Estate Administration

Family Settlement Agreements

Natural Gas Pipeline Co. of America v. Law, 65 S.W.3d 121 (Tex. App.—Amarillo 2001, pet. denied).


Parties with an interest in a lease of mineral property and royalties by intestate succession, will, or assignment, executed an agreement relating to the correct ownership of the interest. The agreement also appointed one of the owners as the agent to collect and distribute royalties and to pay taxes and expenses incident to the lease. The appellate court held that this agreement acted to revive the lease as a matter of law. Although the lease may have terminated because of cessation of production during the secondary term of the lease, the agreement recognized and revived the lease.

The court treated this instrument as a family settlement agreement which served as “an alternative to formal administration of a decedent’s estate and is a favorite of the law. * * * A family settlement agreement cannot be avoided by a unilateral mistake of law by one party and will not be set aside for ordinary mistake of law or fact where all parties have the same knowledge or means of obtaining knowledge, in the absence of fraud or otherwise inequitable conduct.” Natural Gas at 126. The agreement is binding on the parties as to their respective interests in the minerals and royalties as well as the fact that their interests are subject to the lease.

Moral: Family settlement agreements continue to be an effective method of resolving disputes regarding the ownership of a decedent’s property.