Bradley Law Firm Blog

Title to your Mineral Rights is in Dispute. What now?

Fri, 29 Sep 2023 17:37:34 GMT

Guidance on Addressing Oil and Gas Title Disputes in Texas

If you own mineral rights in Texas, you’re likely well aware of the value and potential of your assets. However, the road to securing your rights and royalties can sometimes be rocky, especially when disputes arise over ownership. Imagine this: an oil and gas company has halted your royalty payments due to a disagreement about who truly owns the mineral estate. The company has filed an interpleader action with the court, or perhaps you have been named in a lawsuit where another owner of the mineral estate is claiming that they own what you thought you owned. The issue can come out of left field, well after division orders have been issued and signed. What can you do now?

To make sense of what is going on in the lawsuit, you should understand a few key legal terms:

1. Trespass to Try Title Action

Think of this as a legal mechanism to determine land ownership, including oil and gas rights. It’s like a contest where you need to prove that your claim to the property is stronger than all others, ensuring the title is quieted against any competing claims.

2. Declaratory Judgment Action

Here, a party asks the court to clarify the legal relationships and rights between parties. In the realm of oil and gas title, the court will be interpreting title documents to determine the original parties' intent.

3. Interpleader Action

Imagine several parties all claiming a piece of the same pie—in this case, royalty payments. An interpleader action is initiated by a party who could be subject to multiple liability (the oil and gas company) to sort out who the rightful owner of that pie is, ensuring that everyone’s rights are properly addressed. The oil and gas company deposits disputed royalties with the court, and the court holds onto it until ownership is determined.

Common issues underlying title disputes are ambiguities in deeds and conveyances in the chain of title, like whether 1/2 of 1/8 royalty means a 1/16 fixed royalty or a 1/2 of the royalty in any future lease; multiple competing chains of title to the same interest; application of legal theories to facts (such as strip & gore); boundary disputes; and the interpretation of trusts and estate documents.

If you have been named as a defendant in a title dispute, you should quickly seek legal representation. Title disputes are highly complex, not only in their subject matter but also in the legal procedures and rules that need to be followed to protect your oil and gas rights. When you hire an attorney, they will start with a deep dive into the facts of the case and a meticulous review of all relevant documents, outline a litigation strategy and arguments, and determine what information you need to track down to make your case.

Oil and gas title litigation can last years, especially when there are many parties involved, which is often the case when fractional interests are involved. Your attorney will keep you appraised of what is happening throughout the process, attend hearings on your behalf, and prepare pleadings and motions to support your claim. It is vitally important to quickly retain legal representation before any court-imposed deadlines pass.

Protecting your mineral rights in an oil and gas title dispute demands a nuanced understanding of the law and a strategic approach. Every title dispute is unique. At our firm, Bradley Law Firm, we bring our extensive knowledge and experience in oil an gas title lawsuits to the table, ensuring your interests are protected.

Reach out to our title litigation team for a consultation by calling 817-645-3993.

Verifying Your Inherited Mineral Rights

Fri, 14 Apr 2023 16:50:20 GMT

You know you own mineral rights, but how can you verify what they are and find out what they are worth?

As an attorney practicing in the oil and gas space for more than a decade, I understand the complexities and challenges that come with inheriting mineral rights. Many landowners find themselves in a situation where they have inherited mineral rights from a family member but have little to no knowledge about the extent and value of their interest. In this guide, I will walk you through the process of verifying inherited mineral rights and addressing common issues encountered.

Step 1: Locating the Interest in Public Records and Maps

The first step in verifying your inherited mineral rights is to locate the interest in public records. The document(s) that created the interest will contain the language needed to determine what and how much you own. Depending on the state, land records may be available online for free or for a fee, or they may be accessible only by visiting the County Clerk's office or Recorder or Register of Deeds office in person. To begin, visit the county website where the minerals are located and check if they have a link for searching land records online. You can also call the office and ask for assistance. The recorder or clerk will not search for you, but they will give you information about their records and how to search. Some states, like Texas, have third-party providers that offer online access, such as texasfile.com, so if you strike out trying to search directly at the county level, look for comprehensive third party providers. If this process is overwhelming, contact someone who does it every day. An attorney or oil and gas landman or abstractor can help you.

Once you have identified the deed or instrument of record that created the oil and gas interest, you will want to find the property on a map to confirm if there are any wells nearby. In Texas, Pennsylvania, and Ohio, you can access GIS mapping information through state regulatory websites, such as the Railroad Commission of Texas , the Pennsylvania Department of Environmental Protection , or the Ohio Department of Natural Resources . You may also need to use the county's GIS website to locate a particular parcel of land, and then find that land on the state regulatory site. Click around your property to identify active wells, access production and permitting information, etc.

Step 2: Analyzing the Deed Language and Understanding the Nature of the Mineral Interest

As an attorney, I cannot emphasize enough the importance of analyzing the language in the deed to determine the type and extent of your mineral interest. Each state has its own laws governing deed interpretation, but generally, courts look to the "four corners" of a document to determine the intent of the parties to a conveyance.

Mineral interests can be thought of as a "bundle of sticks," which includes various rights such as the right to sign leases, receive bonuses, royalties, delay rentals, and the right to produce (ingress and egress). There are several types of mineral interests, with the most common being the nonparticipating royalty interest (NPRI) and the full mineral interest (which includes all rights in the bundle of sticks). However, mineral interests can be divided in numerous ways, and state law ultimately determines the specifics of these divisions. For instance, you can own a mineral interest but have no right to royalties; you can own the right to sign leases but no right to bonuses or royalties; you can own a non-participating mineral interest which is an interest in the minerals with no right to sign leases, and so on. The rights you have will be determined by the language in the conveyance and state law applied to it. An attorney should analyze the deed language to ensure proper understanding and classification of the inherited mineral interest. Keep in mind that ambiguities in deed language can lead to different interpretations, and different attorneys might have varying opinions on the meaning. Consulting an attorney experienced in real property law and mineral rights is crucial to navigating these complexities. Just as you wouldn't go to a podiatrist for stomach issues, don't ask your family law lawyer to interpret your oil and gas deed.

Step 3: Determining if the Interest is Producing

To determine if your inherited mineral rights are producing, check if the person you inherited the interest from was receiving royalty payments. If that's the case, you already know it's producing, as royalties are paid on production. If you aren't receiving royalties, explore the state regulatory agency's website or mapping tools to find permitted or producing wells. Sometimes the property's inclusion in a producing unit is evident, while other times it may be unclear. Perhaps you learned about the interest because a landman, mineral buyer, or oil and gas operator reached out to you. Find out if a well is planned and when it will be drilled, and negotiate favorable terms in your lease. For negotiation tips, see our post on key considerations when negotiating an oil and gas lease .

For some context, a producing unit, also known as a spacing unit or drilling unit, is a designated area of land established for the production of oil and gas. These units are created to prevent waste and protect the correlative rights of mineral owners. It is essential to know if your land is included in a producing unit, or will be included in a unit, as this will affect the value of your inherited mineral rights.

Step 4: Addressing Common Title Defects and Other Problems

When verifying inherited mineral rights, it's crucial to be aware of potential title defects and other issues that may arise. These defects can hinder a mineral sale or purchase and prevent royalties from being paid. Some common issues to address include:

Ambiguity in deed language or legal descriptions: Ambiguous language in deeds can create competing claims to the same interest. Examples include fixed vs. floating royalties, whether the interest is a royalty only or a full mineral interest, and property descriptions that call to old landmarks that no longer exist (such as an old road, fence line, stream, or creek bed).

Dormant mineral statutes: In Ohio, the Dormant Mineral Act (ODMA) and the Marketable Title Act (MTA) can cause a mineral interest to be abandoned due to non-development, potentially extinguishing the mineral interest and re-vesting it with the surface owner. It's important to note that Pennsylvania and Texas do not have such dormant mineral statutes.

Unprobated estates: Sometimes, when a person dies, there is no need to probate their estate, which can lead to difficulties in tracing the ownership of a mineral interest. This issue can arise when the deceased person did not know they owned the mineral interest or when they acquired it through another unprobated estate. In such cases, it may be necessary to research entire family trees to determine the current owner of the mineral interest and open multiple probates as required. Each state has its own procedure for handling these situations, with some allowing for an affidavit of heirship as an alternative to probate.

Step 5: Consulting an Attorney for Title Curative Work and Legal Guidance

Navigating the complexities of inherited mineral rights can be challenging, and it is highly recommended to consult an attorney to assist you in the process. An attorney can help with title curative work to release suspended royalties or close a mineral sale. They can also provide guidance on deed interpretation, state laws, and resolving any issues that may arise during the verification process. By following the steps outlined in this guide and seeking the assistance of an experienced attorney, you can gain a better understanding of your inherited mineral rights.

Be mindful that the steps above assume that you truly inherited mineral rights. Just because a mineral buyer or operator approached you with an offer to purchase or a lease does not mean that you actually own anything. You should always verify that you truly have an interest in the minerals, oil, and gas, before signing any affidavit of heirship or warranting title to interests sold or leased. You can ask the mineral buyer or operator to supply their research documenting how you came to own the interest. If they do not provide it, you can conduct your own independent research in deed and probate records. Heirship companies, land services companies, and attorneys can assist you with this research. Inheritance laws can be complicated and each state has different rules that apply.

Feel free to reach out to our law firm for assistance with any questions related to your inherited mineral rights. We are here to help you make the most of your valuable asset. Call 817-645-3993 or schedule an appointment online .

Estate Battle Breakdown: 5 Leading Factors That Drive Estates into Litigation

Fri, 31 Mar 2023 14:24:58 GMT

Key Factors and Strategies for Dealing with Estate Legal Conflicts

As an experienced estate litigator at Bradley & Hammond, I have witnessed firsthand the turmoil and heartache that can arise from estate disputes. When families find themselves in conflict over inheritance, emotions often escalate, resulting in a downward spiral of hostility and legal battles. This "conflict spiral" typically starts with minor disagreements and miscommunications that gradually snowball into larger disputes, culminating in litigation. Understanding the leading factors that drive estates into litigation can help you better prepare for and navigate these challenging situations. In this article, I will discuss the five most common factors that contribute to estate litigation in Texas and share my insights on how to resolve these issues effectively.

Factor 1: Will Contests

One of the primary factors leading to estate litigation is disputes over the validity of a will. A will contest occurs when an interested party challenges the legitimacy of a decedent's will, usually on one or more of the following grounds:

Lack of testamentary capacity: The testator (person creating the will) must have been of sound mind and capable of understanding the nature and extent of their property, the people they were benefiting, and the implications of the document they were signing. An example would be a situation where an elderly parent creates a new will shortly before passing, leaving their estate to a caregiver while excluding their children, raising suspicions about the parent's mental capacity at the time of drafting the new will.

Undue influence: This occurs when the testator's free will is overcome by the coercion or manipulation of another person, often to that person's advantage. For instance, a relative who isolates the testator and pressures them to change the distribution of their estate in favor of that relative could be exerting undue influence.

Fraud: Fraudulent conduct can lead to a will contest if the testator was deceived or tricked into signing a document they believed to be something other than a will. For example, a family member might present the testator with a document claiming it to be a power of attorney but is, in fact, a new will that benefits the family member.

Improper execution: In Texas, a will must comply with specific formalities to be considered valid. This includes being signed by the testator (or someone at the testator's direction and in their presence), in the presence of two or more credible witnesses who also sign the will (Texas Estates Code § 251.051). A will can be contested if it fails to meet these requirements.

As a fierce advocate for my clients, I always strive to resolve will contests through negotiation and mediation, when possible. One of the best ways to avoid will contests is through meticulous estate planning and open communication with all interested parties.

Factor 2: Trust Disputes

Trusts are valuable tools in estate planning, but they can also be a source of conflict. Trust disputes often arise due to disagreements over the interpretation of trust provisions, trustee management, or allegations of breach of fiduciary duty. Here are some common trust-related issues that can lead to litigation:

Interpretation of trust provisions: Trust documents can sometimes contain ambiguous language or unclear instructions, resulting in disputes among beneficiaries or between beneficiaries and the trustee. In Texas, courts can be petitioned to resolve ambiguities in a trust document (Texas Property Code § 112.054(a)).

