Inheriting mineral rights can feel like receiving something valuable, yet complicated. Whether you just found out you inherited them, or you’re preparing for the possibility, it’s natural to have questions.

What exactly do you own? How do you prove ownership? Should you keep them, lease them, or sell?

This guide will walk you through the basics, explain the legal process, and help you understand your options.

Mineral rights can be transferred through inheritance or gifted during someone’s lifetime. While the end result is that you now own the rights, the process of getting there — and the legal implications — are different.

Inherited Mineral Rights

When mineral rights are inherited, the transfer usually happens through a will or trust. In cases where no legal instructions were left, the rights pass through intestate succession, based on state laws. The probate court oversees this process, and once it’s complete, ownership is legally transferred to the heirs.

Gifted Mineral Rights

Mineral rights can also be gifted while the original owner is alive. This is sometimes done as part of estate planning. Gifting may avoid probate, but it can have tax consequences depending on the value of the gift and whether it exceeds IRS gift tax thresholds.

Both inheritance and gifting create a need to confirm ownership, notify operators, and decide how to manage or monetize the rights.

Note:  In general, gifting mineral rights is not a good idea unless you have a very specific reason to do this.  It’s better to pass and let your heirs inherit the mineral rights or oil and gas royalties.

If you inherited mineral rights, there’s a good chance you’ll need to deal with probate — a legal process where the deceased person’s estate is settled.

When Mineral Rights Go Through Probate

Mineral rights usually go through probate if:

• The owner didn’t place them in a trust

• They weren’t jointly owned

• No transfer-on-death deed was used

Probate can be more complicated if the mineral rights span across multiple states. Each state may require a separate legal filing, also known as ancillary probate.

After Probate is Complete

Once the probate process is finished, mineral rights are officially transferred to the heir or heirs. You will need to:

• File a deed with the county clerk where the minerals are located

• Notify any oil and gas operators paying royalties

• Submit documentation to update the name on record for payments

Owning mineral rights can come with important tax implications — both when you inherit them and when you eventually sell them or collect royalties.

Step-Up in Basis

When you inherit mineral rights, the IRS typically allows a “step-up in basis.” That means the value of the rights is reset to the fair market value at the time of the original owner’s death. This can significantly reduce the capital gains tax if you decide to sell later.

Reporting Royalty Income

If your inherited rights are producing, you’ll likely receive oil and gas royalty payments, which are taxable income. You’ll get a 1099 form at the end of the year and need to report this income on your tax return.

Gift Tax Considerations

If you were gifted mineral rights while the original owner was alive, the transaction might be subject to gift tax rules depending on the value and whether it exceeded the annual IRS limit.

It’s a good idea to speak with an accountant or estate planner who understands estate planning for oil and gas rights to ensure you’re following all legal requirements.

Before doing anything with your inherited mineral rights, you need to confirm what you actually own. Mineral interests can be split among family members and passed down over generations, so it’s important to check the details.

Steps to Confirm Ownership:

1. Review the Will or Trust Documents
   Check how the rights were passed to you and whether there are other heirs involved.

2. Get a Copy of the Deed
   Look up the mineral deed at the county clerk’s office where the minerals are located.

3. Contact the Operator
   If the rights are leased, there may be an oil company already sending royalty payments. Contact them to update your ownership information.

4. Check for Division Orders
   Division orders show how royalties are distributed. You may need to sign one to start receiving payments.

If this all feels overwhelming, you’re not alone. Many people who inherit mineral rights are unsure of what to do next. That’s why working with a knowledgeable buyer like Fraction Royalty can make things much easier.

Once you’ve confirmed ownership and understand the value of mineral rights, you’ll need to decide what to do. Keeping the rights means holding on to potential future royalties, but it also comes with paperwork, taxes, and ongoing tracking of production.

Selling the rights gives you a lump sum payment and takes the hassle off your plate. This can be especially helpful if:

• The rights are split among multiple heirs

• You’re not receiving much in royalty payments

• You want to avoid future mineral rights tax and estate complications

At Fraction Royalty, we specialize in helping people sell inherited mineral rights. We give you a fair offer fast, we take care of the paperwork, and we cover the closing costs.

You don’t need to be an expert in mineral rights to make a smart decision. If you inherited or were gifted mineral rights and aren’t sure what they’re worth, we’ll help you figure it out.

Our team will evaluate your rights and get you an offer within 24 hours. There’s no obligation, no pressure, and we’ll answer all your questions clearly. Whether you decide to sell or hold onto them, at least you’ll know what you have.

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