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Yes, you can. This can be done through either a general bequest or a specific bequest. A general bequest passes all of your assets (including any mineral rights you own) on to an initial beneficiary, for example, your spouse. Should they pass away, mineral rights could then pass to your children.
A specific bequest would give mineral rights alone to a specific beneficiary, such as a nephew or a friend. Either way, it is quite common for mineral rights to be inherited in Texas.
Yes, you can. If you wish to do this, the first step I would recommend would be a mineral appraisal to help determine the value of the gift at the time it is given.
If the value of the mineral rights gift exceeds the annual gift exclusion set forth by the IRS (currently at $17,000 to one individual), the IRS must be notified that you are giving a gift in excess of that amount. This will reduce your estate tax exemption once you do, ultimately, pass away.
The other thing to keep in mind is that the recipient will assume the basis of the donor, meaning they will use the value of the minerals at the time you acquired them for tax purposes. If the mineral dramatically increases in value, that could have serious capital gains tax implications for the recipient, especially if they later decide to sell those mineral rights.
Another common practice is the placement of mineral rights into a family limited partnership, often composed of parents and their children. The tax and estate planning structure in place can potentially ease the estate tax burden on heirs in the future, especially if the value of those minerals is substantial.
I would always encourage you to consult your CPA (Certified Public Accountant) on tax matters if you are considering gifting or selling mineral rights to someone. Your CPA should be the first to know about the gift or sale of your mineral rights, and in far too many cases, they’re the last to know. It’s better to have a clear understanding of the tax implications of your conveyance sooner rather than later, and consulting a tax expert early on is a very important step.
Attorney Seth Bell is a caring, knowledgeable mineral rights and estate planning attorney serving Texas. Since 1997, he’s helped clients just like you navigate mineral rights and helped families craft estate plans with compassion, skill, and heart.
Have questions, or in need of legal guidance? Reach out to the Law Office Of Seth K. Bell for an initial consultation today.
When mineral rights are put into a trust, they can stay together. This keeps mineral rights intact, as opposed to being divided through a will to multiple beneficiaries who might then sell their rights, removing those assets from your family’s overall wealth in the process. With a trust, mineral rights under a given piece of land stay whole and intact.
I generally don’t recommend partitioning mineral rights among heirs. Instead, I typically suggest giving heirs an undivided, shared interest in mineral rights. There is strength in numbers when you’re negotiating with an operator: often, the more unified, interested parties you have, the better of a deal you get when seeking to lease those rights to companies.
While dividing mineral rights may be appropriate for some families in some circumstances, I typically suggest keeping mineral rights together and allowing beneficiaries to share an undivided interest.
One thing to consider is whether those minerals were profitable during the decedent’s lifetime. In some cases, this has not been the case; however, upon conveyance, the oil and gas industry shifts, and suddenly, the land you’ve passed on or inherited becomes quite profitable.
The oil and gas industry is a truly fascinating industry in terms of how it operates, where it operates, pricing, and many other things. In many cases, however, mineral estate planning is not significantly different from overall estate planning.
Absolutely. In addition to mineral rights law, I also handle estate planning for families throughout the San Antonio area. When everything is planned, down to your funeral and burial, you can take a tremendous burden off of your beneficiaries, who are mourning your loss and having to make some very difficult, long-term decisions within days.
If we adequately plan, all your children will have to do is determine “We’re going to have Mom or Dad’s service at a certain location on a certain day”, and then everybody comes and celebrates your life.
We tend to avoid discussing our mortality as human beings. We hope to live a long and prosperous life, but we are all aware of examples of people who passed away unexpectedly, whether it be a family member, friend, or neighbor. So while we would generally rather mop the floor of a kitchen than discuss our death, almost every client tells me, after they’ve done their planning, how relieved they feel that they have done it.
That’s nearly a daily occurrence, but it’s a real honor for me to work with families in their planning. I truly feel that this is a way I can make a difference. If you need help with any aspect of estate planning, please come and see me. I’m very honored by anyone who takes the opportunity to call on me to be of service. If you need them, we do keep Kleenex and handkerchiefs here at the office.
For more information on how to transfer mineral rights in Texas, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (210) 824-4001 today.
Attorney Seth Bell is a caring, knowledgeable mineral rights and estate planning attorney serving Texas. Since 1997, he’s helped clients just like you navigate mineral rights and helped families craft estate plans with compassion, skill, and heart.
Have questions, or in need of legal guidance? Reach out to the Law Office Of Seth K. Bell for an initial consultation today.