Trustee mismanagement: Beneficiaries might allege that a trustee has mismanaged trust assets, failed to provide proper accounting or failed to distribute assets according to the trust terms. A trustee has a duty to act in the best interests of the beneficiaries, and failure to do so can lead to litigation. In Texas, a trustee's actions can be subject to judicial review, and the court may remove a trustee if it finds a breach of fiduciary duty (Texas Property Code § 113.082).

Breach of fiduciary duty: Trustees have a legal obligation to act in the best interests of the trust beneficiaries. This includes managing the trust assets prudently, avoiding conflicts of interest, and providing accurate and timely information to the beneficiaries. When a trustee is accused of breaching these duties, a dispute may arise that requires litigation to resolve.

Like will contests, many of the issues that materialize with trusts can be avoided with careful estate planning. Trustee mismanagement issues in particular can be avoided by properly educating the trustee on his or her duties, picking the proper person to serve as trustee from the outset, or providing proper oversite and mechanisms for trustee removal.

Factor 3: Guardianship Disputes

Guardianships are established to protect and manage the affairs of individuals who are unable to make their own decisions due to mental or physical incapacity, including minor children. Disputes can arise when there is disagreement over the appointment of a guardian, the actions of the guardian, or the necessity of a guardianship. Some common reasons for guardianship disputes include:

Necessity of guardianship: Family members or other interested parties may dispute whether a guardianship is truly necessary or whether a less restrictive alternative, such as a power of attorney or a supported decision-making agreement, might be more appropriate.

Qualifications of the proposed guardian: Disagreements may arise over who should be appointed as a guardian, with family members or other interested parties questioning the qualifications, character, or motives of the proposed guardian.

Breach of fiduciary duty by the guardian: A guardian has a legal obligation to act in the best interests of the ward (the person subject to the guardianship). If the guardian is accused of mismanaging the ward's assets, neglecting the ward's needs, or otherwise acting improperly, a dispute may arise that requires litigation to resolve.

Factor 4: Joint Ownership and Beneficiary Designation Conflicts

Joint ownership and beneficiary designations play a significant role in estate planning, but they can also lead to disputes. Here are some common issues that arise from joint ownership and beneficiary designations:

Ambiguous or outdated designations: If a beneficiary designation is unclear, outdated, or inconsistent with other estate planning documents, disputes may arise among potential beneficiaries or between beneficiaries and the estate's personal representative. It is crucial to review and update beneficiary designations regularly, especially after major life events like marriage, divorce, or the birth of a child.

Disagreements among joint owners: When property is jointly owned, disputes may arise over the management, use, or disposition of the property, particularly when one owner passes away, and their interest in the property passes to their heirs or beneficiaries. If the disagreements cannot be resolved outside of court, it often devolves into a partition action (in the case of real estate) which can be time consuming and costly for the joint owners.

Family dynamics and disputes: Conflicts can arise due to pre-existing tensions among family members, differing opinions on how assets should be managed or distributed, or concerns about favoritism or unequal treatment.

Factor 5: Creditor Claims

Estate litigation can also arise from creditor claims against a decedent's estate. When a person passes away, their debts do not simply disappear; instead, their estate becomes responsible for settling any outstanding debts. Some common issues with creditor claims include:

Disputed debts: Heirs or beneficiaries may challenge the validity of a debt, claiming that the debt has been paid, is invalid, or is otherwise unenforceable. Disputes can arise over the amount owed, the terms of the debt, or the legitimacy of the creditor's claim.

Insufficient estate assets: If the decedent's estate lacks sufficient assets to cover all outstanding debts, disputes may arise among creditors or between creditors and the estate's personal representative over the priority and distribution of assets.

Priority of claims: In Texas, certain creditor claims take priority over others (Texas Estates Code § 355.102). Disputes can arise over the proper classification and priority of claims, particularly when there are insufficient assets to satisfy all outstanding debts.

Estate disputes can be complex, emotionally charged, and challenging to navigate. Understanding the leading factors that drive estates into litigation is crucial for anyone facing estate litigation in Texas or looking to initiate litigation. You should also understand, however, that winning any of these battles in court is extremely difficult and rare. Predicting success is almost impossible unless you have a slam-dunk case.

When you approach an attorney for representation in an estate dispute, you should put your feelings aside and ask for a neutral evaluation of your case to help you determine whether litigating is worth your time, money, and stress. Will litigation itself cost you more than the inheritance you seek is worth? Can you resolve the issue with mediation instead of going to court?

At Bradley Law Firm, our goal is to help clients avoid estate disputes through careful planning and open communication. If litigation is inevitable, however, we educate our clients and empower them with the information they need to initiate successful litigation or defend their rights. If you are facing estate litigation or concerned about a potential dispute, I encourage you to reach out to our experienced estate litigation team. We are here to guide you through the process and protect your interests every step of the way.

How to Execute Estate Planning Documents in Texas

Thu, 30 Mar 2023 15:34:29 GMT

In Texas, as in every state, there are specific legal formalities that must be adhered to when signing these estate planning documents.

When it comes to estate planning, creating legally valid documents, such as wills, trusts, and powers of attorney, is crucial to ensure that your assets are distributed according to your wishes upon your passing and that your healthcare and financial affairs are properly managed. In Texas, as in every state, there are specific legal formalities that must be adhered to when signing these estate planning documents. Failing to follow these formalities could render your documents invalid, leaving your estate to be distributed according to state intestacy laws, which may not align with your intentions, or making it difficult for your loved ones to manage your affairs during times of incapacity.

In this comprehensive guide, we will delve into the intricacies of estate planning document signing formalities in the Lone Star State. Our aim is to equip you with the knowledge necessary to create legally sound estate planning documents that stand up to scrutiny and provide the peace of mind that your final wishes will be honored and your affairs properly managed.

First though, you need to understand some legal terms of art:

A testator is a person who makes and executes a will.
A person who dies with a will is said to die testate , while a person who dies without a will is said to die intestate .
A will is a legal document that outline's a person's wishes regarding the distribution of their assets, property, and care of any minor or disabled persons upon their death.

A holographic will is a will that is written in the testator's handwriting and signed by the testator.
A non-holographic will is a type-written will signed by the testator in the presence of two credible witnesses. Sometimes it will be self-proving, meaning it has a self-proving affidavit signed by the testator, witnesses, and a notary public.
A trust is a legal arrangement (contract) in which one party, known as the grantor or settlor , transfers assets to another party, called the trustee , who holds and manages those assets for the benefit of one or more beneficiaries . Trusts can be established for various purposes, such as estate planning, asset protection, or providing financial support to minors or individuals with special needs. Trusts can be revocable , allowing the grantor to modify or terminate the trust during their lifetime, or irrevocable , which cannot be changed or terminated once established (although they sometimes can through decanting or court order). The trustee has a fiduciary duty to manage the trust assets in accordance with the terms of the trust document and in the best interests of the beneficiaries.
A durable power of attorney (POA) is a legal document that allows an individual, known as the principal , to grant authority to another person, called the agent or attorney-in-fact , to make decisions and act on their behalf in financial, legal, and personal matters. The term " durable " means that the POA remains in effect even if the principal becomes incapacitated or mentally incompetent , unlike a general power of attorney , which would become invalid under those circumstances. A durable POA can be tailored to the principal's specific needs and preferences, granting either broad or limited powers to the agent. It can be effective immediately upon signing or become effective only upon the principal's incapacity, known as a " springing " durable power of attorney.
A Physician's or Medical Directive is a written instrument where the declarant , the individual who makes and executes the directive, expresses their preferences and instructions regarding medical treatment and end-of-life care. The declarant specifies their wishes in the document to guide healthcare providers and appointed agents in making medical decisions on their behalf, particularly when the declarant becomes unable to communicate or make decisions due to illness or incapacity. A medical directive may include a living will , a durable power of attorney for healthcare , or a combination of both.

Wills

A non-holographic will must be signed by either the testator in person or by another person on behalf of the testator in the testator's presence and under the testator's direction. Additionally, a non-holographic will must be attested by at least two (2) credible witnesses who are at least 14 years of age and sign the will in their own handwriting in the testator's presence. A credible witness is a competent witness who receives no financial benefits under the will and is therefore competent to testify regarding the will's execution. A will is not automatically invalidated if a beneficiary or other interested person serves as a witness, but it could significantly affect any intended bequest to the witness. A gift in the will to a witness is void unless certain conditions are met, such as the witness being entitled to a share of the estate had the testator died intestate.

On the other hand, a holographic will must be written entirely in the testator's handwriting and signed by the testator. A holographic will cannot be signed by another person on the testator's behalf and does not need to be attested by any subscribing witnesses. Despite being less formal, holographic wills can still be legally recognized in Texas as long as they meet the necessary requirements.

There is no requirement for a will to be notarized in Texas unless the will is self-proved. A self-proving affidavit or simultaneous attestation is not required to make a valid will, but it will simplify the probate process and is a best practice among estate planning attorneys.

Trusts

In Texas, a trust can be created orally (in limited circumstances) or in writing (Tex. Prop. Code Ann. § 112.001). Unless the trust meets the limited exceptions for a valid oral trust, a trust is only enforceable if its terms are evidenced by a written instrument that is either: (1) Signed by the settlor or the settlor's authorized agent or (2) Created by the court.

Texas law does not require a revocable trust instrument to be witnessed to be valid.

Texas does not require a trust instrument to be notarized to be valid, but notarization is a best practice. If the trust may hold real property and need to be recorded in the real property records, you should have the trust acknowledged and notarized so the trust instrument can be recorded. Financial institutions also often require that trust instruments be written and notarized to avoid fraud.

Durable Power of Attorney

To be valid, the durable power of attorney instrument must be signed either by the adult principal, in the adult principal's conscious presence by another adult at the direction of the principal to sign the principal's name. Texas does not require the power of attorney to be witnessed. The power of attorney however must generally be acknowledged by the principal before a notary public.

Medical Power of Attorney

To be valid, a medical power of attorney instrument must be signed by the adult principal. If the adult principal cannot sign, it can be signed in the adult principal's presence by another person at the direction of the principal to sign the principal's name. The principal's signature must be either made in the presence of two witnesses or in the presence of and acknowledged by a notary public.

Physician's or Medical Directive

The declarant must sign the directive to physicians. The declarant's signature must be either made in the presence of two witnesses or in the presence of and acknowledged by a notary public.

HIPAA Release

The principal must sign and date the HIPAA release. Other people, referred to as personal representatives under the HIPAA regulations, sometimes may sign the HIPAA release on the individual's behalf. These people include the health care agent or agent for an adult or emancipated minor, the parent or guardian of an unemancipated minor in some situations, the fiduciary in charge of a deceased individual's estate. Witnesses are not required for a valid HIPAA release, and neither is a notary.

Can you sign estate planning documents with an electronic signature?

Texas has adopted the Uniform Electronic Transfers Act (UTEA). The UETA authorizes electronic signatures for certain transactions. A transaction is defined as "an action or set of actions occurring between two or more persons relating to the conduct of business, commercial, or governmental affairs. However, the UETA does not apply to laws governing the creation and execution of wills, codicils, or testamentary trusts, and is generally understood to not apply to other documents executed with an estate plan (such as powers of attorney and advance health care directives) because these types of documents are typically not related to a transaction as defined under the UETA.

What about witness signatures?

Wills, trusts, powers of attorney, and advance health care directives generally cannot be witnessed electronically in Texas. There is an exception for Advance Directives Not Prepared by Attorney. Advance health care directives in Texas can be signed, witnessed, and notarized electronically in certain circumstances. These electronic executions are specifically authorized under the Texas Health and Safety Code, not the Texas UETA, and include various restrictions that prevent most attorneys from recommending that clients execute these instruments electronically.

