How to Manage Your Minerals

August 18, 2021
If you or your family are from Oklahoma, there is a chance that your family owns mineral rights. This is ownership in resources, such as oil or minerals, that families often pass down through the generations via inheritance. That sounds like an excellent way to secure a nest egg for your heirs. There is an old saying in Oklahoma, “never sell your mineral rights.” Which is to say, if you have them, hold on to them because the resources will retain their value over the years.  For this reason, older family members will often pass on their mineral rights to their children and grandchildren. This process causes fractionalization of mineral rights, and it’s a bigger problem than you would think. Here are some of the fractionalization issues and some of the ways that a lawyer can help you.

Smaller pieces of the pie

So how does fractionalization work? Let’s say you have one mineral acre that gets broken up into four fractions to be passed on to your children. Now, each of the heirs only has a right to one-quarter of the acre. If this happens again in the next generation, each person will have a smaller fraction. Over the years, the fractionalized interest becomes more challenging to manage and more expensive to maintain and these costs often are more than the value of the fractionalized interest. What’s worse, if the fractionalized rights are forgotten or lost somewhere in the process, the state will reclaim them. 

How a lawyer can help 

Nobody wants the gift they leave to be lost, so what can be done? A helpful lawyer can help you decide which one of the following solutions is the best for you.  First, you can put your mineral rights into a trust or partnership and make your heirs the beneficiaries of it. This makes it easier to manage and will give your heirs greater bargaining power because the mineral interest is in a bigger fraction. A second option is to donate your mineral rights to charitable organizations, many of whom have extensive mineral rights and the means to manage them. Another option is to sell your mineral rights and split the money between your heirs. Whether you want to learn more about passing on your mineral rights or managing the fractionalized rights you have, Robertson & Williams's our inheritance lawyers can help you protect your family’s legacy. We understand oil and gas law.