Reasons to Sell Your Mineral Rights & Royalties
1. Guaranteed Cash → Owning mineral rights can be risky since the royalty payments of a drilled well usually decline 80% in the first year. Selling your mineral rights or royalty provides you with a certainty of cash.
2. Investment Diversification → Retaining your minerals creates a risky investment portfolio with little diversification. Selling your rights will allow you to reinvest and diversify your portfolio.
3. Lump Sum Cash Payment → Take advantage of your cash payment. Use the money towards your retirement fund, children’s college education, mortgage payment, or other high interest loans. Lump sum payments often prove to be more useful than small monthly royalty checks.
4. No More Management → Forget dealing with well operators who are known to take advantage of royalty owners. Royalties can also complicate taxes and turn into an organizational problem.
5. Tax Advantages → Selling your minerals can give you favorable capital tax gains treatment, which can also result in income tax reductions.
6. Estate Settlement → Sell your minerals and allow the Estate to divide cash. Dividing cash amoung heirs is much simpler than dividing small mineral interests.