What about remote notarization?

Texas law permits notaries to conduct notarizations remotely, as authorized by a statute. According to the statute, an individual may "personally appear" before a notary using a two-way audio and video communication system, as long as it adheres to the procedures established by the Secretary of State.

Nonetheless, the statute's wording implies that online notaries are only allowed to notarize electronic signatures . Since the Texas Uniform Electronic Transactions Act does not authorize testators to sign wills and codicils electronically, it is not possible to notarize wills online in Texas.

In conclusion, navigating the complexities of estate planning and ensuring that your will and other essential documents are legally valid is crucial for safeguarding your assets and fulfilling your final wishes. Understanding the specific requirements for signing wills, trusts, durable powers of attorney, and medical directives in Texas can provide peace of mind and help you create a solid estate plan. By adhering to the state's guidelines and seeking professional advice, you can ensure that your will and other documents will stand up to scrutiny and protect your family's future.

As you embark on this important journey, remember that knowledge is power. This guide has provided you with an overview of the legal formalities and processes involved in creating and executing wills and other estate planning documents in Texas. Armed with this information, you can confidently take the necessary steps to secure your legacy and provide for your loved ones. Estate planning is an ongoing process, so be sure to review and update your documents periodically to account for any changes in your life or the law. Contact us at Bradley & Hammond for a consultation if you have any questions.

Have more questions about estate planning? Check out our blog for more helpful information, or visit our estate planning page.

Due Diligence for Mineral Buyers and Sellers

Fri, 24 Mar 2023 19:14:34 GMT

Thorough due diligence ensures that buyers and sellers of mineral, oil and gas properties can make informed decisions and avoid potential legal disputes or financial losses.

In the world of mineral rights transactions, due diligence is an essential process for both buyers and sellers. It involves conducting a thorough investigation of the legal, financial, and technical aspects associated with the mineral rights in question. This process ensures that buyers and sellers can make informed decisions and avoid potential legal disputes or financial losses. In this blog post, we will discuss the importance of title examination, examples of title defects, title curative methods, who to engage for help during the due diligence process, and questions to ask about production records and the operator of producing properties.

Title Examination

A key aspect of due diligence in mineral rights transactions is the title examination. This is a detailed review of the mineral rights' historical ownership, conducted by a qualified professional such as an oil and gas attorney or a landman. The examination includes analyzing documents like deeds, leases, assignments, and other instruments of record to verify the current ownership, identify any potential defects or encumbrances, and ensure the proper transfer of ownership. This process allows the parties to understand the full extent of the mineral rights and any associated liabilities.

Title defects are issues that can potentially cloud the ownership of the mineral rights. Examples of common title defects include:

Breaks in the chain of title: Missing conveyance documents or gaps in the ownership history can create uncertainty about the rightful owner of the mineral rights.
Inaccurate or conflicting legal descriptions: Errors in the legal descriptions of the property can lead to confusion about the extent of the mineral rights.
Overlapping ownership claims: Instances where multiple parties claim ownership of the same mineral rights due to ambiguous or conflicting conveyances.
Unreleased liens or encumbrances: Prior security interests, mortgages, or other encumbrances that have not been properly released or satisfied.
Uncured probate issues: Inadequately administered estates or unresolved inheritance matters that affect the title.

To address title defects, parties must undertake title curative actions. These actions help to resolve any identified issues and ensure a clean transfer of ownership. Some common title curative methods include:

Obtaining corrective instruments: Acquiring documents such as corrected deeds or affidavits that rectify errors or omissions in the chain of title.
Quiet title actions: Initiating a legal proceeding to resolve competing claims or remove any clouds on the title.
Judicial or non-judicial probate proceedings: Addressing unresolved probate matters to establish a clear line of inheritance.
Releasing liens or encumbrances: Securing proper releases from lienholders or other parties with an interest in the property.

When conducting due diligence, it's crucial to engage qualified professionals with experience in the oil and gas industry. This may include oil and gas attorneys, landmen, or title agents who can navigate the complexities of title examinations, identify title defects, and guide you through the curative process. Their expertise will help minimize risks and ensure a smooth transaction for both buyers and sellers.

Another crucial aspect of the due diligence process is obtaining a title opinion. A title opinion is a legal document prepared by an experienced oil and gas attorney, which provides a detailed analysis of the title examination, identifies any title defects, and offers recommendations for curative actions. The title opinion serves a similar purpose to title insurance. It helps protect buyers and sellers from potential legal disputes and financial losses that may arise due to title issues. While title insurance provides financial coverage for losses caused by defects in the title, a title opinion offers a thorough assessment of the title's current status and suggests appropriate remedies to ensure a clear and marketable title.

Production Records Review

If the property is currently producing, it's essential to analyze production records to gain insights into the asset's performance and future potential. This may include reviewing:

Production history: Analyze historical production data to understand trends, decline rates, and the potential for future production.
Revenue and expense statements: Review financial statements related to the property to gain insights into the profitability of the asset and identify any significant expenses or liabilities.
Lease and operating agreements: Evaluate the terms of existing agreements to understand the rights and responsibilities of both the mineral rights owner and the operator.
Regulatory filings and compliance records: Ensure the operator has maintained compliance with relevant federal, state, and local regulations, and identify any potential environmental or safety concerns.

Researching the Operator

For producing properties, or those that are likely to be produced, understanding the performance and reputation of the operator is crucial, as the operator can impact the value and management of your mineral rights. Here are some factors to research about the operator:

Track record: Investigate the operator's history of success and experience in managing similar properties.
Financial stability: Assess the operator's financial health to ensure they have the resources to continue managing the property effectively.
Regulatory compliance: Look into any history of regulatory violations, fines, or penalties the operator may have incurred.
Reputation within the industry: Seek feedback from other mineral rights owners or industry professionals about the operator's reliability and management practices.

Mineral Appraisals

To establish an accurate value for the mineral rights, you should consider obtaining a mineral appraisal from a qualified professional. A mineral appraisal will take into account factors such as current and future production, commodity prices, geological factors, and comparable sales in the area. This information can help both buyers and sellers negotiate a fair price for the asset.

Conducting thorough due diligence before buying or selling mineral rights is crucial for protecting your interests and avoiding potential legal disputes. By engaging in a comprehensive title examination, identifying and addressing title defects, and seeking the help of qualified professionals, buyers and sellers can navigate the complexities of mineral rights transactions with confidence. At Bradley & Hammond Attorneys at Law , we understand that each case is unique, and we are committed to providing personalized legal guidance tailored to your specific circumstances. Our experienced team is well-versed in business law, real estate, estate planning, probate, and oil and gas law, and we are ready to help you navigate the complexities of your mineral rights. Contact us today or call 412-533-2620 (PA) or 817-645-3993 (TX) to schedule a consultation and discuss your options.

Choosing the Right Vehicle for Your Mineral Rights: LLCs, Trusts, and Personal Ownership

Fri, 17 Mar 2023 18:01:18 GMT

The vehicle you choose to hold your mineral rights should reflect your goals for asset protection, tax planning, and control for effective mineral rights management.

When it comes to holding mineral rights, there are several vehicles to consider for effective asset management and protection. Two common choices are Limited Liability Companies (LLCs) and Trusts. In this blog post, we will examine the pros and cons of each, providing you with valuable insights to make an informed decision for your unique situation. As always, we at Bradley & Hammond Law Firm are here to help you navigate the complexities of mineral ownership and management.

Limited Liability Companies (LLCs)

An LLC, or Limited Liability Company, is a legal business structure that combines the benefits of both corporations and partnerships. It offers limited liability protection to its members (owners), meaning their personal assets are generally shielded from the business's debts and liabilities. Additionally, an LLC typically has pass-through taxation, where profits and losses are reported on the members' individual tax returns, avoiding the double taxation that can occur in corporations. This business structure also provides flexibility in management and operations, as it allows members to customize the company's organization and decision-making processes according to their specific needs. Overall, an LLC is a popular choice for entrepreneurs and small business owners seeking a balance between liability protection, tax advantages, and operational flexibility.

Here are the pros and cons of using an LLC to hold mineral rights:

Pros:

Limited Liability Protection. An LLC provides limited liability protection to its members, meaning their personal assets are shielded from the business's liabilities and debts. This is a significant advantage when holding mineral rights, as it can minimize the risk of personal financial loss due to unforeseen circumstances or disputes.
Flexibility in Management. LLCs offer flexibility in terms of management and structure, allowing members to tailor the company to their specific needs. This flexibility can be advantageous when dealing with mineral rights, as it allows for efficient decision-making and ease of operations.
Pass-through Taxation. An LLC typically has pass-through taxation, meaning the profits and losses are reported on the members' individual tax returns. This structure can be beneficial as it avoids double taxation, which can occur in other business entities like corporations.

Cons:

State Fees and Annual Filings. LLCs are subject to state fees and annual filings, which can add to administrative burdens and costs.

Public Record. Because LLCs are creatures of the state legislature, all LLC information is generally available in public records, potentially limiting the privacy of the members involved in the mineral rights.
Self-employment Tax Considerations . Members of an LLC may be subject to self-employment taxes on their share of the profits, which can increase their overall tax liability. The LLC could elect to be taxed as an S-corp to avoid self-employment taxes, but doing so requires the LLC to follow more strict and complicated tax rules.

Trusts

A trust is a legal arrangement in which a grantor (also known as a settlor or trustor) transfers assets to a trustee, who then manages these assets for the benefit of one or more beneficiaries. Trusts are established through a written document called a trust agreement, which outlines the terms, conditions, and instructions for the management and distribution of the trust assets. There are various types of trusts, including revocable and irrevocable trusts, each with their own unique features and purposes. Trusts are commonly used for estate planning, asset protection, and tax planning purposes. They can provide privacy, avoid the probate process, and enable long-term control over assets, ensuring that the grantor's wishes are carried out and the beneficiaries' interests are protected.

In the context of mineral ownership, it's essential to understand the differences between irrevocable and revocable trusts. An irrevocable trust is a trust that, once established, generally cannot be altered, modified, or terminated by the grantor without court approval or going through a legislatively-authorized decanting process. This inflexibility can offer certain benefits, such as enhanced asset protection from creditors and potential tax advantages. However, it can also be a disadvantage when dealing with mineral rights, where circumstances may change, and adjustments to the trust may become necessary. On the other hand, a revocable trust, also known as a living trust, can be modified or terminated by the grantor during their lifetime. While revocable trusts may not provide the same level of asset protection or tax benefits as irrevocable trusts, they offer greater flexibility in managing mineral rights and adapting to changing circumstances. Ultimately, the choice between an irrevocable and revocable trust for mineral ownership will depend on factors such as the grantor's goals, risk tolerance, and the need for control over the assets.

Here are some pros and cons of holding your mineral rights in a trust:

Pros:

Potential Tax Advantages. Trusts can offer tax advantages, particularly in the estate planning context when transferring wealth to beneficiaries. These benefits may reduce the overall tax burden associated with mineral rights.

Privacy. Trusts provide privacy for the grantor and beneficiaries, as they are generally not part of the public record. They are a contractual arrangement, rather than a creature of state legislatures like an LLC. This can be particularly advantageous when holding valuable assets like mineral rights.

Avoids Probate. Assets held in a trust avoid the probate process, potentially saving time and expenses for beneficiaries. Mineral rights held personally or in an LLC, by contrast, must go through probate to pass to the next generation.

Long-term Control. Trusts allow the grantor to maintain long-term control over assets, including mineral rights, and can provide specific instructions for their management and distribution. The trust itself, depending on how it is written, will often survive the death of the grantor.

Cons:

Irrevocability (in some cases). Some trusts, particularly irrevocable trusts, cannot be easily modified or terminated once established. This lack of flexibility can be a disadvantage when dealing with assets like mineral rights, where circumstances may change over time. Before setting up a trust, you should carefully evaluate whether an irrevocable trust or a revocable trust is right for your circumstances and goals.

