Great idea for spreading the tax into to years. My aim is to create a trust which will own the mineral rights for my kids. Working now with a estate tax expert so we'll see. Thanks for your input.
Not saying it is important or relevant. But you might want to be certain your tax expert is aware of Revenue Ruling 68-606.
I am not a 68-606 acolyte. However, at the same time, I am not one who would argue the merits of ignoring it entirely.
Speaking in general, the area of structured payments (of all kinds) has been something of a focus for the IRS in recent years and goodness knows I'm no expert on this rather arcane subject matter. The trouble seen from time to time is that even the so-called tax "experts" have remained unaware of (what are fairly recent) developments. The other problem, which is seen quite often with the "experts", is that when they do become aware of something like this they play safe.
Great discussion all around, Milton. My question is, will heirs take ownership of the mineral rights, even if the property is sold outside the family? I am working on a reverse mortgage, and wonder what happens to any mineral rights, when the mortgage company takes possession of my land.
Eleanor, we don't own the property. The rights were reserved for my great grandfather's heirs when he sold the property in the '30's. His deed specifically set aside the rights for our ultimate inheritance.
If you currently own the rights, then you dictate what happens to them. You can reserve them away and keep them before entering into the reverse mortgage. Then when the mortgage company takes possession of the surface ownership, you still hold the mineral interest.
Bottom line - see an attorney
Better make sure this is legal and get all your ducks in a row before doing it. There is IRS policy and documentation on the subject.