Gas on Land Complicates Estate Planning in Pennsylvania

Owning land in Pennsylvania can be something of great value, especially if there is oil on your property. And while that oil is a potential income booster, it also complicates landowner's estate planning.

Although many people assume those with oil on their property are wealthy, often this is not the case. Pennsylvania landowners need to look their own situation in order to properly determine whether gifting the oil as part of their estate plan is the right move from a tax standpoint. They also need to decide whether that gift should happen while they are still living or whether it should wait.

Gas planning groups are doing what they can to protect the tax interests of those with both "wet gas" and "dry gas" on their land. While both substances are valuable, wet gas contains methane plus propane, benzenes and ethane, and dry gas is nearly all methane.

Landowners are seeking legal counsel not only because they are discovering a valuable resource on their land and are trying to determine exactly how to handle that, but they want to be sure that their heirs are able to collect royalties on the valuable resources.

When it is financially feasible, estate experts suggest setting things up early and letting heirs have control of royalties while you live on other income. Dynamic trusts can be set up, and in many cases real estate transfer taxes do not apply. When planning may legal areas come into play, including tax laws, estate laws and energy laws. Working with the right expert is important in seeing that things work out the best way possible for all concerned.

Source: Pittsburgh Post-Gazette, "Estate planning follows gas boom," Zack Needles/The Legal Intelligencer, November 26, 2012