More Complex to Establish. Trusts can be more complex and time-consuming to establish compared to LLCs or simply holding the minerals individually, which may result in higher legal fees and additional planning.

Trustee Fees. Trusts require the appointment of a trustee to manage the assets, and if the trust allows the trustee to collect management fees, those fees can add to the overall cost of maintaining the trust.

Keep it simple: hold the minerals in your own name

While LLCs and Trusts are common vehicles for holding mineral rights, another option is to hold these rights in your individual name. Below, we discuss the pros and cons of holding mineral rights in your name to help you better understand this option.

Pros:

Simplicity. Holding mineral rights in your individual name is the most straightforward option. There is no need to create a separate legal entity or trust, which can save time and legal fees.

Direct Control. By owning mineral rights in your name, you retain direct control over the assets and their management. This allows you to make decisions without consulting other members, trustees, or managers.

Easier Tax Reporting. As the sole owner of the mineral rights, you report any income, deductions, and credits related to the assets on your personal tax return. This approach can simplify tax reporting compared to managing an LLC or Trust.

Cons:

Lack of Asset Protection. Holding mineral rights in your individual name exposes your personal assets to potential liabilities associated with the mineral rights. This risk is significantly higher compared to holding assets through an LLC or Trust, which provides a degree of liability protection.

Limited Estate Planning Options: When mineral rights are held in your individual name, they become part of your probate estate upon your death. This may result in a more complicated and time-consuming probate process for your beneficiaries. Trusts, in particular, can provide more efficient estate planning options.

Ultimately, the decision to hold mineral rights in your individual name, an LLC, or a Trust will depend on your specific circumstances and goals. At Bradley & Hammond Attorneys at Law, we understand that each case is unique, and we are committed to providing personalized legal guidance tailored to your specific circumstances. Our experienced team is well-versed in business law, real estate, estate planning, probate, and oil and gas law, and we are ready to help you navigate the complexities of your mineral rights. Contact us today or call 412-533-2620 (PA) or 817-645-3993 (TX) to schedule a consultation and discuss your options.

The Power of Trademark Licensing: Protecting Your Brand and Unleashing Business Opportunities

Thu, 16 Mar 2023 15:12:53 GMT

A well-drafted trademark license agreement protects intellectual property rights, ensures successful collaboration, and addresses potential legal claims or damages.

Trademarks play a crucial role in protecting a business's identity, reputation, and brand. One way to leverage the value of a trademark is through licensing agreements, which can offer various benefits, such as sponsorships, joint marketing, and tax advantages. This blog post will explore trademark licensing, its importance, and key terms to consider, as well as situations where licensing agreements make sense for your business.

What is a Trademark?

A trademark is a distinctive symbol, logo, word, or phrase that identifies and distinguishes a company's products or services from those of other businesses. Trademarks help customers recognize the source and quality of goods or services, making them an essential aspect of branding and building consumer trust.

What is a Trademark License Agreement?

A trademark license agreement is a legal contract between a trademark owner (licensor) and another party (licensee) that grants the licensee the right to use the trademark for specific purposes under certain conditions. This agreement enables businesses to expand their brand reach, generate revenue, and collaborate with other entities without giving up ownership of their intellectual property.

The Importance of a Trademark License Agreement

Trademark licensing offers several advantages:

Sponsorships and joint marketing: Licensing allows businesses to collaborate with other companies, fostering mutual growth and exposure through sponsorships or joint marketing efforts.

Revenue generation: Licensors can earn royalties from licensees for the use of their trademark, creating an additional income stream.

Tax benefits: Owning the trademark in an IP holding company and licensing it to your own business can provide tax advantages, such as lower tax rates or favorable deductions, depending on the jurisdiction.

Brand expansion: Licensing agreements enable businesses to enter new markets and reach a wider audience without the need for significant investment or infrastructure development.

Quality control: Licensors can set standards for the quality of goods and services associated with their trademark, ensuring that their brand reputation remains intact.

Key Terms to Include in a Trademark License Agreement

A well-drafted trademark license agreement is essential for ensuring a successful collaboration and safeguarding intellectual property rights. Key terms to include in such an agreement are the scope of the license, which should clearly define the specific rights granted to the licensee, including the products or services they can offer and the geographic territory in which they can operate. Additionally, the agreement should outline the financial terms, such as the royalty rate, payment schedule, and any additional fees associated with the license.

It is also crucial to specify in the agreement any quality control standards that the licensee must adhere to when using the trademark (the mark should always be legible, displayed in a certain size, etc.), as well as any monitoring or reporting requirements. The agreement should have a definitive term, and establish conditions under which either party can terminate the license.

The agreement should also clarify that the licensor retains ownership of the trademark and that the licensee has no rights to modify, transfer, or sublicense the trademark without the licensor's permission. It should also address each party's responsibility for legal claims or damages that may arise from their respective actions or omissions, which state's law governs the instrument, and, if you feel so inclined, breach and alternative dispute resolution provisions.

Situations Where Licensing Agreements Make Sense

Licensing agreements make sense in various situations, such as sponsorships, where businesses can increase brand visibility and reach a broader audience by sponsoring events, teams, or organizations. They also facilitate joint marketing efforts between businesses, enabling them to pool resources, share costs, and leverage each other's expertise for mutual benefit. Franchise businesses often rely on licensing agreements to grant franchisees the right to use the franchisor's trademark, business model, and proprietary information, which enables the brand to expand into new markets. Furthermore, licensing agreements can foster collaborations between businesses to develop and market new products or services, combining their respective strengths and expertise.

In addition to public facing situations, owning the trademark in an IP holding company and licensing it to your own business can yield tax advantages, depending on the jurisdiction. For instance, with a licensing agreement between your own IP holding company and your own business, your business can pay royalties to your IP company for use of the trademark, creating income to the IP holding company that may be in a lower tax bracket, while creating a royalty deduction for the business, lowering its taxable income. Not only that, but by holding your trademark in a separate IP company, you can protect it from any claims against your business.

In summary, a well-drafted trademark license agreement is critical to protect intellectual property rights, ensure a successful collaboration, and address potential legal claims or damages. By considering the various situations in which licensing agreements make sense, businesses can maximize their brand visibility, achieve tax and asset protection advantages, and foster strategic partnerships for mutual growth and success.

Bradley & Hammond Law Firm offers comprehensive and customized legal solutions for businesses of all sizes, including trademark registration and licensing. Our primary focus is to alleviate our clients' legal concerns, empower them to achieve their business aspirations, and effectively manage legal risks.

Do you have questions about trademark registration and licensing? Contact us or call 412-533-2620 (PA) or 817-645-3993 (TX) to schedule a consultation.

Federal Trademark Registration: What B2B Businesses Need to Know

Tue, 28 Feb 2023 20:35:22 GMT

Filing a successful trademark application for a B2B business takes time, research, and careful planning.

When most people think of intellectual property, they think of patents and copyrights, inventions, books, and music.

Y our B2B business’ brand identity – its name, phrases, symbols, logos, and designs -- is also intellectual property entitled to certain protections under federal and state law. Protecting and leveraging your business' intellectual property is important, and adds value to your company and needs protection from copycats.

One of the most effective ways to protect your brand is by registering your brand’s name, phrase, symbol, logo, or design -- your mark -- as a trademark with the US Patent and Trademark Office (USPTO). In this article, we’ll explore what federal trademark registration is, what benefits it offers, and give a high-level overview of the registration process.

What is Federal Trademark Registration?

Federal trademark registration is the process of registering a trademark with the USPTO. A trademark is a word, phrase, symbol, or design that identifies and distinguishes the source of a product or service from those of others. By registering your trademark with the USPTO, you gain nationwide protection and legal rights to use your mark in commerce.

Owning a federally-protected trademark has benefits:

Legal protection: Registration provides enforcement rights and protection against trademark infringement. In case of infringement, once your trademark is registered, you can take legal action to protect your brand and seek damages.
National coverage: Registration with the USPTO grants nationwide protection, allowing you to expand your business and sell your products or services in other states. While you can also register trademarks with individual states, federal trademark registration has the broadest reach.
Exclusive rights: Registration gives you exclusive rights to use the mark in connection with your goods or services. Once registered, you have the legal right to prevent others from using a similar mark that may cause confusion or dilute your brand.
Deterrent: Registration deters others from using a similar mark. Once registered, your trademark will be listed on the USPTO database, making it easy for others to search and avoid using a similar mark.

Filing a successful trademark application for a B2B business takes time, research, and careful planning. Very broadly, here are the steps to follow:

Step 1: Conduct a Trademark Search

Before you apply for federal trademark registration, you need to conduct a comprehensive search to ensure that your proposed mark is available for registration. You should do this at the same time you register your LLC or business with the state. Conducting a search can help you identify potential conflicts and avoid costly legal battles and re-brands. You can perform a search on the USPTO website or hire a trademark attorney to conduct a search for you. Want to see if your top name is available before committing? Ask a trademark attorney to run a knock-out search to eliminate obvious non-starters.

Step 2: Choose a Strong Mark

To increase your chances of getting your trademark approved, it’s important to choose a strong mark. A strong mark is unique, memorable, and not descriptive of the goods or services you provide. Avoid using generic or descriptive terms that can’t be trademarked. A strong mark can be arbitrary, fanciful, or suggestive of your brand. After running a comprehensive trademark search, your trademark attorney will issue an opinion letter that flags any issues with the mark you intend to use and any marks similar to it in your industry.

Step 3: File Your Trademark Registration Application

While you can file the application yourself, it is highly recommended to hire a trademark attorney to guide you through the process. He or she will know strategies for filing that are more likely to get your mark registered. Once the application is filed, it will take some time for the USPTO to review the application, issue any office actions (objections or questions), and finally approve or reject your application. As of the writing of this article in 2023, it can take more than a year for the USPTO to process an application.

Step 4: Maintain your registration status

Once your application is approved (congratulations!), you will need to use your mark in commerce to maintain its registration. If you don’t use your mark for a consecutive three (3) years, it can be considered abandoned and lose legal protection, although exceptions can apply. Use your mark on your products or services, advertising, and other branding materials to establish your brand identity and maintain your trademark registration. Additionally, a Declaration of Use and Application for Renewal must be filed every 10 years after registration.

Step 5: Monitor Your Trademark

Once you’ve registered your trademark, you will need to monitor its use and enforce your rights against others who copycat. Regularly monitor the market and the USPTO database to ensure that no one is infringing on your trademark. If you find any unauthorized use of your mark, take legal action to protect your brand and seek damages. Your trademark attorney can help you with monitoring and protecting your trademarks.

In short, federal trademark registration is a crucial step in protecting your intellectual property and establishing your brand identity. As a B2B business owner, it’s important to conduct a comprehensive search, choose a strong mark, use your mark so its registration doesn't expire, and monitor your trademark to ensure legal protection and prevent trademark infringement.

Don’t forget that trademarks, and intellectual property law in general, is complicated. Relying on a trademark attorney to guide you through the process can save you time and money in the long run. It's best not to DIY something outside of your expertise. A story to illustrate this point:

Imagine you decided to DIY your trucking business' trademark application. You picked a generic name for your brand, and because you are a veteran, used the US Airforce insignia in your branding. You wanted to save money, so you decided not to do a trademark search, or maybe you did a search but the USPTO's free search database, TESS, came back with no direct matches when you looked. You filed your application and waited a year to hear from an examiner, just to have your application rejected because the name is generic (first problem) and it infringes on existing trademark rights -- rights belonging to the US Airforce (second problem). Here's the real issue though: while you were waiting for your application to be reviewed, you used your mark to form your business entity, put it on all of your contracts, marketing materials, websites, vehicles, building signage, and so on. Because your mark infringes on the rights of another, you will need to re-do all of your branding, including your business name. How will your customers handle a business name change? Will they know who you are? And all of that re-branding costs your business time and money.

