Should You Sell Mineral Rights in a Family Trust? What New Mexico Landowners Should Consider

Managing mineral rights in a family trust can be both a financial opportunity and a legal responsibility. For many New Mexico landowners—especially those tied to assets in the Permian Basin—questions often arise about whether selling mineral rights in a trust is the right move.

This article explores key considerations for trustees and families, helping you weigh the benefits, risks, and strategies before making a decision.

Why Mineral Rights in a Family Trust Matter

A family trust is often used to simplify inheritance, avoid probate, and protect family assets. When mineral rights are included, the trust becomes more complex because:

• Mineral rights can generate ongoing royalty income.

• They require active management (leases, title updates, tax filings).

• Value can fluctuate with commodity prices, drilling activity, and operator performance.

For trustees, managing these rights responsibly means balancing income generation with the long-term financial interests of beneficiaries.

Key Considerations for Selling Mineral Rights in Trust

1. Cash Flow vs. Certainty

Royalties can provide long-term income, but payments are often unpredictable. Selling mineral rights can convert this uncertainty into a lump-sum payout, which may be easier to manage and distribute among heirs.

2. Beneficiary Expectations

Different heirs may have different priorities—some may want steady income, while others prefer cash in hand. Selling can help avoid disputes and create a clear, one-time distribution of value.

3. Administrative Burden

Trustees are responsible for maintaining lease agreements, tracking royalty payments, and handling taxes. If managing mineral rights feels overwhelming, selling may simplify administration.

4. Market Timing in New Mexico

The Permian Basin continues to be one of the most active oil and gas regions in the U.S. Strong buyer demand for New Mexico mineral rights means landowners may be able to secure favorable offers today compared to uncertain future conditions.

5. Tax Implications

Selling mineral rights triggers capital gains considerations. Trustees should consult with tax professionals to weigh the one-time tax event of a sale against the ongoing tax responsibilities of managing royalty income.

When Selling May Be the Right Choice

• The trust is nearing dissolution and assets need to be divided.

• Trustees want to reduce administrative headaches and potential legal disputes.

• Beneficiaries prefer immediate liquidity instead of waiting on royalties.

• The market presents a strong opportunity to capture maximum value today.

When Holding May Make Sense

• The trust is designed for long-term wealth preservation.

• Beneficiaries rely on steady royalty income.

• The mineral rights are in an area with future drilling potential, meaning value could increase.

For New Mexico landowners, deciding whether to sell mineral rights held in a family trust comes down to balancing certainty, simplicity, and long-term opportunity. Trustees must consider beneficiary expectations, trust requirements, and market timing before making a move.

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Disclaimer: The content on this website is provided for general informational purposes only and should not be considered legal advice. While we strive to ensure the information is accurate and up-to-date, laws and regulations can change, and circumstances vary. For advice tailored to your specific situation, we encourage you to consult a qualified legal professional.

About 1280 Royalties
1280 Royalties is a trusted mineral acquisition company that helps owners across the country maximize the value of their mineral rights. With a proven track record and personalized approach, we guide each client through a friendly, professional, and confidential process—from evaluation to closing.