Hi again. Got more info from my near-by neighbors, elderly couple trying to figure this all out before they sign any lease agreement. This is what a high-falootin' planner told them they do (for a hefty fee):
1. Create an LLC, get a TIN for it.
2. Create an Operating Agreement
3. Create a Charitable Trust
4. Assign Deed of Mineral Rights to the LLC
5. something about a W-9 from the date is formed?
The LLC holds the funds, income, royalties, invests it, and none of the income is taxable until dispersal of that income to the member/owner/partner receiving the funds from the LLC. A Charitable Remainder Trust is a 99% non-voting co-owner of the LLC.
The LLC files an annual return on its revenue/income but pays no taxes. The tax responsibility belongs to that 1% owner of the LLC but only when they receive any funds from it.
The Charitable Trust has nothing in it until they both die. All it owns is a piece of paper - it "owns" a 99% non-voting interest until then. Yet 15% of the LLC money/income goes to a charity annually beginning now.
They said something about an ILIT too, that funds life insurance on them and something about a "second to die" policy - all way over my head...I'm doing good to get this far for them.
So what they want from you via me Jax, is confirmation of what they heard from the planner they can't afford to hire. The planner sees this is as a way to pay no tax on the signing bonus, get a charitable deduction
on the couple's assigning 30% to the Charitable Remainder Trust. How it jumps from 30% to 99% I don't follow.
But if you could tell us what part of this makes sense and what part needs more investigation, they'd be thrilled. Thanx Jax!