Risks like the ones described above can be avoided by using a trademark attorney to help you pick a strong mark, run thorough searches, and advise you on risk of rejection prior to filing your application. The Attorneys at Bradley & Hammond Attorneys at Law help B2B business owners with federal trademark searches, applications, office action responses, enforcement, and monitoring. Want to grow your business and protect your intellectual property? Schedule a consultation by calling (412) 533-2620 (PA) or (817) 645-3993 (TX), or contact us online.

Navigating Mineral Transactions: Tips for Buyers and Sellers

Wed, 22 Feb 2023 22:11:28 GMT

Whether you're a mineral buyer or seller, it's important to understand the transaction and the key terms and conditions in the purchase agreement.

Are you considering buying or selling mineral rights? Whether you're a mineral buyer or seller, it's important to understand the transaction and the key terms and conditions in the transaction documents. The process for buying or selling mineral rights can be complex, and it's essential to have a good understanding of the steps involved in the transaction process.

The Mineral Purchase Transaction

The mineral purchase process typically starts with an offer from the buyer to the seller. This offer will typically include a purchase price and other terms that the buyer is willing to agree to as set forth in a written offer. If the seller accepts the offer, the parties will then enter into an agreement of sale. This agreement will typically include a description of the mineral rights being sold, the purchase price, and other key terms (we will discuss those terms in more detail below).

Once an agreement of sale has been reached, the buyer will usually be entitled to perform due diligence to ensure that the mineral rights are free from defects and encumbrances which affect the marketability of title. Due diligence usually involves obtaining a title abstract dating back over 100 years (depending on where the assets are located) and a review of title and any liens affecting the interest. Sometimes the mineral buyer will obtain a title opinion from an oil and gas title attorney during this time frame to advise on the marketability of title and any curative required to clear title prior to purchase. If any issues are discovered during due diligence, the parties may need to perform title curative to resolve them. Curative can include anything from opening probate estates, filing affidavits of heirship and corrective deeds, to filing lawsuits and obtaining releases from prior owners or lienholders.

Once due diligence and curative is complete, the parties will move on to the closing phase. At this point, the buyer will typically provide payment to the seller, and the seller will transfer the mineral rights to the buyer. This may involve the execution of a deed, assignment, or other legal documents to effectuate the transfer of ownership. A mineral deed is most common.

Key Terms to Consider in a Mineral Purchase or Sale

When entering into a mineral purchase and sale agreement, it's important to consider several key terms and conditions, including:

Purchase price: The most critical term for both the buyer and the seller is the purchase price. This includes the amount, currency, and payment terms, as well as any adjustments that may be made based issues identified during due diligence.
Due diligence period and curative period: The purchase agreement should define how much time the buyer has to review title, the scope of the review, and time available for curative if defects are discovered. These provisions should also discuss which party is responsible for doing curative, who will pay for it, and what rights the parties have if title is less than marketable. For instance, does it allow for the contract to be terminated by the buyer without doing curative, or does the buyer need to provide the seller a certain amount of time to cure before the deal terminates?
Closing: The purchase agreement should detail when and where closing will take place.
Representations and warranties: Mineral sellers need to provide accurate and comprehensive representations and warranties regarding the ownership and status of their minerals, and mineral buyers need to be assured that they are buying clear title from a party with the authority to convey it. This is where representations and warranties come into play. You should review your agreement, or better yet -- have your oil and gas attorney review your agreement -- to ensure that the reps and warranties are not overly broad or too narrow for your situation.
Covenants and conditions: Mineral buyers and sellers may also need to make and fulfill certain covenants and conditions before the closing date, such as obtaining necessary consents and approvals or providing access to relevant documentation and information, such as corporate resolutions, certificates of trust, and other documentation to prove their authority to transact.
Indemnification and liability: Mineral buyers and sellers need to consider the indemnification and liability provisions in the purchase agreement. These provisions include the parties' respective obligations to indemnify the other for any losses arising from breaches of representations and warranties, as well as liability for other claims, such as breach of contract or failure to convey clear title.

Buying or selling mineral rights can be a complex process. It's an important decision that can have significant financial benefits and risk. Whether you're a mineral buyer or seller, it's important to work with an experienced oil and gas attorney to ensure that your interests are protected, and that the transaction serves your needs and goals.

If you are buying or selling minerals, we are here to help. Contact us today or call (817) 645-3993 (Texas) or (412) 533-2620 (PA) to schedule a consultation with one of our oil and gas attorneys.

New Case Law Affecting the Fixed vs. Floating Royalty Dilemma: Susan Davis Van Dyke v. The Navigator Group

Mon, 20 Feb 2023 15:24:05 GMT

Texas Supreme Court clarifies how to interpret Texas mineral deeds containing double fractions with a reference to 1/8

The facts of Susan Davis Van Dyke, et al. v. The Navigator Group, et al., Case No. 21-0146 (Tx Supreme Court Feb. 17, 2023) are straightforward, as far as title litigation goes.

In 1924, George H. Mulkey and his wife conveyed their ranch and the underlying minerals to G.R. White and G. W. Tom, reserving “one-half of one-eighth of all minerals”. Facts were introduced at trial showing a 90-year history of the parties’ predecessors treating the interest as a 1/2 mineral interest in leases, division orders, conveyances, probate inventories, stipulations and other recorded documents. The parties are the successors in interest to White and Tom, and Mulkey.

Despite this history, in 2013, after Endeavor Energy drilled a well and started paying a floating 1/2 royalty, the successors in title to White and Tom (the “White parties”) filed suit arguing that the deed reserved only a 1/16 of the minerals, or simply 1/2 of 1/8 mathematically.

Susan Van Dyke, et al., the successors to George H. Mulkey (the “Mulkey parties”), argued that the interest reserved was a 1/2, and that the referenced 1/8 was a term of art at the time the deed was drafted. They further argued that the Estate Misconception Theory applied – the once common misconception that a lessor only retained a 1/8 interest in the minerals after executing an oil and gas lease – to allow a rebuttable presumption that the reference to a 1/8 is a reference to the mineral estate as a whole.

The trial court agreed with the White parties and held that the deed was unambiguous and reserved only a 1/16. On appeal, the Appellate Court for the Eleventh District affirmed the trial court’s decision. It further held that the Estate Misconception Theory did not apply because (1) the deed did not contain any conflicting provisions requiring harmonization and (2) there was no lease in existence at the time of the conveyance.

The Texas Supreme Court disagreed and overturned the appellate court’s decision, holding that the interest reserved was a 1/2. The Court explicitly used the case as an opportunity to clarify its previous holding in Hysaw v. Dawkins , 438 S.W.3d 1 (Tex. 2016), and how to apply the Estate Misconception Theory.

Under standard rules of deed of interpretation, Texas courts will adopt a word’s ordinary meaning unless otherwise defined in the document. The words in a deed must be given the meaning they had when the text was adopted and given their historic context. Unless a deed is ambiguous, courts are limited to the four corners of the deed and must determine, objectively and not subjectively, what the parties meant by the words they used in the deed.

The Court relied on its opinion in Hysaw to discuss the historical use of 1/8 as a reference to the standard royalty reserved in an oil and gas lease and the Estate Misconception Theory. In Hysaw , the Court construed the terms of a 1947 will that bequeathed to each child “one-third of one-eighth royalty” to be a 1/3 floating royalty, and explicitly rejected “a mechanical approach requiring rote multiplication of double fractions whenever they exist.” To reach this conclusion, the Court relied on (1) the Estate Misconception Theory and (2) the historical use of 1/8 as the standard royalty in oil and gas leases.

The Court noted that even after Hysaw , state courts still used conflicting approaches to interpret deeds containing double fractions, and that clear guidance for the courts and the public is necessary to prevent wasteful litigation over double fractions. To address this problem, the Court laid out an approach that it feels is flexible, and advances stability and predictability from case to case:

When courts confront a double fraction involving 1/8 in an instrument, the logic of our analysis in Hysaw requires that we begin with a presumption that the mere use of such a double fraction was purposeful and that 1/8 reflects the entire mineral interest, not just 1/8 of it. . . . Our analysis in Hysaw thus warrants the use of a rebuttable presumption that the term 1/8 in a double fraction in mineral instruments of this era refers to the entire mineral estate. Because there is ‘little explanation’ for using a double fraction for any other purpose, this presumption reflects historical usage and common sense.

The presumption can be rebutted with evidence in the deed itself that the parties’ intent was otherwise.

The Court made clear that sometimes the language in the deed itself will confirm the presumption, sometimes it will rebut it, and sometimes, due to the nature of mineral conveyances, it may do neither. Either way, courts should begin with a presumption that the 1/8 in a double fraction was meant to refer to the mineral estate as a whole, and then look for language in the deed that could indicate the parties’ intent was otherwise.

The Court examined the Estate Misconception Theory and noted that the appellate court got the analysis backward. To rely on the Estate Misconception Theory, a court does not need to first identify a lack of inconsistent provisions in the deed and then use the presumption to harmonize the language used. Instead, courts should begin with the presumption and then look for language in the deed that rebuts it. “The use of a double fraction in a deed, combined with the lack of anything that could rebut the presumption, is precisely why we can conclude as a matter of law that this deed did not use a 1/8 in its arithmetical sense . . .”

The confusion in how to use the Estate Misconception Theory likely stemmed from its use in Hysaw , Luckel v. White , 819 S.W.2d 459 (Tex. 1991), and Concord Oil Co. v Penzoil Expl. & Prod. Co. , 966 S.W.2d 451 (Tex. 1998), which all required harmonization of language in the instrument. According to the Court, however, the presumption that 1/8 is a reference to the entire mineral interest is not, and has never been, limited to harmonization cases.

So, what are the takeaways for mineral owners and oil and gas operators?

Interpreting deeds containing double fractions is now a lot easier. The rule to apply is that parties are permitted to a rebuttable presumption that a reference to 1/8 in a double fraction in historic mineral conveyances refers to the mineral estate as a whole. The presumption can be rebutted by evidence in the deed that the reference to 1/8 in the double fraction means otherwise, permitting rote multiplication or some other means of determining the amount of the interest reserved or conveyed. The litigation risk around most double fraction conveyances should be greatly reduced. The winner in such a dispute will be clear.

As far as litigation risk is concerned, whenever there is a clarification in the law which resolves an area that previously posed a high risk of uncertainty, mineral owners that are paying attention will likely examine how the clarification affects their interests. With clearer case law, however, we predict that most disputes should be resolvable outside of court with a written stipulation of interest.

What about overpayments or underpayments? Is a mineral owner who was overpaid responsible for repaying those funds to a party who was underpaid? Yes, unless a statute of limitations applies. Typically, a party who was underpaid should pursue the party that was overpaid to obtain what is rightfully theirs under the law, but often the operator can prospectively balance payments between the parties by adjusting future payments to both.

Oil and gas operators will need to take note of the change and plan to address disputes that could arise. They should review whether they are protected by a title opinion and whether a new title opinion should be obtained before making a change to an owner’s payment status. Operators should also evaluate how the Court’s holding affects suspended royalty payments and pending or threatened litigation.

Does the Texas Supreme Court's holding affect you? Contact one of our oil and gas attorneys to discuss further. Our office can be reached by calling (817) 645-3993 or you can contact us online to schedule a consultation.

Guide to Inherited Mineral Rights: Understanding Oil and Gas Mineral Rights

Wed, 08 Feb 2023 10:30:00 GMT

What should you do with your inherited mineral rights? First, you need to understand what they are.

If you have inherited oil and gas rights , your first step is to understand exactly what they are. Oil and gas rights can come in many forms, each with distinct characteristics which affect its value and what you can do with it.

In the law, a n oil and gas interest is often compared to a "bundle of sticks" with a number of rights which can be divided and separately conveyed. The "sticks in the bundle" are:

Executive Leasing Rights. The executive leasing right is the right to enter into an oil and gas lease.

Right to Develop. The right to develop gives the owner the ability to drill and produce minerals on a specific piece of land.

Right to Receive Bonuses. The right to receive bonuses gives the owner the right to receive a bonus payment in exchange for entering into a lease.

