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Texas Probate Documents Case Study: Intestate Estate in Texas

This case involves a deceased mineral owner under an oil and gas lease now in its secondary term and producing from three unitized wells in West Texas. This owner was receiving over $500 per month with oil in the $40 bbl. range.


The operator was notified that the owner passed away, followed soon by several documents, including a Final Order of Administration of The Estate of John Doe. Letters of Administration also were included in the packet. The owner had died intestate in the State of New Mexico, and the documents were issued by a New Mexico Probate Court.


Texas probate laws differ from those in New Mexico. The administration of an estate in either state is tantamount to an Affidavit of Heirship issued by the court and has binding effect. That said, the court ordered the distribution of the estate based on New Mexico laws of descent and distribution. The court in New Mexico has no jurisdiction over the distribution of real property in Texas.


While Texas probate laws allow filing exemplified copies of out-of-state probate documents, the statutes apply to probated wills.


In this case, the analyst was following the company’s standard policy requiring copies of recorded documents, and was about to ask the Administrator (widow) that the New Mexico court’s administration documents be filed in the West Texas county’s official public records. Feeling something wasn’t quite right, the analyst decided to clear the request with the supervisor. Good thing he did.


The New Mexico court awarded all of the decedent’s real property interests, wherever situated, to the widow. She was granted Letters of Administration. It turned out that the widow was married to the deceased for only three years, and he had three adult children by a previous marriage. The court order awarding the widow all of the mineral rights was invalid as to the Texas mineral rights, which the deceased owned as separate property.


The operator had two choices. The company could require a Texas court conduct a separate administration of the estate or ask for an Affidavit of Heirship. The company’s in-house counsel decided a full and complete Affidavit of Heirship filed in the Texas county would be acceptable.


The Affidavit of Heirship was hand-typed, prepared by the widow’s probate attorney. It provided all of the information required to properly apply Texas laws of descent and distribution.


After a copy of the recorded Affidavit was received by the analyst, the deceased owner’s decimal in the divisions of interest was transferred 1/3rd to the widow as a life estate, and the remaining 2/3rds went in equal shares to the three adult children, who also were the remaindermen to the 1/3rd life estate.


According to the company’s in-house counsel, a serious title mess was averted when the analyst asked for a second set of eyes on the New Mexico documents. If the analyst, as agent for the operator, had required the New Mexico court order be filed into the West Texas public records, it could have caused slander of title. As if that were not bad enough, the company’s counsel added that the widow would have been given a basis (albeit false) to sell 100% of the mineral rights to a bona fide first purchaser, possibly cutting off forever the rightful inheritance of the true heirs. Had all of this occurs, the company attorney explained that the company could be held liable for hundreds of thousands of dollars in damages in a worst-case scenario.


Analysts should never hesitate to ask for a second opinion before following company policy, if they feel the least bit uncomfortable carrying out the company policy in a specific situation. On the flip side of that, an analyst should never be criticized in any way for asking for assistance, because the analyst is the gatekeeper doing their small part to guard the company from financial loss.


Next week’s blog will be “Texas Probate Documents Case Study: Ambiguous Codicil.”


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