The Mineral Rights No One Knew She Owned

The Letter From the Oil Company

The letter from the landman arrived three months after Karen Harper had begun to believe the hardest part of settling her mother's estate was behind her. Evelyn Harper had lived in McKinney for forty-one years, raised two children in the same house on the same street, and died in February 2023 at eighty-two with a will her estate planning attorney described, without exaggeration, as "uncomplicated." A paid-off home. Two bank accounts. A 2017 Buick. Some jewelry. Karen had been named executor. The Collin County probate was moving along on schedule.

Then the estate attorney ran a title search — not just on the McKinney home, but on all real property that might be in Evelyn's name anywhere in Texas. Buried in the deed records of Palo Pinto County, 120 miles west of McKinney, was a 1952 mineral deed. Evelyn's father, a rancher named Clem Watkins, had sold the surface rights to his 180-acre spread while reserving a 1/8 nonparticipating royalty interest in any oil, gas, or minerals produced from the land. Clem had died in 1971. The interest passed to Evelyn through his will. There had never been drilling. There had never been royalty checks. Evelyn had mentioned it once to Karen, vaguely, years ago — "Daddy had some mineral rights somewhere, I think" — and the conversation had moved on.

The landman's letter was not vague. A company had just signed a pooling agreement covering that section of Palo Pinto County land. They needed to contact whoever currently held the royalty interest. That person, it turned out, was now Karen Harper, as representative of her mother's estate. Would she be available to discuss terms?

A qualified oil and gas appraiser valued the interest at $480,000.

Evelyn's 2009 will said: "I give all my real and personal property to my daughter Karen." It did not mention Palo Pinto County. It did not mention mineral rights. It did not describe any parcel of land. The attorney who drafted it had no reason to ask whether Evelyn held interests in West Texas. Evelyn had no reason to mention it. Nobody had been paid on that interest in Evelyn's lifetime. It simply hadn't come up. Now it had.

Why Mineral Rights Are the Invisible Estate

Texas is different from almost every other state when it comes to mineral rights. In most of the world, subsurface resources belong to the government. In Texas — and in the United States generally — they can be privately owned, bought and sold, leased, and inherited, entirely independently of the land above them. Once mineral rights have been "severed" from the surface through a deed, they become a separate parcel of real property with their own chain of title, their own tax obligations, and their own probate pathway when the owner dies.

The Texas Supreme Court has recognized five attributes of a fully intact mineral estate: the right to develop the land (ingress and egress), the right to lease, the right to receive bonus payments, the right to receive delay rentals, and the right to receive royalties. A nonparticipating royalty interest — like the one Clem Watkins reserved in 1952 — strips away most of those attributes while preserving the royalty right. The holder cannot make development decisions or negotiate leases. But when someone else drills and produces, the royalty checks flow to them.

These interests pass silently from generation to generation. They generate no annual statement. They appear on no financial dashboard. Many of them have been undeveloped — and therefore income-producing for nobody — for decades. Their value can shift from near-zero to life-changing in the span of months, as new drilling technology reaches formations that were uneconomic a generation ago. Texas has hundreds of active producing counties, each with its own geological history and its own deed records going back to the Republic. The range of places and forms in which a Texas family might hold mineral interests is enormous.

The result is that thousands of Texas families hold mineral rights they don't know about — and whose estate plans, accordingly, say nothing about them.

How Mineral Interests Pass at Death Under Texas Law

Mineral interests are real property under Texas law. That single classification drives every probate and estate planning consequence that follows.

If you die with a valid will, your mineral interests pass according to its terms — either through a specific bequest naming the interest ("my 1/8 royalty interest in the Watkins Survey, Abstract 412, Palo Pinto County, Texas") or through the residuary clause if the interest is not specifically named. A residuary clause covering "all my remaining property" will generally capture mineral interests as real property. A clause limited to "all my remaining personal property" will not — in Texas, mineral interests are not personal property.

If you die without a valid will, mineral interests pass by Texas intestate succession under the Estates Code — divided among heirs in proportions determined by statute, without any court recognizing the transfer until a Determination of Heirship is completed under Texas Estates Code Chapter 202. A producing mineral interest owned by an intestate decedent can become fractionated across a dozen or more heirs, each owning a small undivided fractional interest in the same parcel. Operators must account for all of them before releasing royalties, and future buyers must trace all of them to establish clear title.