Right to Receive Delay Rentals. The right to receive delay rentals gives the owner the right to receive rental payments for delays in the drilling or production of minerals on a specific piece of land.

Right to Receive Royalties. The right to receive royalties gives the owner the right to receive a portion of the production from a specific piece of land.

It is also possible to inherit leasehold interests if a loved one owned oil and gas leases either held individually or in a corporation, partnership, or LLC:

Leasehold Working Interests. A working interest in a lease gives the owner the right to explore, develop, produce, and own minerals on a specific piece of land. This is the interest an oil and gas operator (Lessee) receives when the mineral owner (Lessor) executes an oil and gas lease.

Overriding Royalty Interests. An overriding royalty interest is a non-operating revenue interest in an oil and gas lease that gives the holder the right to receive a percentage of the production from a specific piece of land, without being responsible for the costs of production. This interest is tied to an oil and gas lease, and will often terminate when the lease itself terminates.

Net Revenue Interests. This is the interest in production retained by the working interest owner in a lease. The working interest holder's net revenue interest in production is reduced by the mineral owner's royalty and any overriding royalties of record.

When it comes to deciding what to do with inherited oil and gas mineral rights, owners typically have to decide whether to keep their rights or sell them, and if they are undeveloped, whether to lease them. What to do depends on several factors, including the size and value of the mineral interest, the location of the mineral interest, whether the mineral interest is developed or undeveloped, the current market conditions for selling or leasing minerals, and the owner's personal financial situation and goals.

For instance, insubstantial mineral interests -- often fractional interests in a nonparticipating royalty passed down and diluted in size over generations -- may cost an owner more time and money to manage than they are worth. It may make more sense to sell such rights for a lump sum rather than go through the process of transferring ownership into their own name. If the interest is large and capable of producing substantial revenue, however, it may be worth holding on to for future royalty payments, or selling to a mineral buyer for a larger lump sum payment.

In order to make informed decisions about what to do with inherited mineral rights, it is important to work with a knowledgeable attorney who understands the oil and gas industry and the various legal and financial considerations involved. An attorney can help the owner locate and determine the extent of their interest, conduct market research and find mineral buyers or leasing opportunities, and provide advice on whether to keep or sell the minerals.

Learn more about your mineral rights. Check out our posts about choosing the right legal vehicle to hold your rights and the top questions to ask when negotiating an oil and gas lease .

The attorneys at Bradley & Hammond Attorneys at Law are uniquely qualified to help oil and gas mineral rights owners with all aspects of mineral ownership. Schedule a consultation today by contacting us or by calling 817-645-3993 (Texas) or 412-533-2620 (Pennsylvania).

A Guide to Texas Mediation Laws

Mon, 06 Feb 2023 21:09:12 GMT

The Texas Uniform Mediations Act governs mediation process and procedure in Texas

Mediation is a popular alternative to traditional litigation for resolving disputes. Texas laws provide a framework for the process. In Texas, the legal framework governing mediation is the Texas Uniform Mediation Act (TUMA). TUMA applies to any mediation, whether it is court-ordered or voluntary. It sets out the rules and guidelines for the process.

Under TUMA, mediation is defined as "a process in which a neutral person facilitates communication between parties to assist them in reaching a mutually acceptable agreement." TUMA applies to both private and court-ordered mediation and it provides for the confidentiality of mediation communications. Any information disclosed or any agreements made during the mediation session cannot be used as evidence in court.

TUMA also provides that a mediation agreement is enforceable if it complies with certain requirements. The agreement must: (1) be in writing, (2) clearly state that the parties are required to engage in mediation before taking any legal action to resolve a dispute and (3) must be signed by all parties.

TUMA also provides that a court may order the parties to participate in mediation if it finds that the dispute is appropriate for mediation and that the parties are likely to benefit from the process. If a party refuses to comply with a court order to participate in mediation, the court may impose sanctions, including the imposition of attorney's fees and costs.

Additionally, TUMA provides that a mediator must be impartial and shall not have any financial interest in the outcome of the dispute. It also provides that a mediator shall disclose any known or potential conflicts of interest before accepting a mediation.

It is important for parties and their attorneys to be familiar with the TUMA when engaging in mediation in Texas. Keith Bradley provides mediation services in Johnson County, Texas, and surrounding counties. To schedule a mediation session, call 817-645-3993 .

Essential Considerations for Estate Planning with Mineral Rights

Mon, 06 Feb 2023 10:30:00 GMT

As a mineral rights owner, you may have unique considerations that are not present for other property rights owners in estate planning.

Estate planning is a critical aspect of preparing for your future and preserving your legacy, particularly when it comes to owning oil and gas mineral rights. If you are a mineral rights owner, you may be wondering how to ensure that your assets are protected and passed down to your heirs or beneficiaries in a way that reflects your wishes and meets your goals. To help you make informed decisions, this article will outline some of the key considerations to keep in mind when planning your estate in regards to mineral rights ownership.

Understanding Your Mineral Rights. Before you can create a comprehensive estate plan, it is essential to have a good understanding of your mineral rights. This includes knowing what rights you have, what rights you can sell or transfer, and what rights you may be required to retain. Understanding the nature of the oil and gas mineral rights that you own will help you make informed decisions about your estate planning goals and the documents you need to put in place.

Estate Planning Documents. Estate planning involves putting together a set of documents that define how your assets will be managed and transferred upon your death. When it comes to mineral rights, you should consider putting in place a will, a trust, or other estate planning strategies that can help you protect your assets and control their transfer. The right estate planning tool for you will depend on your circumstances, the value of your assets, where they are located, and who you wish to have them after you pass away.

Probate Considerations. Probate is the legal process of transferring your assets to your heirs or beneficiaries after your death. If your estate includes mineral rights, it is crucial to understand how these assets will be treated during the probate process. You should work with a probate lawyer who understands the oil and gas industry and oil and gas title issues to ensure that your estate plan is in compliance with all legal requirements and that your assets are transferred in a manner that reflects your wishes.

Transferring Mineral Rights. Depending on your situation, you may choose to transfer your mineral rights to your heirs or beneficiaries during your lifetime, or through a trust, limited liability company (LLC) or family partnership. When making these decisions, it is important to consider your objectives, the tax implications of the transfer, and the degree of control you wish to retain over your oil and gas mineral interests during your lifetime.

Protecting Your Interests. As a mineral rights owner, you may have unique considerations that are not present in other forms of estate planning. For example, you may need to ensure that your interests are protected from creditors, from litigation, or that costly ancillary probates can be avoided when you pass. When planning your estate, it is important to consider these issues and put in place measures that will protect your interests and the interests of your heirs or beneficiaries.

Working with an Attorney. Estate planning can be complicated when it comes to mineral rights ownership. To ensure that your estate plan reflects your wishes, it is essential to work with an estate planning attorney who understands mineral rights and complex estate planning vehicles. He or she can help you make informed decisions about your oil and gas mineral rights, ensure that your estate planning documents comply with all legal requirements, and provide guidance and support as you craft your estate plan.

The attorneys at Bradley & Hammond Attorneys at Law are uniquely qualified to help mineral owners with all aspects of oil and gas mineral rights ownership, including simple and complex estate planning. If you are looking for assistance, contact us or give us a call to schedule a consultation: 817-645-3993 (Cleburne) or 412-533-2620 (Pittsburgh).

Dos and Don'ts of Estate Planning for Mineral Rights Owners

Fri, 03 Feb 2023 15:12:27 GMT

Mineral rights are a unique and complicated type of property. If you own mineral rights and royalty interests, what should you do with them in your estate plan?

Estate planning for mineral rights owners can be a complex and confusing process, but it’s critical to ensure that your rights are protected and your wishes are honored after you pass away. In this article, we’ll outline the dos and don’ts of estate planning for mineral rights owners and discuss why it’s important to work with an estate planning lawyer who understands the oil and gas industry and oil and gas title issues.

DO: Understand your mineral rights

Before you start the estate planning process, it’s important to have a good understanding of your mineral rights and how they fit into your overall estate plan. You should be familiar with the terms of any agreements you’ve signed with oil and gas companies, such as leases and division orders, and know the nature of the interests you own. Is it a fee mineral interest, a royalty interest, or something else? This will help you make informed decisions about what you want to include in your estate plan and how you want to transfer your rights to your heirs or beneficiaries. An estate planning lawyer who understands the oil and gas industry will know the questions to ask and information to gather to determine what your mineral rights are, and can help you make informed estate planning decisions.

DO: Plan for the future

Once you have a clear understanding of your rights, you can start planning for the future. This includes considering what to do to maximize income from your mineral rights, how you want to transfer your rights to your heirs or beneficiaries, and what role you want them to play in the management of your mineral rights after you pass away. If you own mineral rights in multiple states, you might consider transferring ownership to a trust to make the transfer process simpler for your loved ones. You should carefully consider the value of your mineral rights when making these decisions, and whether the rights will be a boon or a burden to your loved ones after you pass away.

DO: Update your estate plan regularly

Just like your other estate planning documents, it’s important to keep your plans for your mineral rights up-to-date. This means revisiting your estate plan every five years or whenever there is a significant change in your personal or financial situation, such as a change in marital status, the birth of a child, or a change in your financial situation. If you owned undeveloped mineral rights when you made your plan, but they are now developed and you are receiving royalty checks, you should reevaluate your estate plan to ensure the interests are properly addressed. Perhaps you inherited mineral rights since you made your will or trust, and now you need to consider a new asset class. Whenever you acquire mineral rights, you should make sure that they are addressed in your estate plan.

DO: Work with an estate planning lawyer who understands the oil and gas industry

Not all estate planning lawyers are familiar with mineral rights. If you own mineral rights, it’s critical to work with an estate planning lawyer who has a deep understanding of the oil and gas industry and oil and gas title issues. The probate process for mineral rights and transferring ownership can be complicated, and addressing them in your estate plan requires a specialized knowledge of the industry and how mineral rights work in your state. An estate planning lawyer with experience dealing with mineral rights can help you navigate the process, ensure that your rights are protected, and help you transfer your rights to your heirs or beneficiaries in the most efficient and effective manner possible.

DON’T: Neglect to include your mineral rights in your estate plan

One of the biggest mistakes mineral rights owners make is neglecting to include their rights in their estate plan. This can have serious consequences for your rights and your heirs or beneficiaries, as well as for your overall financial situation. Just like if you bought a rental property or inherited land, you need to include any mineral rights you own in your plan.

DON’T: Transfer your rights without proper documentation

Another mistake that mineral rights owners make is transferring their rights without proper documentation. This can lead to disputes and legal issues down the road. To avoid this, it’s important to work with an estate planning lawyer who can help you transfer your rights in a manner that is compliant with state law and that provides proper protection for your rights and your heirs or beneficiaries. If you are approached by a mineral buyer, always consult with an attorney familiar with mineral rights and oil and gas interests before signing anything. Contracts for buying and selling mineral rights are complicated and contain provisions you may not be familiar with. Just like trying to self-diagnose an illness, dealing in mineral rights without the requisite legal knowledge can expose you to unnecessary legal risk and affect your financial bottom line.

Estate planning for mineral rights owners can be a complex and confusing process, but with the right guidance and support, you can ensure that your rights are protected and your wishes are honored after you pass away. By following the dos and don’ts outlined in this article and working with an estate planning lawyer who understands the oil and gas industry, you can give yourself peace of mind knowing that your rights and your heirs or beneficiaries will be taken care of.

The attorneys at Bradley & Hammond Attorneys at Law understand not only estate planning , but also mineral rights in Texas and Pennsylvania. With deep knowledge and experience in both areas, they can help you craft an estate plan that includes your mineral rights and maximize their value. To schedule a consultation, contact us or call (817) 645-3993 (Texas) or 412-533-2620 (Pennsylvania).

When to Update Your Estate Planning Documents

Mon, 23 Jan 2023 20:34:11 GMT

Your estate planning documents should be updated to reflect major changes in your life.

Many approach estate planning as a one-and-done event, when it is, in fact, a process that should be revisited throughout your lifetime.

