Out of State, Out of Mind: Inheriting Out-of-State Property and the Problems That Come With It

By Brad Davenport

A common issue families encounter in having to probate the estate of a family member or dealing with inherited property involves learning that their parents or other relatives owned minerals or other real estate outside of the state of their residence at the time of their death. For example, Grandparents Smith may have lived in rural Grady County, Oklahoma in the early 1940’s when they were young or middle-aged adults. They owned an 80-acre farm that they inherited from one of their parents. Maybe hard times, military service or other circumstances caused them to relocate their family to Ohio. When they moved, Grandparents Smith only sold the surface estate of the 80-acre farm in Oklahoma and kept the minerals. Grandparents Smith and their children lived in Ohio for more than three decades. As Grandparents Smith reached their golden years, they decided to retire in Florida, bought a home and moved there. Grandparents Smith both passed away a few years later as residents of Florida, first Grandfather Smith and then, two years later, Grandmother Smith.

Because Grandparents Smith had their home, bank accounts, vehicles and other personal property in Florida, a probate of Grandfather Smith’s estate was filed in Florida state court. For purposes of our story, he left everything to Grandmother Smith in his Last Will and Testament. When the probate of Grandmother Smith’s estate occurred two or three years later, also in Florida state court, her Last Will and Testament provided that the house in Florida be sold, and the sale proceeds from the house and all other property she owned be divided equally among the two adult children. What happened to those 80 acres of minerals that Grandparents Smith owned in Oklahoma? Do the two adult children each own 40 acres of minerals in Oklahoma? Would the adult children be able to sell the Oklahoma minerals and convey marketable title to a buyer?

The short answer is that the adult children never acquired marketable title to the minerals in Oklahoma and could not convey marketable title to those minerals to a buyer. In this simplified example, a title problem was created when Grandfather Smith passed away and there was only a probate of his estate filed in Florida. The problem was perpetuated when the only probate of Grandmother Smith’s estate was done in Florida. Even if the Florida court addressed and distributed all of Grandparent Smith’s property, including the Oklahoma minerals, a Final Decree and Order for Distribution entered in the Florida court would be legally insufficient to pass or distribute marketable title in the Oklahoma minerals to the beneficiaries. Even filing a copy of the Final Decree and Order for Distribution from the Florida probate case in the land records in Grady County, Oklahoma is not sufficient to pass marketable title to the minerals to the beneficiaries.

For any real property, or real estate, including minerals, located in the State of Oklahoma, Oklahoma law requires a probate be filed and completed in the District Court of the County where the real estate is located in order for marketable title to pass to the beneficiaries under a Will[1]. In our example, since no probate of either of Grandfather Smith’s or Grandmother Smith’s estate was filed or completed in the District Court of Grady County, Oklahoma, Grandparents Smith are still the record owners of the 80 acres of minerals. The title problem identified in this example would not only cause an issue if the adult Smith children tried to sell these 80 acres of minerals, but would also present a problem if they wanted to lease these minerals to an oil and gas company. If there happened to already be a producing oil well on this property, the oil and gas company would have to hold any royalty payments attributable these 80 acres of minerals in suspense and not pay the royalty to the adult children until the title to the minerals was cleared up in Oklahoma.

To avoid problems like those illustrated in the example above, first it is important to discuss such matters with your family members and know where property is owned, and whether it is the surface estate, mineral estate or both that is owned. Second, find out how the property is owned or titled. For example, is the property owned by Grandparents Smith as tenants in common so that it will have to go through probate? Or, is the property owned as joints tenants with right of survivorship, such that the surviving joint tenant, like Grandmother Smith in our example, would just have to file an Affidavit of Surviving Joint Tenant in the County Clerk’s office of Grady County, Oklahoma following Grandfather Smith’s death to pass marketable title? Or, did Grandparents Smith transfer ownership of all their property into a trust before either of them passed away? These are all key things to know, find out and understand. Third, if there is property located out-of-state that will pass or be conveyed through probate of the Last Will and Testament of your family member, make plans to have a probate case filed in the state where the real property is located in addition to the state where your family member resided at the time of death.

If you have questions or are uncertain about what to do about the out-of-state real property of a family member who has passed away, consult legal counsel for advice and assistance so that the problem is not perpetuated for the next generation of your family to discover and have to address.


[1] Note that this example is based on Grandparents Smith having owned the Oklahoma minerals as tenants in common. A different set of issues and outcome may exist if Grandparents Smith owned the Oklahoma minerals as joint tenants with right of survivorship, or if they had put ownership of their property, including the Oklahoma minerals, into a Trust before either one of them passed away.

Download Blog in PDF Format

No comments (Add your own)

Add a New Comment


Comment Guidelines: No HTML is allowed. Off-topic or inappropriate comments will be edited or deleted. Thanks.