Texas Estates Code Chapter 358 specifically governs mineral properties in probate, providing authority for courts to authorize personal representatives to lease, pool, unitize, or otherwise manage mineral interests held by an estate while administration is pending. These provisions exist because producing mineral interests require active decisions that cannot wait for a probate to close. Without a court order authorizing action, an executor managing an estate with producing minerals may be unable to negotiate a new lease or join a pooling agreement — even if doing so would benefit the estate substantially.

An Affidavit of Heirship can sometimes establish chain of title to inherited mineral interests without a full probate proceeding. But it has real limits. Many oil and gas operators will not release royalties held in suspense on the strength of an Affidavit of Heirship alone. They require either a court order from a Texas probate proceeding or a Muniment of Title before recognizing new ownership and releasing funds. Without that order, royalties accumulate in suspense at the operator while the heirs remain unaware the money exists.

Where Texas Estate Plans Break Down

The most common failure is simple omission. A client meets with an estate planning attorney and lists their assets: the house, the retirement accounts, the life insurance, the savings. Nobody asks, "Do you own any mineral rights?" The attorney drafts based on what was disclosed. The mineral interest — sometimes worth more than everything else in the estate combined — is left to pass by default, or to be discovered only when a landman finds it first.

Generic real property clauses. "I give all my real property to my children in equal shares" sounds comprehensive. But for a family with mineral interests in three counties — a royalty in Cooke County acquired in 1948, a working interest in Ward County inherited from a great-uncle, and a nonparticipating royalty in Reeves County that has never produced — those interests need to be specifically addressed, not only to confirm who receives them but to provide guidance on what the executor should do while probate is pending and production decisions need to be made. A generic clause creates ambiguity. A specific bequest creates clarity.

The unfunded living trust. A revocable living trust avoids probate for assets properly transferred into it before death. But mineral interests must be conveyed into the trust by a mineral deed — executed and recorded in the county clerk's office for the county where the land is located, describing the interest by survey, abstract number, and fractional share. Simply signing a trust agreement and listing "mineral interests" in a schedule attached to the trust does not transfer record title. If the mineral deed has never been recorded, the interest remains in the grantor's individual name and must pass through probate, defeating the trust's entire purpose.

The missed step-up in basis. Under current federal tax law (IRC § 1014), inherited assets receive a fair market value basis at the date of death. For a mineral interest acquired decades ago for nominal consideration — or inherited from a grandparent who paid nothing for it — the step-up eliminates the entire built-up gain. Royalty income itself is ordinary income and receives no basis benefit. But any gain on the eventual sale of the mineral interest is measured against the inherited basis. Without a contemporaneous appraisal establishing that value at the date of death, the heirs may have no documentation to support the step-up they are entitled to when they eventually sell. The appraisal that isn't ordered the week after someone dies is often never ordered at all — and the heirs pay capital gains tax on gain that federal law never intended them to recognize.

Blended family complications. Mineral interests acquired during a Texas marriage are community property — owned equally by both spouses — even if the deed names only one. When both spouses die, each spouse's half of every community mineral interest must be administered separately, through each spouse's respective will or intestate succession. This is rarely addressed in estate plans that focus on the family home and the retirement accounts. It matters most when a mineral interest appreciates dramatically and the family's plan was drafted years before that appreciation was even imaginable.

The Royalty Income Problem Inside a Trust

When mineral interests are held inside an irrevocable trust — or when a revocable trust becomes irrevocable at the grantor's death — the royalty income those interests generate falls subject to trust-level income taxation, which compresses far more steeply than individual rates.

For 2026, a trust reaches the highest federal income tax bracket (37%) at approximately $15,650 of taxable income. An individual doesn't reach 37% until $626,350 (single filer). The 3.8% net investment income tax also applies to royalties at the trust level at that same low threshold. A mineral interest producing $60,000 per year in royalties, held inside a trust that accumulates income rather than distributing it, can face a combined federal marginal rate approaching 41%.

Proper trust drafting for mineral-bearing estates requires distribution provisions that allow — and in high-income years, require — the trustee to distribute current royalty income to beneficiaries who may be in significantly lower tax brackets. A trustee with no guidance from the trust document on distributing mineral income is left to exercise discretion in a tax environment where the cost of accumulation is severe. The trust document that was drafted before the mineral interest was known to exist almost certainly contains no such guidance.

What To Do If Your Family Has Ever Owned Texas Land

The first step is a title search — not just on the property you know about, but on the counties where you, your parents, or your grandparents ever owned land. A mineral interest severed from the surface in 1945 may appear only in old deed records at the county clerk's office, not in any digital database, not on any financial statement, and not in the memory of any living family member who could volunteer the information. A title attorney or experienced landman can search a county's deed records for a modest fee. For families with roots in Texas oil country — Palo Pinto, Erath, Eastland, Cooke, Montague, Stephens, West Texas Permian Basin counties — the search is particularly worth doing.

