Oil, gas and mineral interests are real property under Texas law. In a probate they are inventoried at their fair market value on the date of death, and they pass to the beneficiaries or heirs through documents recorded in every county where the minerals lie. Operators typically suspend royalties when an owner dies and will not release them until they are satisfied about who now owns the interest. Getting payments flowing again is largely a matter of choosing the right procedure, recording the right documents and meeting each operator's title requirements.
What families should know
Royalty checks often stop within a month or two of an owner's death. That is routine: once an operator learns of a death, paying the decedent's account would expose it to paying the wrong person. The funds are held in suspense until the operator's title department is satisfied about the new owners.
The first task is to identify every interest. Royalty check stubs and Form 1099-MISC, division orders, leases, mineral tax statements from appraisal districts (many West and South Texas districts use contract mineral appraisers) and the county deed records in the decedent's name are the usual sources. Each interest should be tied to a county, a legal description and an operator, because each county requires its own recording and each operator its own submission.
The second task is choosing the procedure. Whether there is a will, whether the estate owes debts and how complicated the family is will determine whether the minerals pass through an administration, a muniment of title, an affidavit of heirship or a court determination of heirship.
The legal detail
Inventory and valuation
In an administration, the personal representative must file, within 90 days after qualifying unless the court extends the deadline, a verified inventory of all estate real property located in Texas and all personal property wherever located, stating the fair market value of each item as of the date of death and identifying separate and community property (Tex. Est. Code § 309.051). Mineral and royalty interests are listed as real property. Producing interests are best valued by a qualified mineral appraiser; appraisal district values are a starting point, not a substitute.
An independent executor may instead file an affidavit in lieu of inventory if, when the inventory is due, there are no unpaid debts other than secured debts, taxes and administration expenses, and the beneficiaries have received a verified inventory and appraisement (§ 309.056). Interests discovered later require a supplemental inventory or supplemental affidavit (§ 309.101).
How title passes
Administration. Certified copies of the will (if any), the order admitting it and the letters are recorded, and the executor or administrator conveys the interests by distribution deed when the estate is settled.
Muniment of title. The order admitting the will is itself sufficient authority for operators to pay the devisees named in the will, who may deal with the property as if record title were in their names (§ 257.102). Certified copies of the will and order are recorded in each county.
Intestacy. An affidavit of heirship or a judgment declaring heirship is recorded in each county. The intestacy rules for land apply, so a surviving spouse may hold only a life estate in a fraction of separate-property minerals (§ 201.002).
Trust or transfer on death deed. The trustee records a certificate of trust or deed, or the beneficiary of a TODD records an affidavit of death in the county where the TODD was recorded.
Send documents to each operator's division order department with the owner number and property name from the check stubs. It speeds processing significantly.
Suspended royalties and operator requirements
Texas law permits a payor to withhold proceeds without interest when a title opinion raises a requirement concerning the payee's title, identity or whereabouts that has not been satisfied after a reasonable request for curative information (Tex. Nat. Res. Code § 91.402(b)). Operators therefore typically require a death certificate, recorded copies of the probate or heirship instruments, a W-9 for each new owner and signed division orders before they will release suspended funds and begin paying the successors.
Managing minerals during administration
An independent executor generally acts without court approval, within the authority the will and the Estates Code confer (Chapter 402), and can collect royalties and deal with lessees during the administration. A dependent administrator's dealings with mineral property, including leasing, are subject to court authorization under Chapter 358. Royalties and bonuses received during administration are estate receipts until distributed.
| Procedure | What is recorded in each county |
|---|---|
| Independent administration | Will, order and letters; later, an executor's distribution deed |
| Muniment of title | Certified copies of the will and the order admitting it |
| Affidavit of heirship | The sworn affidavit of family history |
| Determination of heirship | Certified copy of the judgment declaring heirship |
| Trust | Certificate of trust or deed from the trustee |
| Transfer on death deed | Affidavit of death with death certificate |
Submitting documents to each operator's division order department with the owner number and property name taken from the check stubs materially shortens processing.
Frequently asked questions
Do mineral rights have to go through probate?
Unless the interest passes outside probate, through a trust, a transfer on death deed recorded before death or a similar mechanism, some legal process is required to establish the new owners' title: probate of a will, a muniment of title, an affidavit of heirship or a determination of heirship.
How long does it take to restart royalties after a death?
Once the probate or heirship documents are recorded and delivered to the operator with the information it requests, release commonly takes several months. Much of the delay is the operator's internal title review.
Do operators owe interest on royalties held after a death?
Not when payment is withheld because of a title requirement concerning the payee's identity or title that has not been satisfied after a reasonable request (Tex. Nat. Res. Code § 91.402(b)). Prompt curative work is the only way to shorten that period.
What if mineral interests were left off the inventory?
The personal representative must promptly file a supplemental inventory, or a supplemental affidavit in lieu of inventory, when additional property is discovered (Tex. Est. Code § 309.101).
Probate across Texas, often by Zoom
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About the author
Todd Worrich is a San Antonio native and Texas attorney. He earned his undergraduate degree from Texas A&M University, his law degree from St. Mary’s University School of Law and an LL.M. in Taxation from SMU Dedman School of Law, and he has been recognized multiple times by Texas Super Lawyers. His practice focuses on estate planning, probate and helping Texas families recover oil and gas royalties. More about Todd
This article is general information about Texas law, not legal advice for your situation, and reading it does not create an attorney-client relationship. Laws change, and results depend on the facts of each matter. Attorney responsible for this content: Todd Worrich, San Antonio, Texas.
