What if I get sued? What if creditors come after my assets?
What would be the best choice of action to protect myself from sued? Turning my royalties into some kind of business? Insurance? I'm a new land owner and I want to protect myself before moving forward.
The advise may differ depending on whether you have a house lot or a section.
If I were in your shoes, I would set up an LLC to isolate your mineral holdings. I am NOT an attorney or accountant, but this is what I did with my mineral assets and it will assist with estate planning too.
Strong indemnities and insurance requirements in your leases and other agreements is your first line of defense.
In general, you cannot protect personal assets from creditors who are entitled to be paid for goods and services rendered. One creditor could have a priority for an asset, such as the lender on your car loan. Some assets are protected by state or federal law, depending on the state where you reside and where the assets are located - particularly a defense in bankruptcy. If you own stock or shares in a partnership, that too can be taken by creditors. The purpose of a legal entity such as an limited liability company or a limited partnership is to protect your personal assets from business creditors or liabilities incurred by the business. It is not to protect your personal assets from debts owed to general creditors or from someone you harm in an accident or from liability for destruction of property. The best way to protect all of your assets is to purchase an umbrella insurance policy. It covers you for liability in a car accident which exceed your auto coverage, or if someone falls on your stairs, or other such things. Generally you get this through your homeowner's and auto insurance companies.
You might consult a qualified attorney in your jurisdiction about establishing an intervivos trust, wherein your minerals can be transferred and isolated from the reach of certain creditors.