When a family member dies, royalty interests typically complicate the handling of an estate. Properties split between many heirs often have little value and a great deal of paperwork. In addition, the legal cost or costs to maintain the property may total more than the value of the property itself. While leaving minerals and royalties to your family may seem like a smart solution, many times, because the royalty becomes further and further divided, the actual cash flow that they receive is trivial. The small payments still hold all of the responsibilities of a larger interest that could become a paperwork and administrative headache. In addition, paperwork associated with transferring and maintaining an oil and gas property is complicated therefore, new ownership is a learning curve that may create the potential for extra accounting and legal fees.
