I took over my mother's finances about 4 years ago. A CPA recommended that we form an LLC for her mineral interests. Does anyone have any recommendations about this? Would it be worth the cost? She has mineral interests all over Texas and in North Dakota. Very few are paying anything at this point.
It costs about $800 on up to form an LLC through an attorney or CPA, plus you have the annual tax return and state franchise tax return (in Texas). The main issue is one of management. It is better to have to get one signature than multiple, pay one tax bill than multiple, and reduce the risk someone moves and has their minerals foreclosed on or payments stopped.
In addition to what Wade Caldwell has mentioned, since she owns interests in multiple states, conveying into an LLC would likely save costs upon her death with transferring interest to her heirs due to a more simple probate process (no ancillary probate). I would confirm with an attorney though.
There are a number of situations where a LLC isn't doable in No.Dak., but a LLLP is. My family tried to set one up a couple of years ago without much luck. Depending on the number of minority interest holders involved, it can be tough sell to get all to agree on the terms favored by the majority. Petitioning the court for relief can become pricey.
In Texas it is advisable to consider an L.P. with an LLC as general partner. Royalties are not subject to Texas franchise tax if owned by LP.