My Great Aunt passed away three years ago and had mineral rights at a producing field in Taft County, CA. She left the rights to my brother and I; however, her nephew (my dad) was the executor of the estate and has taken some time getting things done, finalizing her estate and getting the rights transferred to our names. I have called the oil company and they have everything on hold until he does whatever needs to be done to clear probate.
The real question is after three years, when everything clears, and I receive whatever inheritance has accrued, what am I going to be expecting to pay in taxes (both California State and Federal)?
let me address what I can which is that an estate may have estate taxes depending on the size of the estate. But, you as the inheritor don't have to pay taxes on what you receive. If there is production, you will have to pay income taxes on the receipts
I am an oil and gas lawyer and not a tax lawyer, and therefore you should check with a CPA or a tax lawyer. My understanding that the mineral interests will have been assessed a value as of the date of the death of your Great Aunt and depending upon the size of the estate you either will or will not have to pay inheritance tax on the mineral interests depending upon that value. The income derived after your Great Aunt's death, which has been held in suspense by the oil company since your Great Aunt's death, will be yours and generally Federal and State income taxes on this income will need to be paid.
You should certainly make sure that property taxes are paid on the interest (if it is producing). Once you get the ownership changed with the oil company, you should notify the county assessor and inform them of the ownership change, so that you will receive all future tax bills for your portion of the interest.