Qualification for Gov. Benefits | Russell T. Rudy Energy LLC
WHAT TO DO WHEN AN APPRAISAL IS REQUIRED?
As compared to an outright sale, this alternative is far more problematic. As I have already discussed, the oil and gas purchasing companies are usually prohibited by company policy from giving out a determination of value of an interest. In most instances, it would merely be an opinion of the particular employee anyway and not necessarily representative of its actual value. To obtain a legitimate appraisal for a producing oil and gas interest, it must be done by a petroleum engineer who is not also potentially engaged in acquiring the interest for himself. Unfortunately, the minimum cost of an independent appraisal will be in the range of several thousand dollars. Of course, this is completely out of the question for small or marginal interests, and should only be used for more substantial properties. However, if you contact Russell T. Rudy Energy, LLC, can tell us that you are being required to provide some type of appraisal in order to qualify for State or Federal benefits, we will be happy to write a brief non binding letter. We would state what we believe the fair market value to be, based upon what we would likely offer to pay if we were to buy it. This has often satisfied agency requirements so that the individuals can keep the small income stream. However, this may not be a wise long term alternative as discussed below.
WHY SELLING COULD SAVE MONEY and MAKE SENSE
In situations where the demise of an individual is imminent, or where someone is at an advanced age, there is clearly only one logical disposition of the small oil and gas asset. Many States require full ancillary probate when any “real property” (royalty and minerals are considered real property in most states) is owned in that state, even if an Estate went through full probate in another state. The result of this is costs that are often vastly disproportionate to the value of the oil and gas interest itself. Even where states have a small estate probate alternative, such as in California, it will require the hiring of a County sanctioned appraiser and local lawyer to handle the submission of inventory and appraisement. Many small estates find themselves in a perpetual state of limbo; where there is not enough money to handle an ancillary probate in another state for a few negligible producing oil and gas interests, yet they cannot fully close the Estate without liquidating the royalty or working interests. Please consider your alternatives carefully and think about the short and long term consequences of retaining a small producing interest for an elderly or infirmed individual.