Posts Tagged ‘Attorney’

Topics like reporting leasing income, transferring leases to beneficiaries to be covered.

The temptation to just sign could seem irresistible. With a few strokes of the pen, some people in the region are being offered the chance to completely change their lives with natural gas leases.

But first, they’re warned, make peace with the fact that the next person will get more. Check the maps, they’re told, check the deed, hire a lawyer, test the water. How much environmental damage is acceptable? How about hassles to daily life?

For those not involved, think Beverly Hillbillies, minus that improbable shot, and then exchange the endearing high jinks for hours of tedious title searching, legal work and stressful decisions with lifelong implications.

So who could blame anyone for simply signing and hiding behind the wads of cash? Well, their children, for one. Because with the great benefits of gas royalties come the great responsibilities of taxation and profit allocation, and, if they’re ignored, the great headaches of the judicial system and familial infighting.

“People are just seeing the (money) as a way to pay taxes … and not thinking about having to report it to the IRS and the tax implications that could have on them … or thinking about general financial planning or investing,” wrote Donna Skog Grey in an e-mail.

Grey, who works for the Penn State Cooperative Extension in Luzerne County, says the extension has been fielding questions on gas leases, environmental issues and lessee rights. What to do with the money, however, hasn’t come up often, she noted, which is why the extension is sponsoring workshops on what to do after the lease is signed but before the money rolls in.

One is planned for Lake-Lehman Junior/Senior High School on Aug. 25.

“There may be some strategies available to reduce the income tax,” said Dale Tice, an attorney with Greevy & Associates, a Williamsport law firm consulting on gas leases. “That’s something they would want to work out with their accountant or financial advisor prior to receiving the payment.”

The workshop will cover various topics, including how to report leasing income – the cash bonuses are just like regular income – transferring leases to beneficiaries and investment options.

“Certainly the cash-bonus payment is an issue,” Tice said. “It could push somebody up into a higher tax bracket. … You’re looking at a large potential tax hit, and without using the strategies that are available, you’ve got issues (in the event of) divorce, creditors.”

To add to confusion, there are health-care implications with elderly lessees who are currently eligible for Medicare or Medicaid, he said.

He noted some families are creating limited-liability companies to distribute the proceeds, and that family limited partnerships can make dividing up ownership of the lease similar to issuing stock.

“Really, the issue here is providing governance, keeping the parents in control of the resource while they’re alive, but at the same time providing for an orderly and easy shift of equity to the next generation,” Tice said. “I don’t think that you have to have it necessarily worked out before you receive your cash-bonus payment, but certainly there’s no disadvantage to thinking about these issues earlier rather than later.”

If you go

A natural gas-leasing workshop entitled “Managing Natural Gas Lease and Royalty Income” is scheduled for 7 p.m. to 9:30 p.m. Monday, Aug. 25 at the Lake-Lehman Junior/Senior High School. The cost is $10 per person. To make reservations, call the Penn State Cooperative Extension at 1-888-825-1701.

Rory Sweeney, a Times Leader staff writer, may be reached at 970-7418.

Copyright: Times Leader

Experts say leases are in-depth and a lawyer’s assistance is recommended.

By Sheena Delazio sdelazio@timesleader.com
Staff Writer

LEHMAN TWP.— The Penn State Cooperative Extension of Luzerne County and the Luzerne Conservation District want landowners to know what they are getting into before they sign a natural gas lease for their property.

The two organizations will host “Understanding and Negotiating Natural Gas Leases,” as part of a two-day informational discussion. The first session, held on Monday, was attended by more than 70 local landowners.

“It’s a hot topic right now,” said Tanya Dierolf, a conservation coordinator for the conservation district. “The price per acre has increased at a phenomenal rate.”

Typically, leasing companies offer property owners one-eighth of the money made on gas or oil extracted from beneath their properties. Depending on the company, owners can receive hundreds of dollars up front.

“(On Monday) presenters talked about the impact it could have on the land (if someone signed a lease), and there is potential there to make money, but we’re trying to present the facts,” Dierolf said. “These (leases) are very technical, and we highly recommend (landowners) consult an attorney before they make a decision.”

For example, in June, the Pennsylvania Mineral Group based in Port Lavaca, Texas, made up to 700 offers in Luzerne County to purchase gas rights at $300 an acre. Offers were based on geological surveys that pinpoint locations that may contain natural gas or oil.

The Pennsylvania Mineral Group did not return phone calls.

“These lease agreements are so in depth that landowners don’t understand the legality,” said Donna Grey, a Penn State Cooperative Extension educator. “We’re trying to explain what the landowner can expect to occur on their property so they can have an understanding, both visual and written.”

For next week’s session, Penn State Extension educators will be on hand, as well as a geologist and attorney, to talk about understanding gas leases, negotiating a lease, the economic impact of signing a lease and development of the Marcellus shale within the Earth.

Grey said landowners who attend will be able to make better decisions regarding their land. “This could be a good thing or a bad thing (for the landowner),” she said.

“It’s really confusing, and landowners need to use a consultant or attorney to help them. They can negotiate (if they decide to sign). And if they aren’t comfortable, they don’t have to settle on one gas company,” Grey said. “There is more than one company. They are just like any other sales person, they are out there to sell their product.”

If you go…
What: Understanding and Negotiating Natural Gas Leases

When: 7 p.m. Monday

Where: Technology Center, Penn State Wilkes-Barre Campus, Lehman Township

To register: Call 570-825-1701 or 570-674-7991. There is a $15 registration fee per person.

Copyright: Times Leader