55-277.20 - Minerals, water, and other natural resources. - Virginia Statutes

§ 55-277.20. Minerals, water, and other natural resources.

A. To the extent that a trustee accounts for receipts from an interest inminerals or other natural resources pursuant to this section, the trusteeshall allocate them as follows:

1. If received as nominal delay rental or nominal annual rent on a lease, areceipt must be allocated to income.

2. If received from a production payment, a receipt must be allocated toincome if and to the extent that the agreement creating the productionpayment provides a factor for interest or its equivalent. The balance must beallocated to principal.

3. If an amount received as a royalty, shut-in-well payment, take-or-paypayment, bonus, or delay rental is more than nominal, ninety percent must beallocated to principal and the balance to income.

4. If an amount is received from a working interest or any other interest notprovided for in subdivision 1, 2, or 3, ninety percent of the net amountreceived must be allocated to principal and the balance to income.

B. An amount received on account of an interest in water that is renewablemust be allocated to income. If the water is not renewable, ninety percent ofthe amount must be allocated to principal and the balance to income.

C. This chapter applies whether or not a decedent or donor was extractingminerals, water, or other natural resources before the interest becamesubject to the trust.

D. If a trust owns an interest in minerals, water, or other natural resourceson January 1, 2000, the trustee may allocate receipts from the interest asprovided in this chapter or in the manner used by the trustee before January1, 2000. If the trust acquires an interest in minerals, water, or othernatural resources after January 1, 2000, the trustee shall allocate receiptsfrom the interest as provided in this chapter.

(1999, c. 975.)