The New Marcellus Shale Gold Rush - Estate Planning?

Been attending a couple seminars and meetings lately aimed at estate planning and the effects of Royalty payments on the estate.  The implied consequences are staggering.  So are the proposed legal fees for setting up Family Limited Partnerships, LLC's, ect.  I am really wondering if a lot of what they are hyping is true. 

 

The real scare part is the impact of possible future royalty valuation in the estate. If, as explained, the next 20 years worth of royalties can be added to the value of the estate and taxed at the time of death it could concievably add 10-12 million to an estate of a 200 acre land owner.  The tax on this and other parts of the estate would then be due from the estate within 90 days.  At a possible 45% tax rate this could mean 3-5 million due then.  For most the only way to pay that would be to sell the land and royalty rights, most likely at less than favorable prices.

 

So my question is has anybody had any experience or gotten any good advice from a tax or estate professional they trust.  Some of the figures I have gotten for setting up a Family Limited Partnership top $15,000.  Including appraisials of royalties, 3-6K, Legal Fees 8-9K. 

 

All of this is so new to area that I worry some of these outfits may be riding on/manufacturring a wave of hysteria.  If all the hype is true I definatley see the need to set things up now, cost seems pretty steep though.

 

This is my first post since joining last month so if I didnt put in the proper forum I apologize

Thanks

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Permalink Reply by stormangasman on November 27, 2010 at 11:33am
David
you hit the nail on the head there,we are in a catch 22!!! everyone is trying to get in and steal your claim,I hope we don't lose the 2nd amendment, I watch a lot of gold rush westerns!!!!!
Permalink Reply by Roger Proper on December 3, 2010 at 4:23am
This has been very interesting following this string of e-mails. I am an estate planning attorney in Ohio and we have been working with numerous clients on this topic; in addition we have a long history of representing many oil and gas companies (producers, drillers, etc.). Attorney Charlie is on point; that is, each case needs to be evaluated on its own particular set of circumstances. The FLP/LLC may be appropriate for some. (When I have created an FLP/LLC for estate planning purposes similar purposes in the past, my fees are generally $2,000 (if fairly straightforward) to $5,000 (if it gets to be a little more complicated). Depending on the clients particular circumstances, the IDIT (intentionally defective trust that Charlie mentioned) and the GRAT have also saved some of our clients many millions of dollars in estate taxes. But, as many of you have pointed out, you need to work with an attorney that understands (1) estatate/gift taxes; (2) income taxes; (3) at least the basics of oil and gas law. If done properly, the client often has indirect access to the money, has the asset excluded from their estate for estate tax purposes, and often can protect the assets from creditors (again, if everything is done properly).

Roger D. Proper, Jr., LL.M. (Tax)
OSBA Certified Specialist in Estate Planning,
Trust and Probate Law
Critchfield, Critchfield & Johnston, Ltd.
225 North Market Street
Wooster, Ohio 44691
Phone: 330.264.4444
Fax: 330.263.9278
E-mail: proper@ccj.com
0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on December 10, 2010 at 2:47pm

Hi everyone,

 

I just came across this discussion and  my compliments to David for bringing the topic up for discussion and thanks to all who have input their part....this is a wonderful discussion thread with much wisdom.

I am glad we have this forum and thank our webmaster Keith for all his input/time/energy to make it work out well for us members to share!

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