The people in your life, your financial status, health, career, investments, dreams and goals, and even the law affecting estates and trusts, are not static. Your estate plan should change in step with your life and applicable laws.

As a rule of thumb, estate planning documents should be updated every 5 years, or if there is a change in your personal or financial circumstances. Consider revisiting your plan if it has been a while, or if any of the following situations apply to your life:

1. Change in marital status

After you get married, you need to revise your will to include your new spouse as a beneficiary. You will also want to remove or add any property that was gained, lost, or consolidated as a result of your marriage. You should also revise your will upon divorce to remove your ex-spouse as a beneficiary and re-title any joint property accordingly. This is especially important if you have or plan to get remarried in the future.

2. A significant change in financial situation (good or bad)

Major changes in your finances may necessitate revision to your estate planning documents. If you expect a windfall financial year, or if you had a rough year, you may be concerned about asset protection from creditors, and tax planning. Your estate plan should reflect your present circumstances.

3. Your previously-appointed fiduciaries passed away, or are no longer the best person for the job

In most estate plans, you can alter your fiduciary designations anytime. Your fiduciaries are your POA agents, trustees, and executors. If you need to change your designations for any reason, you should update your documents as soon as possible.

4. The birth or adoption of a child or grandchild

Adding a new family member can also require a change to your estate planning documents if you wish to include them in the division of your estate or wish to appoint a guardian or trustee to care for them and their inheritance if you pass away before they can manage their own affairs.

5. You have received a diagnosis which requires more intentional financial and contingency planning

Health is everything. Maybe you first began your estate planning process in peak health with young children, but now, years later, you are worried about medical expenses. Having fiduciaries appointed to manage your affairs has a new weight and importance. You should review your plan to ensure it reflects your current wishes and reality.

6. You moved to a new state or acquired real estate in another state

If you move to a new state, you should promptly check with your attorney to determine whether your estate planning documents need to be updated and/or revised to be compliant with the new state’s laws. Similarly, things can get complicated if you own property in multiple states because each state has different laws affecting land and taxes. There are strategic ways in which to title your property in different states to avoid the probate process, or mitigate estate taxes or property reassessments.

7. There has been a change in gift or estate tax laws

Laws change frequently. It is crucial to monitor changes so your estate plan reflects the most effective and efficient ways to preserve your legacy for future generations. For more information on gift or estate tax law changes in 2023, visit our blog post on the topic here .

8. Death or disability of a family member

Death, disability, or illness to a family member should prompt you to make a change to your estate plan. You may want to create a special needs trust for your child or spouse that allows preservation of your assets that improves their quality of life without disqualifying them from other programs (Medicaid, supplemental security income, etc.).

Do not wait until it is too late -- update your plan to reflect important changes in your life.

The attorneys at Bradley & Hammond are actively scheduling estate planning appointments. Give us a call to reserve your spot to update your estate planning documents.

2023 Gift and Estate Tax Exclusions

Tue, 17 Jan 2023 19:34:21 GMT

Now through the end of 2025 is prime time for doing some real planning with lifetime gifting strategies.

In October of 2022, the IRS increased the estate and gift tax exclusion amounts for 2023 to adjust for inflation.

The Annual Gift Tax Exclusion was increased from $16,000 per person in 2022 to $17,000 per person in 2023. The Annual Estate Tax Exclusion was increased from $12.6 million in 2022 to $12.92 million in 2023, with the combined exclusion for a married couple to $25.84 million.

Now through the end of 2025 is prime time for doing some real planning with lifetime gifting strategies. The federal exclusion amounts will be dramatically reduced on January 1, 2026, unless congress acts to extend them. It is also possible that congress could reduce the amounts or eliminate the exclusions entirely before 2026 by tax reform, but that is looking unlikely given the current makeup of congress after the 2022 midterm elections.

So how does lifetime gifting work?

Assume a married couple has three married adult children and a combined estate worth more than $25.84 million. Without employing strategies to reduce their taxable estate, their children would pay a 40% federal estate tax on their inheritance to the extent it exceeds $25.84 million.

Amounts given over the annual limit of $17,000 per recipient will reduce the married couple's estate tax exclusion. If the married couple gives one of their children $1,017,000 in a year, their estate tax exclusion would be reduced to $24.84 million, meaning their heirs would need to pay the 40% estate tax on the excess over $24.84 million rather than $25.84 million.

By employing a lifetime gifting strategy in advance, however, the married couple could reduce their estate by $34,000 per recipient annually ($17,000 from each spouse), without eating into their estate tax exclusion. If they repeat the gifts every year, or spread the gifts among enough separate recipients, they could reduce the value of their estate to a point at which their heirs will no longer be subject to the 40% estate tax on their inheritance.

We encourage you to act now to lessen, or even eliminate, your federal estate and gift tax liability. If you have any questions regarding estate and gift tax matters, or other strategies to reduce your estate tax liability, give us a call to schedule an estate planning appointment.

The 5 Most Common Estate Planning Mistakes to Avoid

Thu, 12 Jan 2023 10:30:00 GMT

You can easily avoid these simple mistakes.

Estate planning is a crucial process that helps ensure that your assets are distributed according to your wishes after you pass away. It can also help protect your loved ones and ensure that they are financially stable. However, there are several common mistakes that people make when it comes to estate planning. Here are 5 mistakes to avoid:

1. Procrastinating . One of the biggest mistakes people make is putting off estate planning. This can lead to important decisions being made without your input, or worse, your loved ones being left with a complicated and expensive mess to sort out. Don't wait until it's too late – start estate planning as soon as possible.

2. Failing to update your plan. Life is constantly changing, and your estate plan should reflect those changes. Make sure to review and update your plan regularly, especially if you experience any major life events such as getting married, having children, or experiencing a significant change in your financial situation.

3. Not having a will. A will is an essential part of any estate plan. It specifies how you want your assets to be distributed after your death and can also appoint guardians for minor children. Without a will, the state will decide how your assets are distributed, which may not align with your wishes.

4. Not designating a power of attorney. A power of attorney gives someone the authority to make financial and legal decisions on your behalf if you become incapacitated. Failing to designate a power of attorney can lead to legal battles and financial problems for your loved ones.

5. Not considering tax implications. Estate and inheritance taxes can significantly impact the distribution of your assets. Make sure to consult with an estate planning attorney to understand the tax implications of your plan and to ensure that you are taking advantage of any tax exemptions and deductions available to you.

Estate planning is an important process that requires careful consideration and attention to detail. By avoiding these common mistakes, you can ensure that your assets are distributed according to your wishes and that your loved ones are protected.

Want to learn more about estate planning? Bradley & Hammond Attorneys at Law provides estate planning services to families and individuals across the wealth spectrum. We will help you make a plan with confidence and ease. Schedule an appointment today by calling 817-645-3993 .

The Benefits of Mediation

Mon, 09 Jan 2023 17:10:02 GMT

Mediation is a less adversarial process than litigation, and can save parties time and money by facilitating resolutions to disputes outside of court.

Mediation is a popular and effective alternative to traditional litigation for resolving disputes in Texas. It is a voluntary, confidential, and informal process in which a neutral third party, known as a mediator, helps disputing parties reach a mutually-acceptable resolution.

There are many benefits to using mediation. It can be faster and far less expensive than going to court, and it allows parties to have more control over the outcome of their dispute. Mediation is also a less adversarial process than litigation, which can help preserve relationships between parties.

The role of the mediator is to facilitate communication and negotiation between the parties. A mediator does not make decisions or give recommendations, but rather helps the parties identify their interests and explore options for resolution. Mediators in Texas must meet certain qualifications and adhere to a code of ethics.

Mediation can be used to resolve a wide range of disputes, including family law disputes, business and employment disputes, neighborhood and homeowner disputes, and personal injury disputes. In some cases, mediation may be court-ordered or required by the terms of a contract, but it is often initiated voluntarily by the parties.

To prepare for a successful mediation, it is helpful to gather relevant documents, think about your goals and interests, and consider any potential settlement offers. During the mediation, it is important to listen actively, communicate clearly, and be open to finding a resolution that meets the needs of all parties.

Mediation can be a highly effective way to resolve disputes in Texas, and with the right mediator, it can be a positive and rewarding experience. If you are considering using mediation to resolve a dispute in Texas, it is important to find a qualified and experienced mediator.

Bradley & Hammond Attorneys at Law provides mediation services. If you are facing a dispute and are interested in exploring mediation as an option, or if you must mediate due to a court order or the terms of your contracts, schedule a mediation session with Keith Bradley , a certified mediator, by calling (817) 645-3993 .

Planning Ahead: Reporting Requirements under the Corporate Transparency Act

Wed, 04 Jan 2023 14:02:56 GMT

If you own a business registered with any state in the United States, your legal compliance obligations will be changing soon.

The Corporate Transparency Act (CTA) goes into effect on January 1, 2024, and will require you to report the "beneficial owners" of your business to FinCEN, the US Department of the Treasury's Financial Crimes Enforcement Network.

Existing businesses have until December 31, 2024 to comply. Businesses formed after January 1, 2024 have 30 days after formation to comply. Both existing and newly formed entities will have mandatory ongoing obligations to report changes in their "beneficial owners" as they occur. Willful failure to report or false reporting can result in statutory civil and criminal penalties. Further, failure to report could result in a breach of representations and warranties in many contracts that the parties will comply with existing laws.

The information reported to FinCEN will generally be held confidential and secure. Reports will be exempt from search and disclosure under the Freedom of Information Act. However, FinCEN is authorized to share information collected with other governmental agencies, financial institutions, and financial regulators. It will be increasingly important to ensure that the information reported to FinCEN does not conflict with information reported to other governmental bodies.

Reporting will be done online through the Beneficial Ownership Secure System ("BOSS") to receive, store, and maintain beneficial owner information. The system has not been launched yet, but is expected to become available sometime in late 2023.

Fortunately for our estate planning clients who have trusts , a trust is not a "reporting company" under the CTA and has no obligation to report its beneficiaries, trustees, or compliance overseer/trust protector to FinCEN. However, the trustee, beneficiaries, and possibly the compliance overseer/trust protector may be considered "beneficial owners" of a business interest which the trust owns. FinCEN issued its Final Rule in September of 2022, but unfortunately it leaves more questions than answers when it comes to who, in the context of trust business ownership, must be reported as a "beneficial owner". The determination of who is a "beneficial owner" therefore requires careful analysis of the trust terms, its business assets, the parties involved, the CTA, and FinCEN's rules.

If you have a trust and your trust holds business interests, you will need to carefully evaluate the business' reporting obligations under the CTA. We recommend this be done well before the reporting deadline. Proactive evaluation will give you time to make any changes necessary to avoid unwanted or inconsistent disclosures, and will allow you to make a plan to ensure ongoing reporting compliance.

If you have concerns about your CTA reporting obligations, we encourage you to schedule an appointment to speak with one of our attorneys in depth.

Act 153 of 2022 Increases Check Stub Consistency and Clarity for Pennsylvania Royalty Owners

Mon, 14 Nov 2022 21:27:40 GMT

Pennsylvania Enacts Natural Gas Royalty Interest Transparency Legislation

On November 3, 2022, Pennsylvania enacted Act 153 of 2022 (the "Act"), amending the act of July 20, 1979, entitled "An act regulating the terms and conditions of certain leases regarding natural gas and oil."

The Act amends the definition of the term "division order," replaces the definition of "interest owner" with the term "royalty owner", and, among other things, adds terms for payments made to royalty owners for oil, natural gas and natural gas liquids from unconventional gas formations.

Payments from unconventional gas formations must now include, at a minimum:

A common well name and API number for the well for which payment is being made;

The month and year of production for which payment is being made;

Total barrels of crude oil or number of McF or MMBtu of gas and volume of natural gas liquids produced and sold from each well;

Price received by the payor per unit of oil, natural gas and natural gas liquids produced and sold;

The aggregate amounts for each category of deductions for each well incurred by the payor which reduces the royalty owner's payment, including all severance and other production taxes;

Net and gross value of the payor's total sales from the sale of oil, gas and natural gas from each well less any deductions;

Royalty owner's legal and contractual interest in the payor's share (decimal or fraction);

The royalty owner's share of the gross value of the payor's total sales for the oil, gas and natural gas liquids before any deductions;

Royalty owner's share of the sales value less the royalty owner's share of taxes and any deductions; and

Payor's contact information (address and phone number).

