People looking at leasing the mineral rights to their property may want to consider family counseling services in addition to legal and financial advice.
That's the suggestion of Dale Arnold, director of energy policy for the Ohio Farm Bureau Federation, for families facing a potential windfall and the pressures that can come along with it.
"When you're starting to talk about some things upwards of a couple thousand dollars an acre, you can get into some very serious conversations," he said.
In general, suddenly coming into a large amount of money can put a variety of psychological and family pressures on people - as evidenced by repeated stories of lottery winners squandering their money or running into other problems. In addition to these concerns, Arnold noted families with multi-generational farms must also deal with the future of what their family has built.
"This kind of money ... has sparked situations where people want to see things split up," he said.
Such issues are usually faced when the parents have passed on and a farm is set to be divided between the surviving children, some of whom still work with the farm and some of whom do not, Arnold said. The money involved in leasing mineral rights for horizontal drilling to access the mineral-rich Utica shale formation can accelerate matters.
Fact Box
Four steps to protecting a windfall
Money moratorium - Allow time to adjust to the new wealth circumstances. Some experts recommend doing nothing with their money for at least a few months, if not an entire year - no gifts for family or friends, new investments, lavish cars or house purchases, and trips around the world. It's not even wise to retire.
Emotional inventory - Sudden wealth can lead to what some psychologists calls "identity dissolution." All the parameters set up in life are suddenly gone. Therapy can help resolve some of these issues.
Set aside play money - Don't spend the money without a plan, but set aside a small amount, no more than 5 percent, to be spent once debt and tax obligations are addressed.
Review after one year - Once a person is becoming comfortable in their new financial reality, they may be ready to review their situation and decide how the money will be used, with the help of trusted advisers and a solid financial plan.
Source: www.bankrate.com
The smallest bonus check Arnold said he's seen is $68,000 for 25 to 30 acres. Elsewhere in southeast Ohio, there have been initial bonus payments of $1.6 million to $1.8 million for 150- to 200-acre properties, he said.
As with details of estate planning, taking action ahead of time can resolve some potential issues. But in some cases, that isn't feasible, particularly if family members have been out of touch for a while because of past disagreements, Arnold said.
"Some families can sit around the table and talk about these particular issues ...and some can't," he said.
That's one place a counselor might be able to help.
"If you come to an impasse, have someone there to help you be able to negotiate it ... create solutions that satisfy a number of needs," Arnold said.
Marietta attorney Randy Burnworth said he hasn't dealt with such mineral leasing issues specifically, but he has seen situations in which farm families were able to address financial and generational issues by signing the farm over to the children who work on it and making different provisions for the others.
"Sometimes, more often, they do nothing at all," he said. "And then there's 'how do I get my piece of it?'"
Some of the heirs could petition the court for the real estate to be sold.
"If the parties can't agree on what they're going to do, then they end up forcing it to sale and there are usually hard feelings," he said.
Palmer Township resident Evelyn Strauss, 71, said she and her husband Tom have discussed mineral rights leasing on their farm property with their five children.
"We are to the age where talking to the family about what's going on with the farm is of utmost importance," she said.
Before the prospect of big bonuses and royalties was even on the horizon, the Strauss family established a trust to govern farm concerns, and that's where any shale-related payments would go.
"We've tried to get a handle on that before this became an issue," Strauss said.
Waterford resident Greg Tornes, 40, is working with his father, David, and brother, Dennis, on potential leasing of mineral rights on the nearly 500 acres in Waterford Township the elder Tornes farms. While it's a team effort, there's not much question about who will make the final call.
"My dad, he's 75, but still he is the primary person taking care of the farm," Greg Tornes said. "We all try to work together because we all know how important the farm is to him and making it to the next generation."
Greg Tornes is one of six children, with Dennis working on and spending the most time on the farm. David Tornes has established a living trust, and Greg said there haven't really been any financial conflicts.
"But I could see how it could be a problem," he said.
Still, if a windfall came, Greg Tornes said he thinks his family would handle the decisions just fine.
John Church, who organized the Barlow-Area Landowners Association to help lease mineral rights in large groups, said he hadn't considered the idea of family counseling but said it sounds like a good idea.
"I don't think anybody really plans on how their life's going to change before they hit the lottery," he said. "I think this is probably the same thing."
Financial publishing website bankrate.com says coming into sudden wealth can have real psychological impact. Some people may engage in irrational behavior, such as giving money away, spending lavishly or going to the other extreme and hoarding it. Work could become an option rather than a necessity, and family members, friends and others may come out of the woodwork seeking gifts, loans and other assistance.
Experts interviewed by Bankrate recommend putting a moratorium on spending the money, setting a limit on how much can be spent on fun, discretionary items and seeking professional, therapeutic assistance in dealing with emotional issues.
