Planning for Mineral Rights in Your Estate Plan
Mineral rights provide the opportunity to create substantial income for your family.
The big unknown, however, is when the substantial income is going to begin. With the uncertain nature of the oil and gas industry, you could be weeks, months or even years away from development and the royalties that come with it. This is an important issue to consider when setting up your estate plan.
Many people elect to give their oil and gas rights outright to their children through their will. Once you pass and the will’s terms become effective, the beneficiary under the will now has complete control of the property.
While this could be effective in many situations, it also comes with risk that the individual receiving the rights could allow those rights to leave the family. A divorce, remarriage and a will that gives the rights to the new spouse is all that it takes for your grandchildren’s mineral rights inheritance to exit stage left. Now, not only has your plan not worked and your grandchildren not received the mineral interests that you have hoped, but your family’s relationships have also most likely been forever damaged.
The smarter way to plan for your mineral rights is through a limited partnership or a trust which does not allow the mineral rights to be transferred outside of the family. A divorce or even a troubled beneficiary with creditors can be protected through careful planning. Most importantly, the settled framework will ensure that a family dispute does not arise over the unexpected disinheritance of one or more family members.
As always, planning in advance can go a long way toward avoiding future problems in your estate plan.
If you would like to discuss mineral rights planning with one of our attorneys, call our office at 877-748-3234.
S. David Wilharm practices in the areas of elder law and oil and gas law with the law firm of Rokisky, Wilharm, Blair, & Rokisky, PLLC. The firm has offices at 3200 Main St., Weirton, and 38 15th St., Wheeling.
If you would like to submit a question for publication, email it to rrokisky @rokiskylaw.com.