Establishing value of minerals

I need valuations on 7 different Lea Co. mineral holdings. How is the best way to get this done? Main concern is to determine if my deceased aunt’s net worth will exceed the new death tax ceiling. Can a landman do this or do I need acertifie engineer ? Only 1 is under lease.

Typically, certified engineers can provide an estimate of your mineral holdings. That would be a good place to start if you need a more accurate estimate. Land professionals can however provide details on recent comparable leases and mineral sales that have been completed in the area.

When the estates of our relatives were evaluated for tax purposes, only producing minerals have any value according to the CPA agency, certified engineer and Bank who handled our grandparents/mothers estates. The value placed on non producing minerals was 1.00 each as no one knew if there was ever going to be any monetary value on the non producing minerals. For minerals only leased same is true. Only producing minerals have any real value and those minerals were valued at what the well or wells brought in for three consecutive years to determine any tax liability to the estate.

My two cents worth. Ask your CPA as our estates were taxed decades ago and the tax laws might have changed.

“That means an individual can leave $5.6 million to heirs and pay no federal estate or gift tax. A married couple will be able to shield north of $11 million ($11.2 million) from federal estate and gift taxes. And the annual gift exclusion amount is $15,000 for 2018—up from $14,000 where it’s been stuck since 2013.”

Google definition of the 2018 Death Tax.

I doubt putting $1 on leased but non-producing minerals would pass muster.

You are probably right on the leased non producing minerals Wade Caldwell. Depends on what the value of the bonus is I suppose.

I have seen examples where non leased were valued at $10 and any leased but not yet drilled were valued at the bonus payment. Not sure what “value” really is as their is almost always someone willing to pay $1 more…Reminds me of a banker I was dealing with years ago. We were building a Staples and we wanted 100% financing based on the credit of that tenant at that time. The banker turned us down two or three times. We found another bank willing to do that deal. Several years later the first banker said, why did you not go with us? I would have done that deal.

The federal estate tax (sometimes called the death tax) is a one-time tax that is imposed at death. If you die with a certain dollar amount of assets – currently, estates under $11.4 million are exempt, but this reverts back to $5 million in 2026. Also my accountant told me that if the mineral interest is not developed/producing it has no value to the IRS.