Notably, the Act gives royalty owners a civil cause of action against a payor for failing to supply payment information as required under the Act.

The Act becomes effective 120 days after enactment, or March 2, 2023.

Interpreting division order check stubs can be complicated. While Act 153 of 2022 aims to make auditing statements easier on royalty owners, you may still need assistance from a trained oil and gas attorney to ensure you are getting what you are owed. Call us today to schedule a consultation.

Digital Assets in Estate Planning

Fri, 23 Apr 2021 20:50:50 GMT

The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA)

In this modern life, the average adult spends a lot of time online. Even if you do not spend a lot of time online (lucky you!), you probably store a lot of data online. Maybe you have social media accounts to keep in touch with family and friends. Maybe you have a flourishing online business. You probably have one or more email accounts, streaming and subscription services, and cloud photo or video storage. Maybe all of your business records are stored on cloud servers, containing confidential information and trade secrets.

Have you thought about what happens to your digital assets after you pass away?

True story: My late grandmother, at age 77, was an active Facebook user. She would comment on every photo I posted in a running commentary, share posts from political candidates that she supported and digitally shake her fist at those she did not support. About five months after she passed away, I started seeing new posts which she "liked" and shared in my news feed. It was clear that her account had been hacked; they were not kind or harmless posts. Seeing her name show up that way so casually and in that context, so shortly after we said goodbye to her, was disturbing. That was 2010, a simpler time, and turning it off did not take much effort. I had her password and I could manually go into her account and turn it off. None of us even considered that her social media accounts might get hacked.

Gaining access to a decedent's digital assets has become increasingly difficult over the past decade. Reliance on cloud servers and digital platforms has grown. We need password software just to track our passwords, and we have to change our passwords frequently to prevent digital pirates from doing their worst.

Until relatively recently, an executor, trustee or power of attorney was subject to a private company's individual policies for releasing information, the privacy policies you see posted at the bottom of every website. Navigating a patchwork of privacy policies is burdensome and confusing. It allows for opportunities to misuse a decedent's digital assets and can prohibit an executor or power of attorney from quickly accessing time-sensitive information, like utility bills and bank statements only delivered to the decedent's email.

In response to the growing complexity, most states have adopted digital asset laws to protect a decedent's digital assets from unauthorized disclosure after death. Think of it like HIPAA rules for digital assets. Both Texas and Pennsylvania have adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). Ahead of the curve, Texas adopted it in 2017. Pennsylvania adopted the RUFADAA in 2020, and it became effective January 19, 2021. Rather than leaving your grief-stricken executor to navigate the myriad requirements and policies of private companies, the RUFADAA allows you to plan ahead by granting your executor, trustee or attorney-in-fact authority to access your digital assets in your estate planning documents.

Authority granted can vary, too: consider whether you want your executor to see every photo in your digital cloud or read every email. Maybe you have protected, confidential business information stored among your digital assets that belongs to a customer or business partner, and you need to make sure it remains protected. Maybe you just have secrets. In those cases, you can allow your executor the authority to turn off the account, but not view its content.

Estate planning documents prepared prior to 2020 in Pennsylvania and prior to 2017 in Texas may need to be updated to address digital assets. As always, we are available to discuss whether you should update your will, trust or power of attorney to include provisions available under the RUFADAA. Give us a call or submit a request here to schedule a consultation.

Women's Energy Network Free Webinar

Tue, 13 Apr 2021 14:03:21 GMT

What the Energy Industry Can Expect from the Biden Administration

Join Keith Bradley this Thursday from 12:00 -1:00 pm for a free webinar through the Women's Energy Network: "What the Energy Industry Can Expect from the Biden Administration."

The next four years could bring massive changes to the US Energy Industry and the US economy. A shift away from oil and gas to renewable energy resources will impact, among many things, the labor force, and oil and gas prices and the prices of everything fueled by and made with it, including renewable energy infrastructure. Bradley will break down the Biden Administration's policies, proposals and executive orders and discuss how they will, and already are, affecting the US energy landscape.

Keith began his career in the United States Navy as a Judge Advocate General (JAG). After decades of private practice, he is a seasoned energy attorney who represents clients in the oil and gas, wind, transmission, solar and nuclear industries. His practice spans stock and asset transactions, title opinions, due diligence for land development projects, and advocating for his clients in complex litigation matters. With licenses to practice law in Texas, Kansas, Oklahoma and Pennsylvania, his practice allows him a unique perspective on political changes and trends that affect energy production.

Missed the presentation? View the slides here .

Ohio Supreme Court Holds Marketable Title Act and Dormant Mineral Act Both Apply to Severed Mineral Interests

Mon, 14 Dec 2020 15:28:53 GMT

In a case of first impression, the Ohio Supreme Court holds that the Marketable Title Act and Dormant Mineral Act can both be used to reunite severed mineral interests with the surface estate

On December 2, 2020, the Ohio Supreme Court rendered a decision in West v. Bode, 2020-Ohio-5473, settling the question of whether the Ohio Dormant Mineral Act, O.R.C. § 5301.56, and the Ohio Marketable Title Act, O.R.C. § 5301.47 et seq., irreconcilably conflict under O.R.C. § 1.51. In short, the Court held that the statutes do not irreconcilably conflict. Both can be applied to reunite severed mineral interests with the surface estate in Ohio.

The Court’s decision answers a fundamental question that has plagued Ohio mineral owners, surface owners, oil and gas operators, landmen, and legal counsel for years. While it does not simplify the legal analysis and thorough title search required to determine ownership of a severed mineral interest, it does provide a modicum of certainty in ownership which previously did not exist absent litigation.

The interest at issue was a severed oil and gas royalty interest. The surface owners claimed ownership under the Dormant Mineral Act, or alternatively, under the Marketable Title Act. The Court of Common Pleas of Monroe County, Ohio, determined that the Dormant Mineral Act was the only statute that should be applied, but due to defects in the surface owners’ notice procedures, the surface owners could not rely on the Dormant Mineral Act to vest the severed mineral interest with the surface estate. The surface owners appealed to the Seventh District Court of Appeals, which held that the Marketable Title Act is still applicable and does not irreconcilably conflict the Dormant Mineral Act. The mineral owners then appealed to the Ohio Supreme Court.

The Marketable Title Act extinguishes property interests after 40 years without a savings event, measured from the effective date of the surface owner’s root of title. It applies to all property interests unless the interest is one of the types specifically excepted from the statute. If the facts meet statutory requirements, the interest is extinguished by operation of law and cannot be revived.

The Dormant Mineral Act, as amended in 2006, only applies to mineral interests. To use the Dormant Mineral Act to vest a severed mineral interest with the surface estate, a surface owner must follow the notice and filing requirements set forth in the statute. A mineral interest is preserved if a savings event, as enumerated in the statute, occurred within the immediate 20 years preceding service of notice to the interest holder of the surface owner’s intent to declare the interest abandoned. If the surface owner follows the statutory requirements and there have been no savings events to preserve the interest, the interest will be “deemed abandoned and vested with the surface estate.”

While the statutes provide for different savings events, lookback periods, and procedural requirements for a surface owner, and one calls for “abandonment” and the other “extinguishment” of the severed interest, the Court determined that “the fact that joint application of the acts may result in a mineral interest being preserved under one but not under the other does not demonstrate a conflict between the acts.” West v. Bode, 2020-Ohio-5473 at para. 36. Surface owners can use both statutes to vest ownership of a severed mineral interest with the surface estate. The Court remanded the case back to the Court of Common Pleas of Monroe County to review the surface owners’ claims under the Marketable Title Act.

Three Justices dissented. In Justice Kennedy’s dissenting opinion, joined by Justice Donnelly, he explains that he would have held that the statutes irreconcilably conflict, citing the different outcomes and procedural requirements under the statutes, along with the possibility for frustrated legislative intent to facilitate title transactions. He would have held that the Dormant Mineral Act is the only mechanism a surface owner can use to vest a severed mineral interest holder with the surface estate.

The attorneys at Bradley & Hammond are fluent in the changing laws and issues affecting oil and gas development in Ohio. If you have any questions regarding the Court’s holding in West v. Bode , or questions regarding mineral ownership, contact Bradley & Hammond at (817) 645-3993.

Election Challenges in Pennsylvania - District Court Dismisses Trump Campaign Lawsuit

Tue, 13 Oct 2020 14:31:19 GMT

On October 10, 2020, the United States District Court for the Western District of Pennsylvania dismissed a lawsuit filed by the Trump campaign alleging that the implementation of Pennsylvania's mail-in voting plan violates provisions of the the state and federal constitutions.

In Donald J. Trump for President, Inc., et al, v. Kathy Boockvar, Secretary of the Commonwealth of Pennsylvania, et al., No. 2:20-cv-966-NR , the Trump campaign alleges that:

(1) The use of drop boxes for mail-in ballots is unconstitutional given the lack of guidance or mandates that the drop boxes have security guards to man them.

(2) The Secretary's guidance to county election boards to not reject mail-in ballots where the voter's signature does not match the one on file is unconstitutional.

(3) Pennsylvania's requirement that poll watchers be residents in the county for which they are assigned is unconstitutional as applied to the facts of the case.

Judge J. Nicholas Ranjan dismissed the case for two main reasons. First, the court found that the Trump campaign lacked Article III standing, because there was no proof of any concrete injury to warrant federal review of the claim. The court found that the alleged injury, vote dilution potentially caused by voter fraud, is only speculative, and no proof was provided that actual voter fraud is "certainly impending." Absent Article III standing, the court has no jurisdiction to review the claim.

Second, assuming the Trump campaign had standing under Article III conferring federal jurisdiction over the case, the campaign's claims fail on the merits. The court found that the election regulations put in place by the General Assembly and implemented by the Secretary are rational, further important state interests, do not significantly burden any right to vote, and do not run afoul of the state or federal constitutions.

If appealed, the case will go to the 3rd Circuit Federal Court of Appeals.

Absent a JOA in Texas, a Lessee Cannot Rely on a Co-Tenant's Production to Extend Primary Term

Wed, 30 Sep 2020 14:16:51 GMT

In a case of first impression out of the 8th Court of Appeals, El Paso, Texas, Cimarex Energy Co. v. Anadarko Petroleum Corp. , 574 S.W.3d 73, 90-97 (Tex. App. – El Paso, March 13, 2019), the court held that an oil and gas lease which requires oil and gas production to extend the lease beyond its primary term, without specifying who is required to cause production, imposes an obligation on the Lessee to cause production. Production from a co-tenant Lessee will not satisfy the obligation to cause production absent a joint operating agreement (JOA) between the co-tenant Lessees.

The court also held that absent a JOA, payment of royalties by the Lessee, and acceptance of royalties by the Lessor, will not estop an argument that the lease terminated for lack of production if the royalties paid are the result of production secured by a co-tenant Lessee.

Cimarex appealed the decision to the Texas Supreme Court. On August 28, 2020, the Texas Supreme Court denied Cimarex's petition for review. Cimarex Energy Co. v. Anadarko Petroleum Corp. , 2020 Tex. LEXIS 748.

Bradley Law Firm in the News

Fri, 21 Aug 2020 14:06:32 GMT

Keith Bradley of Bradley Law Firm represent a homeowner's association in Arlington, Texas, in an inverse condemnation lawsuit against the City of Arlington. The homeowner's association, Prestonwood West Homeowners Association, claims the city's unauthorized breach of a private dam in 2018 and negligent maintenance of the City's storm water sewer system caused significant property damage and erosion to private property.

Read more about the case here: https://www.star-telegram.com/news/local/arlington/article245477840.html

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