New found wealth- a dream for many, could be on the horizon for families across northern Wayne County and other locations, where their large pieces of land are about to be tapped for natural gas. It was apparent a great many people share questions of how to handle their bonanza, as they packed the Park Street Complex cafeteria Thursday night.


New found wealth- a dream for many, could be on the horizon for families across northern Wayne County and other locations, where their large pieces of land are about to be tapped for natural gas. It was apparent a great many people share questions of how to handle their bonanza, as they packed the Park Street Complex cafeteria Thursday night.
Penn State Extension put on a seminar, “Managing Natural Gas Lease & Royalty Income” before a capacity crowd. Debra Bryant, a financial planner, commented on the amount of money some might expect. “Probably not millions- [but] some may get bigger checks than you’ve seen in a life time.”
She said it was tempting to just spend the money, but if you want to save or invest it, she advised: 1. Open a separate bank account. 2. Make a plan, telling what you owe and what you own and your goals. 3. Put the money away for taxes. Put away enough for a three to six month emergency fund. Consider insurance needs. 4. Pay off your credit cards, family to whom you owe money, and perhaps pay off your mortgage. 5. Invest in yourself; plan for retirement. 6. Invest in your children or grandchildren. 7. Invest in others- charity, community foundations, which also can help you with taxes.
“Financial windfalls are a rare opportunity we have,” said Bryant, whose family also owns a local farm and creamery. “Make the most of what you have.”
Tax consultant Frederick Eck of Honesdale said he has many questions related to gas leasing and has done extensive research. He noted that you won’t owe any tax until the gas company actually pays you the money. Beware of tax schemes. The payments will be subject to Capital Gains Tax, which he said is a lot less than ordinary income.  He also offered advice on the Alternative Minimum Tax, figuring depletion, nonprofit landowners such as hunting clubs and multiple owners of a tract of land.
Honesdale attorney Errol Flynn related that real estate agents he spoke with agreed land values would go down if you lease to a gas driller, but that may not be an issue if you plan to keep the land in your family. His opinion was that gas drilling would have minimal impact on the land and would only be a nuisance for a short time while the hole is being drilled. “Any impact on land value- in my opinion it will go away once the drilling is done,” Flynn said.
You can transfer the land to your kids and keep the royalty income; he advised setting a fixed time.
Threat to the water table, Flynn suggested, does exist, but from what he has learned, the gas companies go to great precautions and have a financial stake in not causing a problem. Then again, Exxon thought there was little risk of a drunk tanker captain either, which led to the great oil spill off Alaska, he added.
Leasing for gas is not a breach of the Clean & Green contract on its own, Flynn stated; the actual drilling is a violation. Thirty days before drilling, the land owner should give written notice to the County Tax Assessment Office to avoid a $100 penalty. Drilling will roll back on your taxes for preferential assessment under Clean & Green, but the companies should pay the roll back taxes. The owner has to do the paperwork with the tax office. Only about three to five acres are affected, and a much smaller portion once drilling is finished.
He also reviewed including the lease in your will, lease renewal, and if the land owner has a dispute with the company. Flynn suggested that the company will likely satisfy your reasonable concern rather than face a legal fight.
Paul Vitiello and Ray Pilch, representing Honesdale National Bank, went over the basics of investments, including stocks, bonds, mutual funds, “Rule of 72” and compound interest. Vitiello advised starting your investment early and stay consistent; don’t sell when you are down, sell when you are high. Diversification is most important, Pilch stated.
Pilch went over the services a bank trust can offer. Beware, he said, of investment planners who say they don’t charge. “Run don’t walk to the exit.” Some charge you both a fee and a commission. Estate planning is also wise, Pilch advised. Less than 50 percent of Americans even have a will. Financial planning must have a goal to avoid disappointment. He also advised avoidance of out of town seminars and trusts, and people offering services without a real local office. Beware of mailers, phone offers and product pushers and don’t try to do everything at once.