Why You May Want to Accept that Seemingly Lowball Offer for that Small Royalty Interest You Have Acquired Some Time Ago …

While we all envy the person on television like Jud Clampett that receives some great news on a royalty interest, (or misses a rabbit only to hit oil) …in real life frequently this can be more trouble than gift.

Living in Texas a state that produces oil and natural gas royalty rights are very popular and frequently handed down from one generation to the next.

Continued Disposition Problems

We are continuing to run into an ever increasing number of need to dispose of seemingly small mineral right properties that maybe had an offer at one time or another that actually cost more to dispose of them the offer.

Photo by Albert Hyseni on Unsplash

Please don’t run out and dump that long ago relative’s income producing oil or gas property that has been in the family for years producing a nice monthly check … but the hundred dollar or seemingly worthless offer for that very small parcel of land that has a very small mineral right may be a good offer not only from a small tax reporting over the years that you may have to do but also from an organization standpoint in your estate.

While there are exceptions and of course when oil prices were in the mid 100s there were extreme cases of payments, it is very likely if you are receiving a very nominal amount of money from your mineral interest over the past decade that that mineral interest likely has very little value and maybe more of a burden to you from a tax standpoint and especially to your heirs from an estate cleaning standpoint than it’s worth.

No Need to Be Reckless – Do some Research

This is once again not an endorsement to go recklessly sell the mass form of income property but rather a recommendation to maybe think twice and do a little research when receiving a seemingly low offer by a professional mineral person who wants to consolidate his portfolio and take that interest off of your hands!

Have a Great “Cleaner Estate” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

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