Background. A family member called Carrollton about selling minerals to provide a source of funds for their mother, who was contemplating a move to an assisted living facility. The minerals were an undivided interest owned by three parties, the mother and two children. A prior offer had been made to the family to acquire this interest. The amount was not disclosed to Carrollton.
Challenge. The children wanted the proceeds to go to their mother on the most taxed advantaged basis possible. They also needed a timely closing and Carrollton’s offer needed to be more compelling than the prior offer.
Solution. Carrollton owned minerals nearby and was knowledgeable of operator activities in the area. Carrollton made an offer the family accepted subject to confirmation of ownership. It also crafted agreements paying the mother the mother a larger price per acre than the children.
In the end, the mother received the bulk of the funds, all at capital gains tax rate. The children had minimal tax consequences while finding a solution for the care of their mother. And Carrollton added to it’s mineral position in any area of focus.