Replies to This Discussion

Permalink Reply by Joe Aldridge on June 24, 2013 at 8:01

I had an Aunt that tried to do something similar. Her heirs were told that is "speaking from the grave" and that is not legal. Maybe some of the attorneys on here can speak more about what the legal issuers are. That will be interesting.

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Permalink Reply by olddog573 on June 24, 2013 at 8:06

I am not a lawyer but I would say his wish via the will was granted. It went to his son. After that the son has the right to leave his property to whomever he wants so i would say based on my experience with land deals.

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Permalink Reply by dot holloway on June 24, 2013 at 8:15

Kind of figured that and Dad would be so disappointed but guess there's nothing we can do. Thanks for the info.

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Permalink Reply by Henry on June 24, 2013 at 12:46

Maybe your sister-in-law is the understanding type.... You could ask your brother to leave the land to family members, but give his wife usefruct of the land until her death.  Could that be done?  By doing this, I think (?) that the wife would collect royalties until her death, but then the land and royalties (after her death) would go to whatever family members he willed them to.

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Permalink Reply by Andrew on June 24, 2013 at 21:12

Henry, you're correct about the wife. Usufructs of land that are given to surviving spouses always include the mineral rights unless the act creating the usufruct expressly provides otherwise (or unless the other spouse didn't own the mineral rights when he or she died, obviously).

Another possibility is for Dot's brother to give his wife a usufruct of the mineral rights only. This would allow his wife to continue to receive his royalty after his death, which appears to be his objective, but would allow him to transfer the land itself to his children in accordance with his father's wishes. That may not be exactly what Dot's father had in mind, but it seems closer to the mark than leaving the land and minerals to his widow for life.

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Permalink Reply by Andrew on June 24, 2013 at 21:00

It is technically possible that Dot's brother would not be allowed to convey the property to his wife, but unfortunately I think it is highly unlikely that this is the case. Unfortunately, this kind of situations brings together a couple different areas of the law that are confusing beyond imagination: prohibited substitutions & successive usufructs/usufructs of mineral rights. I'll try to explain as simply as possible and hope I don't end up confusing myself along with the rest of GHS.

Prohibited Substitutions/Rule Against Perpetuities

This appears to be a situation where a Donor (i.e. Dot's father) makes a property donation to A (Dot's brother) that (1) requires A to hold the property until A's death, and (2) requires A to transfer the property to a B (the grandkids) upon A's death. If so, it is the prototypical example of what Louisiana calls "prohibited substitutions." As the name makes abundantly clear, these kinds of donations - which "substitute" the first donee for a second one when first donee dies - are "prohibited" (note that a bequest under a will is technically a "donation").

This "prohibition" is not unique to Louisiana, as virtually all of the other 49 common-law states prohibit what they call “dead hand” control with the "Rule Against Perpetuities." Regardless of the various names for them, these kinds of donations were eventually prohibited almost everywhere for the same reasons: they were taking property out of commerce for long or infinite periods of time, and they were primarily being used to keep dynastic wealth within families. 

While these substitutions are prohibited as a general rule in Louisiana, there are two narrow exceptions that rule that could enable a testator/donor could achieve the same result as a prohibited substitution.

1. If the property is in a Trust created by the donor, they can make requirements for the administration of the Trust's property that will remain long after the donor's death, but there are very strict rules on Trusts that make it difficult to do this. 
2. Using usufructs.

Usufruct Loophole #1

As already astutely suggested by Henry, a testator or donor could create a situation very similar to a prohibited substitution by donating a usufruct of the property to A, but donating ("naked") ownership of the property to B. The usufruct will terminate upon A's death at the latest, at which point the right to actually use and enjoy the property would go to B. Dot's father could have actually donated naked ownership to his grandkids, while giving his children a usufruct. There is one key limitation on this tactic - both usufructs and naked ownership can only be donated to someone already born (or at least "in utero") at the time of the donation. "Dead hand" control, when it was allowed, only required the substitute (B) to be alive when A died, which could be 90 years after the donor dies and leaves the property to A.

