How does mineral rights inheritance work in Louisiana?
When owners die, their estate, the claim to any minerals, and payment of royalties generated from their property are transferred to whoever is designated in their will. Before the rights are transferred, a title insurance company or an attorney at law must conduct and complete a title search to make sure that the deceased owners had a rightful claim to the minerals.
In the process of this research, the rights to any minerals contained on the property will be separated from the surface rights and the attorney will create a mineral deed with a legal description of all the resources (oil, gas, precious stones, etc.) that would come under the possession of the new owners, including any royalty payments.
However, if the rights are subject to a lease to a business or individual, the rights executor or estate executor can transfer the title on the lease to the new owner to afford them the chance of collecting any royalty entitlement attached to the land or estate.
How are Mineral Rights and Leases Taxed in Louisiana?
Whenever a person organizes the sale, lease, or any change of their ownership of mineral rights, they are mandated to pay some tax from the royalty payments they receive. Some of the taxes mandated include royalty-based income tax, ad valorem tax, and severance tax. Each of these taxes goes to a specific government entity.
In Louisiana, mineral rights owners and landowners pay ad valorem and severance taxes to their respective bodies. Ad valorem tax is a tax based on the assessed value of the land acquired. The rate of ad valorem tax paid is not higher than 10% of the value of the minerals or oil and gas and the value of the land. This tax applies when production begins actively on a property.
The severance tax is a tax generated from oil and gas extraction in Louisiana. The tax rate is based on the choice of the state government and the extracted minerals. However, the severance tax differs according to mineral resources, and what landowners pay on oil/gas can provide a significant revenue source for Louisiana.