Leasing Life Cycle
Sudden wealth from Oil and Gas Lease royalties is a good thing, but it’s also often overwhelming — the contracts, tax issues and financial decisions are complex and confusing.
We’ll make it easy, helping you maintain your newfound wealth, offering expert advice, expanded financial services and a comprehensive approach we call Royalty Manager™.
There are tools available at each step of the process — including before your oil or gas lease is signed — to help maximize income. We understand the "Life Cycle" of a lease and we’ll guide you through each step with experience and expertise.
Step 1: Pre-Lease Planning
Before you sign a lease, have an experienced professional review it.
Our experienced and qualified legal, tax and estate planning professionals can help you maximize royalties, minimize taxes, and transfer more wealth to your family.
Your Oil and Gas Lease will likely be the most significant contract you’ll ever sign. And once you sign it, you’re saying you’ve fully understood it. Each provision of an oil and gas can affect you and your family for years to come. Before signing it, we strongly recommend having an attorney review it. Our team will work with your attorney to get you the lease you deserve.
An oil and gas lease means you may be subject to several different federal taxes — Income Tax, Gift Tax, Estate Tax, Alternative Minimum Tax (AMT) and Generation Skipping Tax (GST). You may also become subject to several state taxes — Income Tax, Inheritance Tax and Transfer Tax. We can help reduce your tax liability and provide assistance with more complicated tax returns.
A simple will isn’t adequate for Oil and Gas Lease income. We’ll help you and your attorney avoid pitfalls and structure a Federally taxable estate plan to minimize estate and inheritance taxes. We also offer many other helpful services — estate administration and settlement services, wealth transfer services, family business services and trustee services.
Our team of advisors will help reduce your tax liability and maximize the wealth transferred to your beneficiaries. We offer all kinds of help — wealth management, debt management, retirement planning, educational planning for children and grandchildren and more. Let us be the trusted advisor you need.
Step 2: Lease Preparation
If you’re like most landowners with an oil or gas lease, you’ll receive many different kinds of payments. Each has its own unique characteristics that should be structured to ensure you’re being paid and taxed fairly.
Before entering into any contracts, have them reviewed by an attorney who is experienced in state oil and gas laws, and an accountant who understands the federal and state tax implications.
No matter where you are in the leasing process, Northwest is here to help.
Our team of attorneys, bankers, lenders and investment professionals all work on salary. Your needs are their top concern. Each has unique training and expertise in the oil and gas lease issues that you’ll face.
Northwest's Royalty Manager™ can give you everything you need to understand your lease and how it affects your future.
Step 3: Managing Lease Income
To avoid IRS penalties and interest, you'll pay quarterly estimated tax payments. To make this easy, we can establish a special tax deposit account to pay your estimated tax liability.
Northwest's Royalty Manager™ can help you to properly manage your lease income and meet your tax obligations in a timely and efficient manner – now and in the future.
Types of Lease Income
A bonus payment is the amount paid for the execution of a lease by the Oil or Gas Company. How and when bonus payments are made is important. If needed, we can help you take advantage of graduated federal income tax rates spreading payment of bonus over two or more tax years.
Delay Rental Payments
Paid to you between the time you sign the lease and actual drilling occurs, these payments are highly negotiable and are taxed as ordinary income in the year in which they are paid.
Usually paid monthly, these payments may be very large at first and can continue for decades until production slows. Royalty payments are passive income subject to special tax rules. We’ll help you minimize your tax liability by identifying allowed deductions.
Such payments may include pipeline easement payments, spud fees and others. These are negotiable and carry special tax implications. It’s crucial that a qualified attorney assists you in structuring these complex agreements upfront to protect you from any potential issues.
Step 4: Continuing Support
Northwest's financial advisors will help manage your gas royalty wealth wisely now and in the future.
Northwest offers personalized investment and administrative services in personal, corporate, charitable, and institutional trusts and employee benefits.We’ll help you to reach your financial goals with a three-point process:
- We work with you to assess your current financial situation
- We assist you in determining your financial needs for today and tomorrow
- We help you chart a course for the future with a personalized plan
This comprehensive approach means we’ll help with many things — debt reduction, savings, long-term care insurance, portfolio management, estate and trust services and a combination of FDIC-insured and non-FDIC-insured accounts.
Contact Us today to see how we’ll get where you want to go.