You’ve had several replies suggesting you consult an attorney, and that’s good advice. I suspect, though, that you’re looking for a discussion of the issues, and I’ll offer my perspective. I’ve been managing my own oil & gas properties for about 35 years, and I now manage a family minerals LLC that we formed 11 years ago. It was certainly the right solution for our situation. We own mineral rights in about 100 properties in 13 Oklahoma counties. Advantages of the LLC are centralized management, cessation of the division of the ownership into more and more tiny holdings in successive generations, etc. On the down side, it does require an attorney, setup charges and an annual tax return. Certainly, the number of properties involved and the annual royalty income of the combined set will be a factor in your decision.
I manage the books and have trained one of our sons who will eventually take over. And that’s one of the advantages. The other two sons would be much less equipped by background and personality for this particular job. And if they owned the properties individually, each of them would have to manage all the same leases, etc. And when one of the owners dies, it has no impact on the oil & gas property, since that’s owned by the LLC. This advantage was recently brought home to me as I’m dealing with a property owned by six members of my wife’s family (and not in our LLC). One of the owners died in another state, and in order to transfer the Oklahoma real property to his wife and heir, a separate Oklahoma (Summary) probate will be required. That doesn’t happen with property in an LLC.
Just food for thought.
Rudy