Has anyone had any experience addressing mineral rights via lifetime gifting of interests or testamentary planning? Clients have mineral rights that have potential to pay substantial royalties beginning in near future (while there is no current royalty income and no gauge as to what the future income stream - if any - may be). Have considered a FLP, but given potential transfer tax issue, and low basis of underlying real estate (lose step-up if RE in FLP), a FLP is not in consideration.
Issue is with the "unknown" - given the increased value that has been given of late to oil/gas interests, a substantial royalty interest in one or more properties could very well cause an FET issue. In potentially planning w/ the mineral interests now, that takes the "unknown" and moves it out of the estate - so no FET valuation issue. Latest planning thought is to consider a lifetime gift of mineral interest to children (there are eight) and let each child deal with the income at their individual income rates.
In addition to any planning thoughts anyone may have - would be interested if there are any CPA contacts that may have dealt with income streams from an individual taxation and estate valuation perspective.
Many thanks in advance for any thoughts.
Shawn Pierson, Esq.
piersonesq_at_comcast.net
(717) 560-4966
Received on Thu Aug 31 2006 - 07:13:28 PDT
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