area in which the company wishes to drill.  Prior to making the application the company is supposed to identify all discoverable mineral interest owners.  The company is required to search records including land records, probate cases to identify those owners.  If you receive notification from any Oklahoma Corporation oil and Gas case,  there is a strong likelihood that you have a mineral interest in that property.

What Am I Supposed to Do?

There are several basic strategies for a Mineral Interest Owner:

  1.  Enter and Appearance and Notice of Protest.  This will insure that you receive all notices in the case.  Then there is the issue of what you are to protest.  You could protest the applicant, the Consideration or Bonus to be awarded owners or other issues.  You would need to be prepared to have evidence to support your position.  This may include lease offers you or neighbors have received.  You would probably need an expert such as a Landman.  This strategy may be best utilized by an interest holder with a large amount of acreage at stake.  This may enable you to obtain a lease on more favorable grounds than previously offered.

  2. Negotiate a Lease.  You can attempt to negotiation a lease with the applicant or another entity.

  3. Monitor the Case.  This is recommended no matter what else you do.  Once an order is entered you may have as little as 20 days to make the best election.  See all filings in the case here.

  4. Take No Action. You are not required to take any action.  If you fail to do anything you will still own your minerals, however once an order is entered it will be subject to the forced pooling order.  In other words, you will not lose your property but will become subject to the final order.  The order will require the company to pay you for production.

Sample Pooling Order

Once a final order is entered you will receive an order.  It will include several Bonus or Consideration options.  These tend to be confusing.  If you don’t make a timely an election, the order will authorize the company to assign you the smallest royalty.

 

Can I Still Sell or Lease my Interest?

Yes, you can sell your interest before, during or after the pooling application.  However, companies do not typically go to the expense of a pooling application unless they intend to drill.

Am I Being Sued?

Sort of.  The company is not asking that your pay anything.  However, this is a legal process that can affect your interest namely once pooled you will not be able to lease your property.  Also the Commission will determine the bonus and royalty that you will receive.  It is therefore important to understand the process.

What if the Person Named on the Notice is Deceased?

If the person named as a respondent is deceased then his or her heirs or persons named in that persons estate plan (Will or Trust) should immediately take steps to insure that they are recognized as the owners.  This will often mean filing a probate.    Part of the probate process is to name a representative of the estate who can have authority to deal with the property.  It is preferable that this occur prior to the final order so that the heir will be able to make an election.

How Long Will the Pooling Be Binding?

A pooling order will state the time that operations for drilling a well must begin.  If the drilling has not begun then the mineral interest owner is released from that obligation.  The company must still pay the cash bonus or consideration.  The order can last indifferently if the well is drilled and there is continued production.

Do I Have to Appear at Hearings?  Can I Fight This?

While you have the right to appear and represent yourself, the process is difficult to understand.  Unless you have significant mineral holdings at stake, it is probably not worthwhile to hire an attorney to attend the hearing.

In most circumstances you are unlikely to be able to prevent the drilling of a well.

What is “Relief Granted and Election Period”?

This is the section that defines the deadline for you to make an “election” under the order.  Typically it will be broken into two major sections:

Participate:

This means that you can invest in the well.  Instead of paying you anything you agree to pay your pro-rata share of the costs of drilling the well.  Instead of a royalty, you will be paid a pro-rata share of the net revenues.  So if you own 40 acres in a 640 spacing unit, you will be responsible for 1/16h of all the costs but be entitled to 1/16th of all of the net revenue.  Your decimal interest in the well would be .0625.

“Cash Consideration” or Bonus and Royalty:

Cash Consideration a “lease bonus” it is a onetime payment.  Usually three or more Cash options are offered.  A small royalty interest will have larger cash option.  Conversely, a large royalty will have a smaller cash option.

Assuming a 40 acres interest in a 640 acre spacing you would be entitled to the following decimal share of the net revenue:

1/8  = .0078125

3/16 = 01174875

1/5 = .0125

1/4 = .015625

How Long do I Have to Make My Election?

A pooling order shall contain language to the effect that the respondents shall have at least twenty (20) days from the date of the order in which to communicate an election to the applicant or other responsible person as to the option selected.

Is it Expensive to Have My Options Reviewed?

No, this can be done on a flat fee basis.

What if I Don’t Elect an Option?

If an owner does not make an election or fails to make it timely, then the order will typically state that the owner has deemed to have elected the highest cash bonus (consideration) and the smallest royalty interest.  By law the company is only required to give you 20 days from the entry of the order so time is of the essence.

What is a Multiunit Horizontal Well?

A horizontal well is the technology that allows greater production from a mineral producing zone.  Instead of simply drilling straight down, the pipe is curved into an oil and gas formation to have the maximum contact and greater production.  Multiunit means a well that will send casing pipe in different directions from one rig.

What is a “Well Location Exception”?

In Oklahoma wells must be a certain distance from each other.  A Well Location Exception seeks a variance because of geography, topography or economics.  Permission must be granted by the Commission.

This is general information and should not be used as a substitute for legal advice.

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Ich bin ein lizenzierter Anwalt in Oklahoma und bin in der Lage, in allen Oklahoma State und Federal Courts zu praktizieren. Ich habe an der Universität Deutsch studiert und an einem Arbeitsstudienprogramm teilgenommen, wo ich für einen Sommer am Deutschen Supermarkt in München angestellt war. Ich würde meine derzeitigen Deutschkenntnisse als sozial / gesprächig beschreiben. Ich müsste tatsächlich Geschäfte auf Englisch machen.

 

Meine Tätigkeitsbereiche umfassen: Land Öl und Gas Mineral Besitzer Rechte Nachlassplanung Wills und Trusts Kleinbetrieb Ich kann helfen, einen Anwalt zu finden, der hilft bei: Persönliche Verletzung Ungerechter Tod Geschäftsverkehr

 
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