With the continued uncertainty surrounding federal taxes (i.e. the “fiscal cliff”), those with oil and gas interests should update their estate plans or at least speak with their estate planning attorney or accountant before year end. Estate tax, also known as the death tax or inheritance tax, is the tax owed at a person’s death when their assets exceed the applicable exemption amount for their year of death. The estate and gift tax exemptions for 2012 are $5.12 million; however, unless Congress acts before year end, the estate and gift tax exemption will decrease to $1 million for 2013.
It doesn’t take much to exceed $1 million.
Large acreage tracts can easily exceed $1 million for bonus payments undoubtedly meaning that the total value of your estate exceeds $1 million. If you’ve recently leased and activity is likely, then it may be advantageous to transfer or gift certain assets before production occurs and pushes the values on your assets even higher. If your oil and gas interests are producing, you need to recognize that that income stream is valuable. While only a qualified mineral appraiser can truly determine the value of your oil and gas interests, if your monthly income exceeds $10,000.00 then you inquire further as there is a distinct possibility that your oil and gas interests will exceed $1 million.
Year-End Planning Opportunities
There are some great planning opportunities exist through the end of 2012 with the $5.12 million estate and gift tax exemptions if your estate is likely to exceed $1 million. Don’t delay and contact your accountant or estate attorney to inquire if you should take action now to protect your assets.
Jenna H. Keller, Esq.
Attorney at Keller Law, LLC. (www.kellerlawllc.com)
The information in this article is for general information purposes only. This article should not be substituted for legal advice and should not be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or reading this article does not constitute, an attorney-client relationship. You are encouraged to contact an attorney for legal advice concerning the information provided in this article.
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