One of the students in the first cohort of my Mineral Management Basics course recently brought up an interesting point around the process of training the next generation of mineral owners. They said, “I have gone through a lot of effort to understand and get a handle on our mineral interests. How do we perpetuate this and how do we make it easier for our heirs? And, what should I do if they aren’t interested in managing them?”
You probably have gone through a lot of effort to understand and get a handle on your mineral interests. In this episode, we talk about how to make it easier for your heirs and what to do if they aren’t interested in managing your interests. From how to educate the next generation, hiring a mineral manager to do it for them, to selling your interests, there are a lot of options to consider.
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Educating the Next Generation of Mineral Owners
While there are a lot of resources available to help educate the next generation of royalty owners, the business of taking an active role in managing minerals and royalties may not be for everyone. If you are a member of the National Association of Royalty Owners (NARO), you could share a copy of the monthly newsletter or bring them along to a state or national convention.
Resources for educating your heirs about mineral management:
- In my Mineral Management Basics course (coming in 2023!), I’ll walk you step-by-step through the process of finding out exactly what you own and where it is located. With high-quality videos (that aren’t too long) and examples along the way, you’ll be able to locate your mineral and royalty interests on a map, perform your own title search, and identify nearby oil and gas activity.
- National Association of Royalty Owners (NARO). The mission of NARO is to support, advocate and educate for the empowerment of mineral and royalty owners. NARO hosts webinars and in-person events where you can network with other like-minded mineral and royalty owners and bring along the next generation to get educated.
- Other state mineral/royalty owner associations.
- 1-on-1 Coaching & Training. I provide customized training and education for current or aspiring mineral and royalty owners. Email me at msands@silverheelsinvestments.com for more information.
Hiring a Mineral Manager
Maybe you’ve tried to invite your heir apparent to an educational event but it just isn’t for them. Like the saying goes, “you can lead a horse to water but you can’t make it drink.” If you are faced with this situation, another option is to outsource the management of these assets to a Mineral Manager. Mineral managers can act as an agent and will professionally manage your interests, for a fee. When time comes to review a Divsion Order, negotiate an oil & gas lease, manage your royalty payments, a mineral manager can help. Most mineral managers charge a mininum account fee, plus a fee per asset that you have them manage in addition to 3-8% of gross annual income. Hiring a mineral manager often only makes sense if you receive a significant amount of royalty income each year. There are also smaller mineral managers that offer customized services for royalty owners where a bank mineral management department just doesn’t make sense.
Selling Your Interests
For some mineral & royalty owners who have heirs that do not want to manage these interests, selling your interests is an option as well. I’ve had clients who want to simplify their estate and avoid the potential in-fighting between their heirs over their mineral portfolio. Some have decided that selling was the best option. If you are entertaining the idea of selling your interests, we have a lot of resources available to help you through the process. In MRP 70: 5 Tips if You Are Thinking About Selling Mineral Rights, we talk about our top tips if you are thinking about selling. Whether you are planning on managing your assets long-term or selling, you should know what you own and know what oil & gas activity is happening on or near your interests. These are some of the key skills I teach in my Mineral Management Basics Online Course (coming in 2023!). If you do decide to sell, it is important to have a road map or a plan that outlines everything along the way. If you are thinking about selling your minerals or royalties, our free cheat sheet provides the road map of the things to do in order to sell your property for top dollar like a pro.
Estate Planning
Whether you are planning to give your mineral interests to your heirs or if you intend to sell, updating your estate plan is important. You can help simplify things for your heirs by putting your minerals in a trust or family LLC. This provides the added benefit of keeping your interests whole instead of splitting them up into smaller and smaller fractions over time. This will give your heirs more bargaining power when it comes time to negotiate an oil and gas lease.
Keeping the interests intact can be especially important if your heirs decide to sell in the future. As interests become increasingly smaller, the less desirable they become to a potential buyer. This is because the cost of performing due diligence and running title is the same whether the interests are an undivided 1/128th interest or 100% of the minerals.
Summary
From podcasts to NARO conventions and webinars, there are plenty of resources out there to help educate the next generation. Who knows, you might just have the next Certified Mineral Manager in your family waiting to be given the opportunity to shine. If your heirs decide that mineral management is not for them, then be sure to share this information with them to make sure they don’t leave money on the table. Whatever you decide, be sure to get help from an advisor (whether that is financial, legal, or technical).
Resources Mentioned in This Episode
- COMING SOON: My Mineral Management Basics Online Course
- MRP 180: Practical Tips With Landman and Mineral Manager Jimmy Wright
- MRP 78: How to Sell Your Mineral Rights or Royalties For The Highest Price
- MRP 70: 5 Tips if You Are Thinking About Selling Mineral Rights
- MRP 106: NARO Board Member Martha Barnes
- National Association of Royalty Owners (NARO) Membership Info
- NARO Info
- If you are thinking about selling your minerals or royalties, our free cheat sheet provides the road map of the things to do in order to sell your property for top dollar like a pro.
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