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Texas Probate Documents Case Study: Ambiguous Codicil

The packet of probate documents received by the company appeared straight-forward and complete. The probate of the Will had been conducted in the Texas county where the company operated the owner’s producing lease. The deceased owner had been receiving over $2,000 per month with oil in the $60/bbl range.

The packet contained the typed Will signed in early 2018, various court documents that included the Letters Testamentary, and a copy of a holographic codicil dated the summer of 2020. The owner died in early 2021 and his Will was filed for probate promptly.

The Will stated in the second paragraph, “I have two sons, Robert Doe and James Doe,” and then designated James to be the Executor.

In the third paragraph—and this is very important—the last sentence stated, “I leave all of my property, real, personal, or mixed, to my sons in equal shares.” Below this last sentence, and set apart from the paragraph, the two sons Robert Doe and James Doe were listed with “50%” printed to the right of each name.

The hand-written codicil threw a monkey wrench into the otherwise straight-forward probate documents. The codicil stated that a third son, Joseph, was to be guaranteed a $300,000 balance in his TD Ameritrade managed investment account and that this guarantee was the sole purpose of the codicil. The codicil stated, “my son Joseph is to have $300,000 in his investment account at TD Ameritrade account managed by John Smyth at TD Ameritrade, and the Executor of my Will is directed to place into his account whatever funds are necessary to reach $300,000.”

What caused the problem? The Will explicitly bequeathed all of the decedent’s property “to my sons in equal shares.” Forget the “50%” allocation and that only two of the three sons were listed. The statement “I have two sons” appears to conflict with the codicil, which clearly states a third son existed at the time the codicil was hand-written. This indicates the decedent had three sons at the time of death, not just the two. And remember how the typed Will was worded: “to my sons in equal shares.” It does not say TWO sons, it merely says “sons”.

The codicil goes on to mention that the investment portfolio was meant to provide for Joseph’s care and financial support under the care of Rachel Smith. It did not mention the relationship between Joseph and Rachel, but by questioning the Executor about the codicil, he revealed that Joseph was a minor child that the decedent adopted in late 2020, after the typed Will was signed. He stated that Joseph would not reach the age of majority until 2028. The Executor also admitted there was no legal guardianship established after the death of the decedent, Joseph’s legal father, and that Rachel was not Joseph’s biological mother.

If Joseph had not been legally adopted by the decedent, and the use of “son” in the codicil was only to express the level of his affection for the child, the codicil would not have presented a conflict with the Will. But he was adopted, and therefore, according to company counsel, Joseph would be free to file suit to quiet title and claim that 1/3rd of any revenues paid equally to Robert and James were owed to him, and the court could enter a judgment against the company to recover the funds owed to Joseph. Counsel said that the Will and codicil taken together, and probated together, placed the company on notice that Joseph could be entitled to 1/3rd of the entire decedent’s estate.

The company’s attorney reviewed all of the probate documents and made a decision as to what documents would be acceptable to the company to transfer the royalty interests to the two adult sons in equal shares. An Executor’s Deed from the Estate to the two adult sons in equal shares was not an option, according to the company’s attorney, because the Executor as grantor would also be one of the grantees, a self-serving document.

The company’s attorney was will to accept either a Stipulation of Interest signed by all three sons (with the legal guardian signing on Joseph’s behalf), or a Quitclaim Deed signed by Joseph’s legal guardian in favor of the two adult sons in equal shares.

Either one of these two acceptable documents would require first a court order establishing legal guardianship for Joseph. This could be difficult, since Rachel was not Joseph’s biological mother. The Executor was not willing to discuss who, or where, the biological mother was at that time, but certainly the court would require that information.

At stake was more than $30 million in real and personal property interests to be divided two—or three—ways, but no further royalty payments could be issued by the company for the decedent’s interest until the background legal issues were resolved by the family. As of the date of this blog, the company still waits to receive adequate documentation to transfer the decedent’s decimal and account balance, creeping toward $50,000 with oil over $80/bbl. The company must maintain annual contact with at least one of the three parties involved, in order to protect the account from becoming escheatable.

Next week’s blog is “Post-Production Deductions: Value of a Burdened DOI.”

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