What's up guys.
Hey, it's Clintons here,
and we're going to be talking about oil and gas and mineral rights
and how to protect those when it comes to asset protection.
Planning for real estate investors.
Okay, let's get started.
All right. So here's the deal. Right.
Let's say you have a piece of property right here.
And most of us think in terms of real estate as the physical land itself.
Well, we call this surface rights
when we're dealing with real property.
So you have your land up here, you've got your house probably on the property.
So you get your surface rights there.
But many times, depending on where this property is located,
you may also have what are referred to as mineral oil and gas rights.
And that's the stuff that exists underneath the property itself.
Now, you'd be remiss not to try to separate these two out,
because if you were involved in
any type of lawsuit or the property created the harm and someone sues.
What would happen if you owned all of this, let's say in my own name?
You know, you watch my other videos on my channel.
Don't do that when it comes to real estate, protect it.
If somebody were to sue you personally, then they could go after this entire piece
right here.
They proceed against the property in satisfaction of their judgment,
and they would get whatever is there.
So let's assume that the mineral oil and gas has a value
underneath here of $300,000, and the surface
just of the property itself is worth $400,000.
Well, you've got $700,000 now that someone could recover
against if they came after you and they get a judgment against you.
Or let's assume that you decided to put this property
into a limited liability company.
So maybe it's a rental property and you set up an LLC for it.
You think, All right, I've protected myself.
I have this limited liability company.
Well, if anything goes wrong in somebody brings a claim against the LLC,
let's say a tenants hurt on the property and they sue.
Well, that lawsuit then is going to go against the LLC.
And if they get a judgment against the LLC
than any of the assets of the limited liability company are now at risk.
So what do I want to do if I have property where I know
that there are minerals, oils, oil, natural gas, or there's
something under there that has value, I'm going to split them out.
And it really depends.
Then when you're doing this on also what type of asset we're dealing
with, is this a is this a rental or is it your personal residence?
So we want to break those down, separate them.
So what I would do, let's say this is an investment property that I have.
What I would do is I would take and set up a limited liability company here.
All right.
So this would be LLC number one.
And the purpose of LLC number one is going to own the surface rights.
So I would deed the property into LLC number one.
Now, the mineral rights would go with this, of course,
unless I also prepared a mineral deed separate
out the oil and gas and the minerals from the surface rights of the property.
So I'd also want to create a second LLC up here now and actually in order
of how you would do this, you wouldn't start with the Surface Rights LLC.
I would first start with the mineral rights.
So the first thing I would do is I would prepare a mineral deed
and I would transfer the minerals into this limited liability company.
So I did them out of my name into LLC number two
since I already called that one, number one.
Once that's done, the only thing I possess then
is the surface rights, since I've already transferred away my mineral rights.
So now I'm going to take my surface rights
and deed those into LLC number one like this.
So now we've we've isolated out the property,
the surface from the actual minerals.
And so if I'm going to clean this up really quick here
so you can see what I'm what I'm referring to you're going to have to LLC is
one of them here is going to own the surface I'll use that
as the house and the other one here is going to own the minerals
just like this as follows.
And then if you follow my other strategies where I talk about anonymity,
it would be a good idea to have that Wyoming limited liability
company down here owning the interest in both of those LLC
for asset protection purposes, just like that.
Now what happens, though, if this property, let's say
it's your personal residence, so your house is on 15 acres of land
and you can't put your house into a limited liability company.
So what do we do instead?
Well, in that case, if this is my my personal residence,
I'm not going to set up an LLC.
I'll still set up the limited liability company over here.
This would be LLC number one for those mineral rights.
But instead, what I'm going to do is I'm going to create a land trust here
for my personal residence.
So I'll pull my property out,
put it in a personal residence, and put my minerals over here.
And in that case, I'm using a land trust.
It's not going to attach to this Wyoming LLC.
It's going to come down here to me individually.
So you can also protect your mineral rights,
even if they exist under your personal residence.
So when you're looking at your assets, depending on where you live,
there may be extra value there, extra money
you're leaving on the table when it comes to asset
protection, planning purposes by not separating those out.
Now, one last thing I want to leave you with here as well.
Many times I get questioned.
Well, if I have multiple pieces of property
and each of them have mineral rights, do I have to keep creating
separate mineral, limited liability companies?
Well, from an attorney
who sets up LLC, as you might expect, my answer would be yes, you do.
But in reality is no, there's there's really no liability there.
So you could use this same LLC to hold the mineral rights
on this piece of property, in this piece of property as well.
You can do all those in to that one limited liability company,
because what we're doing here is we're protecting
the the asset itself from claims brought against me or brought against
the surface rights of the property plate or we got something out of this.
Be sure to check your property, know your area wherever you're investing,
if you have mineral oil and gas interests under the ground, and if you do consider
setting up a strategy to protect it like I just showed you here, take care.