Second, once mineral interests are identified, they must be explicitly addressed in the estate plan:

• In a will: Describe each interest by county, survey name, abstract number, and fractional share. If you want the executor to have specific powers during the estate — to negotiate leases, enter pooling agreements, or authorize production decisions — say so explicitly, or rely on Texas Estates Code Chapter 358 for court authorization.
• In a revocable living trust: Execute a mineral deed conveying each interest into the trust, recorded in the county clerk's office for the county where the land is located. Interests in different counties require separate recordings. A mineral deed that was never recorded transfers nothing.
• For all plans: Name contingent beneficiaries for mineral interests. A mineral interest without a clear heir can require a court-supervised Determination of Heirship that takes twelve months or longer while royalties accumulate in suspense.

Third, get the interests appraised. A qualified oil and gas appraisal — prepared by a petroleum engineer or certified mineral appraiser — establishes the value your heirs will need for step-up-in-basis calculations and, if your estate is large enough, for federal estate tax compliance. The cost of an appraisal is almost always a fraction of the tax uncertainty it eliminates.

Fourth, find out whether royalties are already in suspense. Operators hold royalties in suspense when they cannot identify or locate the mineral interest owner. If you inherit a producing mineral interest, the operator may owe you money that has been accumulating for years. A demand letter with proper proof of ownership — either an order from a Texas probate court or a recorded Muniment of Title — triggers their obligation to pay.

What Karen Harper Found Out

The estate attorney working with Karen Harper filed the Palo Pinto County mineral interest in the probate inventory. After a court-supervised administration, Karen received a clear court order establishing her title to the royalty interest. The appraised value at Evelyn's date of death — $480,000 — became Karen's income tax basis in the interest, eliminating whatever gain Evelyn and Clem Watkins had accumulated over seventy-one years of ownership. Karen negotiated a pooling agreement with the oil and gas company. Production began the following spring.

What the process could not provide was a conversation that never happened. Evelyn had known, somewhere in her memory, that her father had "mineral rights somewhere." She had never told her estate planning attorney. Her attorney had never asked. In the fourteen years between the 2009 will and Evelyn's death in 2023, no one had updated the estate plan to address the interest, document its existence, or confirm that passing it through a generic residuary clause was actually what Evelyn wanted.

It worked out. It often doesn't. For every Evelyn Harper whose mineral rights are discovered during a careful probate, there are Texas families whose interests were never found at all — whose royalties accumulated in suspense for decades, whose step-up in basis was lost when the estate closed without an appraisal, whose fractionated undivided interests became unmanageable because three generations of children inherited them through intestate succession with no plan in place and no executor authorized to act.

The Texas ground holds assets that estate plans forgot to mention. Some of them are worth a fortune. The families who benefit are the ones who thought to ask.

Taylor Willingham, the founding attorney at WG Law, has guided more than 10,000 Texas families through estate planning — including the mineral-interest audits and trust-based structures that keep assets from falling through the cracks. He is the author of five published books on estate planning and elder law and has been recognized as a Super Lawyers Rising Star from 2019 to 2022. Carla Alston, WG Law's estate planning and tax attorney with an LL.M. in Taxation from NYU School of Law and 39 years in practice, brings particular depth to mineral-bearing estates where royalty income, step-up in basis, and trust income taxation require both legal precision and sophisticated tax planning. WG Law serves clients from offices in McKinney (7701 Eldorado Pkwy, Suite 200) and Southlake (1560 E Southlake Blvd, Suite 100, Office 116), with 350+ five-star Google reviews from families across the DFW metroplex.

Call 214-250-4407 or contact WG Law to request a consultation. If your family has ever owned land in Texas — in any county, in any generation — your estate plan may need to address an asset that nobody put on the list.

For related reading, see our articles on the step-up in basis trap in Texas estates, why an unfunded trust fails in Texas, beneficiary designation mistakes Texas families make, and when a financial advisor's oversight costs a Texas family six figures. For a complete overview of WG Law's estate planning services for North Texas families, visit our estate planning practice area page.

This article is provided for general informational purposes only and does not constitute legal advice. Texas law governing mineral interests, estate planning, trust taxation, and probate is complex and may change over time. The scenarios described are illustrative only. Nothing in this article should be relied upon as legal advice regarding any specific mineral interest, estate plan, will, trust, royalty, or tax matter. Consult a licensed Texas estate planning attorney if you own or may own mineral interests.