I curently have 120 acres under lease in Washington Co, PA. Drilling is underway and I should be in production within 6 mos to a year. I have started the process of transfering the gas rights from our Living Trust to a LLP. I am looking at several valuation processes and related costs as well as transfer taxes and legal cost. Has anyone else done this or looked in to it. My main purpose is to be able to transfer fractional interests to family members who do not presently have ownership.
My mother & I were referred to a law firm with an attorney who was a CPA prior to becoming an attorney. He recommended we create an LLC that would be held within a revocable trust. He said if we didn't do the estate planning, heirs probably would have to pay inheritance taxes on the potential future value of the mineral rights which would be very costly.
I am not sure who can define the value of your property, but there after your post, I am sure you will have receive recommendations.
It took about three months to pull all the deeds, leases, etc together because we have property in two states, three different counties, and had to work with our local attorney and one from the other state. I thought we were highly organized until I embarked on this project.
We set up an LLC business bank account where income is deposited. So far we take income from the LLC bank account on a quarterly basis and usually use it to invest in our trust accounts with a couple of brokerage firms
. Federal quarterly taxes are paid from the LLC prior to any withdrawals for us. I think you are wise to combine fractional interests.
Most people fortunate enough to receive royalty income from our area just set up trust accounts. I think the decision to do more than the trusts depends on the state you live in.
My legal fees were a little over $5000 to do the trust, LLC, will, and all the standard estate planning. I am glad that it is done. After the work I had to do to get it together for the attorneys, I understand how problematic it can become for your children to deal with it after your death if you didn't do planning.
good luck
What is an LLP or should that have been LLC? I’ve seen some savvy and well advised owners doing that but not able to elaborate on it. Need to look into doing it myself. Seems to be what a lot of owners are doing. I thought it was mainly a liability protection.
LLP = Limited Liability Partnership
LLC = Limited Liability Company
Thank you, Mr. Cotten. Thank you, Mr. Cotten. Thank you, Mr. Buddy Cotten. Oh, so how many were there? Had to ask.
Jessica,
thanks for the reply. Your response is helpful. What state are you in. I am looking at 5000 just to get the evaluations done, and the total may come close to 20k.
Jay
Jessica McNeil said:
My mother & I were referred to a law firm with an attorney who was a CPA prior to becoming an attorney. He recommended we create an LLC that would be held within a revocable trust. He said if we didn't do the estate planning, heirs probably would have to pay inheritance taxes on the potential future value of the mineral rights which would be very costly.
I am not sure who can define the value of your property, but there after your post, I am sure you will have receive recommendations.
It took about three months to pull all the deeds, leases, etc together because we have property in two states, three different counties, and had to work with our local attorney and one from the other state. I thought we were highly organized until I embarked on this project.
We set up an LLC business bank account where income is deposited. So far we take income from the LLC bank account on a quarterly basis and usually use it to invest in our trust accounts with a couple of brokerage firms
. Federal quarterly taxes are paid from the LLC prior to any withdrawals for us. I think you are wise to combine fractional interests.
Most people fortunate enough to receive royalty income from our area just set up trust accounts. I think the decision to do more than the trusts depends on the state you live in.
My legal fees were a little over $5000 to do the trust, LLC, will, and all the standard estate planning. I am glad that it is done. After the work I had to do to get it together for the attorneys, I understand how problematic it can become for your children to deal with it after your death if you didn't do planning.
good luck