Probating Mineral Rights in Colorado: Step-by-Step Guide

When a loved one passes away owning mineral rights, how does one transfer ownership of mineral rights? Is probate necessary? What if the decedent had a Will? What if the decedent owned mineral rights but no house or anything else of value? What if the decedent lived out of state? Mineral rights tend to feel like their own category in the world of probate, trusts, and estates, so these are all valid, common questions. This article is the ultimate guide to probating mineral rights.

Probate Always Required to Transfer Mineral Rights

When someone dies, probate must be opened with the court if someone passes away owning either (1) real estate/real property, or (2) assets worth more than $82,000 (as of 2024). In Colorado, mineral rights are defined as real property, so probate must always be opened to transfer them. This is true even if the decedent had a Will. The only exceptions to this are if the deceased person had a trust or LLC and the mineral rights are titled in the name of the trust or LLC –then, probate may be avoided. If not, then either (1) the person nominated in the Will to be the Personal Representative, or (2) if there is no Will, a person with statutory priority to be appointed as Personal Representative, must file to open probate with the court in the proper county. Once appointed as Personal Representative, it’s important to begin investigating the mineral rights themselves and understanding what the decedent actually owns, which is easier said than done. Other than the decedent’s personal paperwork, it can be a good idea to check the applicable county’s public records for relevant documents.

Executing the Transfer of Mineral Rights

If the decedent owned mineral rights in an inactive location, only a simple Personal Representative’s mineral rights deed is necessary to complete the transfer to the correct heirs/beneficiaries. However, if the decedent owned mineral rights and an oil and gas company has a lease or other method for active drilling in that location, the process can be more complicated—and will undoubtedly take longer. Each company may have their own expectations, so it is important to start by asking the companies about the documents they require upon the death of an owner. Typically, the Personal Representative’s Letters of authority will be required along with a deed. The deed should be preapproved by the company prior to recording in order to prevent errors that can cause confusion and may have to be corrected later on. The reality is that these companies are very busy, so it can take time to connect with them and confirm the sufficiency of the paperwork. However, it’s worth the time to ensure everything is completed correctly.

The Decedent Only Owned Mineral Rights

For situations where the decedent basically only owned the mineral rights and nothing else of value, probate can be opened informally. After transferring the mineral rights to the correct beneficiary, the Personal Representative may then close probate via the small estate route if “the value of the entire estate, less liens and encumbrances, did not exceed the value of personal property held by or in the possession of the decedent as fiduciary or trustee, exempt property, family allowance, costs and expenses of administration, reasonable funeral expenses, and reasonable and necessary medical and hospital expenses of the last illness of the decedent…” (C.R.S. § 15-12-1204). In other words, filing the opening probate paperwork is still required, but if the mineral rights plus whatever else is in the estate totals less in value than all of the above, then the estate still qualifies as a small estate. This means that the Personal Representative can speed up the typical probate process and distribute to heirs without giving notice to creditors. So long as the Personal Representative has fully administered the estate, they can immediately file to close the estate with the Statement of Personal Representative Closing Small Estate (JDF 966 on the Colorado Judicial Branch website) and send copies of the closing statement to all heirs or beneficiaries.

Example: The decedent passed away in Larimer County owning some personal property valued at about $1,500 and mineral rights in Weld County. The decedent was unmarried with one adult child, who is the sole heir of the estate. Even though the estate isn’t worth very much, probate is mandatory. The person with legal priority to be the Personal Representative, likely the heir in this case, would file to open probate informally in Weld County in order to transfer the mineral rights. After executing a deed transferring them to the child, the Personal Representative would then file the Statement of Personal Representative Closing Small Estate and deliver a copy to the heir.

The Decedent is from Out of State but Owns Mineral Rights in Colorado

A very common scenario is when a decedent from out of state owns mineral rights in Colorado. What happens next depends on whether the decedent’s estate required probate in their home state or not. Either way, probate must be opened in Colorado in the county where the mineral rights are located, but it will either be the simplified, out-of-state process, called “ancillary probate” or it will be the typical Colorado probate process as described earlier in this article. If probate has been opened in the home state, the Personal Representative from that state must open ancillary probate. If probate did not need to be opened in the decedent’s home state, then typical probate will have to be opened.

Example: The decedent passed away in Florida where they lived and owned a house in Florida and mineral rights in Weld County. Probate would have to be opened in Florida because the decedent owned a house there. After getting appointed in Florida, the Personal Representative would then need to open ancillary probate in Weld County in order to transfer the mineral rights.

This Process is Challenging – Ask for Help!

Transferring mineral rights upon death can be tricky to navigate, particularly when it comes to understanding and drafting mineral rights deeds. Seek legal advice if you have any questions to help make sure you avoid spending unnecessary time and money trying to answer such questions on your own. As a northern Colorado firm surrounded by land rich in mineral rights, we’re quite familiar with this process and will gladly assist you with opening and closing probate, drafting the proper deeds, and accomplishing anything else required by oil and gas companies. Reach out today to schedule a consultation: admin@gantlawoffice.com