In Colorado, oil and gas ownership is considered an interest in real estate property. Generally, the laws in effect at the time an individual’s death will determine how their interests and estate should pass.[1]

 

Colorado’s probate code greatly favors spouses in intestate estates. In considering the various circumstances that may apply when trying to determine who will inherit, “the circumstance that produces the largest share for the surviving spouse shall be applied.”[2] If the decedent has no surviving descendants or parents or all the decedent’s children are also the surviving spouse’s children, then the spouse will inherit the entire estate.

 

The table provides the spouse’s share in the event that there are potentially other takers in the decedent’s estate.[3]

 

If only a parent of the decedent survives The surviving spouse receives the first $300,000, plus 3/4th of any balance of the intestate estate.
If the decedent and surviving spouse’s children survive but the surviving spouse also has a child that is not descended from the decedent The surviving spouse receives the first $225,000, plus ½ of any balance of the intestate estate.
If a child of the decedent survives but is not the child of the surviving spouse The surviving spouse receives the first $150,000, plus ½ of any balance of the intestate estate.

 

If there is no surviving spouse, then the intestacy laws provide that the estate will be distributed entirely to the children. Adopted children are considered to have the same status as biological children.[4]

 

Recent Changes

 

Although Colorado’s intestacy laws will provide guidance in how mineral ownership is conveyed in the absence of a will, recent changes to the law may make it simpler to seek formal probate proceedings to acquire title. [5]

 

Colorado has followed the UPC trend and created a significant exception to the general three-year statute of limitation rule, which may affect mineral owners.[6] The exception under § 15-12-108(2)(c) allows for a will to be probated if it has not been previously submitted for probate in Colorado even if it is outside the three year rule.[7] In attempting to determine whether a person is the rightful owner of mineral interests, rather than relying on an affidavit of heirship, oil and gas companies may prefer to use this exception if a will can be produced to properly identify the true owner of the mineral interest.[8]

 

The interpretation of this exception in Weld County trial court in the cases In re Woodward and In re Cable, has led to the admission of wills 17-years old, 35-years old, and 54-years old in order to establish heirship for mineral interests.[9]

 

Therefore, this may be beneficial in the case that oil and gas companies approach heirs about their potential interests that may have never been submitted to probate and properly transferred. The probate procedures are the preferable method to establishing title to oil and gas interests. Although an affidavit of heirship may be recorded and taken as prima facie evidence of ownership, this may still be challenged by opposing parties later.[10] The affidavits of heirship also do not effectively convey record or marketable title, so this change to the statute of limitations on probate proceedings may have significant implications for establishing title to oil and gas interests in Colorado.

 

[1] Colo. Rev. Stat. Ann. § 15-17-101(g) (West).

[2] Colo. Rev. Stat. Ann. § 15-11-102 (West).

[3] Id.

[4] Elizabeth A. Bryant, Kimberly R. Willoughby, Constance Beck Wood, Changes to Colorado’s Uniform Probate Code, 39 Colo. Law. 41, 43 (December 2010).

[5] See SB 16-133 (2016).

[6] Kelly Dickson Cooper, Elizabeth T. Meck, Jessica Schmidt, Statutes of Limitation in Probate and Trust Litigation, 45 Colo. Law. 35 (May 2016).

[7] Id.

[8] Id.

[9] Id. See also In re Woodward, No. 2014 PR 30028 (Weld County Dist. Ct. July 22,2014) (unpublished); In re Cable, No. 2014 PR 30424 (Weld County Dist. Ct. Oct. 17, 2014) (unpublished).

[10] § 42.6.6–Additional Issues Impacting Probate of Oil and Gas Interests, COCLE-EPH 42.6.6, 2017 WL 8779514. See also 3 C.R.S. § 38-35-113.