Replies to This Discussion

Permalink Reply by Robert D. Congdon Jr. MAI, SRA on September 22, 2011 at 5:45am

Lynn-

 

We do appraisals for mineral valuations in Pa, NY and West Virginia as part of Estate Planning for IRS applications.  You will need to consult with a qualified Financial Planner and and an Attorney to develop a specific plan for your situation. Call me anytime.

 

Bob Congdon

 

 

Robert D. Congdon, Jr. MAI, SRA

 

Certified General Appraiser in New York, Pennsylvania, and Florida

 

Licensed Real Estate Broker in New York

 

CHECK OUT OUR NEW WEB PAGE    

 

http://congdoncoinc.com/

 

New York Contact Information

 

Congdon & Co. Inc.

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607-757-0435

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Permalink Reply by David Stewart on September 22, 2011 at 4:29pm

Did a lot of looking into this myself and the more you look the more options you will find.  A good estate planning attny is key.  There are a lot of attnys out there jumping on the estate planning and some of them touting complex and complicated plans.  Some run upwards of $17,000 to set up.  Depending on your situation that may be alright but I think most of us can set things up for a lot less.  A living trust for basic estate planning is probably the first thing.  Couple other suggestions and considerations (from a non professional - so dont take them as correct or right for you). There is a yearly gift tax exclusion which allows you to transfer a certain amount to kids and not have it subject to estate taxes. A LLC makes it easier to transfer portions of you assests each year while providing some financial protection, structuring the LLC to prohibit transfers to non family produces a discount of the market value thereby allowing more to be transfered estate tax free each year.  Assigning oil and gas lease rights instead of conveying oil and gas rights may eliminate several other taxes imposed such as transfer tax, realestate tax or capital stock taxes.   Good luck

Permalink Reply by Ann Ticopa on September 23, 2011 at 6:10pm

Yes, but ... the York estate is in Bradford county and it sold now.  What would the property sell for decades down the road, when the gas boom is over? 

I scanned the appraisal and mineral estate was valued at $567,600.  That should be close to right as there are existing producing wells.  The house, out-buildings and 52.8 acres were valued at $275,000.  The house is ~1,800 sf and dates to 1840.  From the description, it has been updated for livability, but it doesn't have architectural detail that would lead someone to buy it to restore.  For example, the downstairs is carpeted, it has central air, and the kitchen has been modernized.  A negative is that it has electric baseboard heat.  The out-buildings are poor-fair condition.  

The land was valued at $2,550/acre - which seems low.  The appraiser does note that development potential was not factored into the valuation.  My guess is that the $500,000+ over the combined appraisal paid was because the bidders had plans for the use of the land.  (It does have 4,000+ ft of road frontage.)

Of course one can't know what estate/inheritance taxes will be decades in the future either.  But the trend has been to a larger exclusion on the federal tax, $5M in 2011. And the current PA tax is 4.5% for bequests to lineal heirs.   Which is not to say that you shouldn't take steps to shelter income/assets from taxation.  But perhaps the priority should be on the gas income you receive in the near future.  

 

Permalink Reply by paleface on September 23, 2011 at 6:46pm

 Ann I think a FLC was designed for a family which might be the way for Lyn to go with her children if she wanted to set up a corporation,alot of people back off when they research an LLC or FLC but it does protect the estate could be a smart move as this oil and gas play grows?

Permalink Reply by Ann Ticopa on September 24, 2011 at 4:02am

My ex's family had something like that set up by the parents for a weekend/summer vacation place.  I never knew the details except that the "last man" eventually got all the marbles. Only two of the five sibs lived close enough to use it regularly. Otoh, they  got stuck with most of the caretaking. One thing I always wondered was whether the arrangement was adequately funded to cover maintenance, taxes, etc.  The house was built to last, of stone, but it is 2,700 sf and now 50 years old. 

Ten+ years ago, the sleepy little town was "discovered" by a high-rise condo builder.  The RE values fell some with the mortgage crunch, but the 0.3699 acres of land has a current fmv of $416,350!  The point being that an arrangement meant to hold a family together can have the potential to create division. 

Permalink Reply by 3tyojqer8wqp3 on September 24, 2011 at 4:26pm

There was a book written several years back its called how to avoid probate and is very helpful from what I understand I believe it was written by a man last name stacy