As our practice has grown and we are covering most of Ohio, we have come across a unique issue in the eastern part of Ohio, Hydraulic Fracturing Drilling or simply “fracking” for shale gas deposits. This phenomena has created a significant amount of wealth for land owners with shale deposits under their land with a producing well, while for others it has created the speculation of a large windfall if and when their land starts to produce royalties.
Now it may seem obvious to most that those landowners in these shale areas would need legal advice when negotiating the lease payments and royalty schedules. But, we think these landowners are forgetting to take other important issues into account, like tax implications, both during the owner’s life and after as well as a plan for succession of these assets to the owner’s beneficiaries. However, many will get that first lease payment or “bonus” payment and they think that they never have to worry about their finances ever again. That could not be further from the truth.
Because of our focus on elder care law we believe the biggest overlooked issue is the impact a long-term care emergency on these assets. Families with properties in these shale-rich areas should consider:
i) Are these assets or the income produced by them subject to a spenddown?
ii) Will Ohio place a lien on the property if Medicaid benefits are received?
Unfortunately, too many families fail to plan ahead or consider these issues until they have a long-term care crisis. By then it is often too late due to the rising long-term care costs (approximately $100,000 a year for nursing home costs). If no plan is in place and a long-term care crisis arises, it is likely that any income produced by this property will have to be spent on care. If the owner is receiving Medicaid benefits Ohio is mandated to attach a lien to the land through the Estate Recovery Act.
This is why it is vitally important to plan ahead to protect these assets before the emergency. At AlerStallings we have several options available to protect not only the land, but also the income produced by the land from those long term care costs. If you or a loved one has land that could be subject to fracking, please call us today to schedule a free 15 minute phone consultation to find out how we can help you and your family.