Usufruct Loophole #2 - Successive Usufructs

As a reminder, a "prohibited substitution" occurs when a Donor makes a donation of property to A that (1) requires A to hold the property until A's death, and (2) requires A to transfer the property to a B upon A's death. However, this rule does not apply to donations of usufruct (as opposed to naked or perfect ownership). So, while the situation I just described where ownership is donated a prohibited substitution that is "repugnant" under Louisiana law, a donation which imposes the exact same requirements on A, but which only donates a usufruct instead of ownership, is totally sanctioned. This defies all logic, and the justifications for the "usufruct exception" are so nonsensical that I won't even bother to paraphrase them. 

Summary

Dot said that her father "left a signed paper stating that his land go directly to his children and grandchildren." That signed paper could be anything. Technically, if that paper was a Trust, his wishes may be enforceable against his son even after his death. Or, assuming his grandkids were born when Dot's father passed away, that paper could have either (1) donated the ownership of the property to his grandkids and only gave his children a usufruct, or (2) donated a usufruct to his kids with a requirement that the usufruct itself pass to his grandchildren upon their deaths (thus leaving actual ownership of the property to someone outside the family). Both usufruct scenarios would be acceptable.

So, it is technically possible that Dot's father took advantage of one these loopholes, in which case his wishes would be honored. However, unless her late father was an eccentric legal scholar with a mischievous sense of humor, that's extremely unlikely to have been the case. 

For anyone actually still reading this post, I commend you for your willpower, and I hope some of this has made some sense.

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Permalink Reply by P.G. on June 25, 2013 at 2:01

Who's liable for upkeep (on home or things that need maintained) and taxes and such in a situation such as that?

I know someone in another state who inherited a property but a life estate was given to someone else...those thing I mentioned became issues..

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Permalink Reply by Andrew on June 25, 2013 at 15:55

In Louisiana the usufructuary is responsible for ordinary maintenance or repairs. The naked owner is responsible for extraordinary repairs unless they are to repair damage that is the usufructuary's fault.

The usufructuary is responsible for property taxes.

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Permalink Reply by ELLIS HUGH on June 25, 2013 at 7:02

Usufruct Loophole #2 - Successive Usufructs

Very interesting Andrew - Thanks for your contributions.

EH, Landman

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Permalink Reply by Hopeful About Natural Gas on June 25, 2013 at 8:41

Good reply Andrew.

I have been thinking of creating a "dynasty". However, I only have stepchildren! My problem is how to get them not to just sell off everything at the first opportunity!

HANG,

"This "prohibition" is not unique to Louisiana, as virtually all of the other 49 common-law states prohibit what they call “dead hand” control with the "Rule Against Perpetuities." Regardless of the various names for them, these kinds of donations were eventually prohibited almost everywhere for the same reasons: they were taking property out of commerce for long or infinite periods of time, and they were primarily being used to keep dynastic wealth within families."

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Permalink Reply by Andrew on June 25, 2013 at 15:57

HANG,

Thanks for the compliment. A trust will probably be the best solution to your problem, just make sure the person who sets it up knows what they're doing. Best of luck,

Andrew

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Permalink Reply by Hopeful About Natural Gas on June 25, 2013 at 18:50

If I set up a Dead Hand Trust I can control the stepkids from the grave? I'd like that. I was unable to control them in my lifetime! (seriously, they are fine adults)

I love my stepchildren but they have zero interest in oil and gas besides the income. I  keep thinking that they should KNOW SOMETHING about O&G if they are going to inherit it. I was raised with the idea that you were responsible for things you owned. They don't know what fracking is, nor do they care. I guess I was the same way when i was their age.

Thanks again for all the advice to that member. She gained a huge amount of good info here. I am going to get to work on my Mean Step Father Trust :)

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