Have you ever dreamed of striking it rich by finding vast reserves of oil in your back yard? The funny thing is, it actually happens sometimes. With the extra riches, though, come added financial responsibilities for Texas residents — both in terms of managing the wealth while alive and in managing it for future generations to come through responsible estate planning.
Some farmers refer to the extra income they receive from drilling and mining operations as mailbox income. However, according to one estate planner, this influx of wealth is often happening to the right people. He says that the farmers who “strike it rich” often come from a background of hard work, and they are using, investing and managing their newfound wealth responsibly.
Farmers who fall into a great deal of mineral, gas or oil wealth are often faced with the question of how they will leave that wealth to their children without destroying their children’s work ethic. In other words, how much is too much and will the children be able to handle the responsibility? There is also the issue of tax liabilities that pertain to large inheritances. Farmers do not want their estates to be eaten up by giant taxes.
Fortunately, Texas residents have a whole host of estate planning options available to them, which could serve to limit the tax liabilities faced by their heirs. They can also set up trust funds to manage the dispensation of their assets to their heirs, so that it happens over time. Similarly, if one has a favorite charity, or would like to create his or her own charitable foundation to last into perpetuity — a charitable trust can be designed to creatively meet virtually any kind of need.
Source: greeleytribune.com, “Energy Pipeline: Managing newfound oil wealth rife with complexities, responsibility”, Sharon Dunn, Nov. 2, 2014