N.Y. Estates, Powers & Trusts Law § 11-a-4.11: Minerals, water, and other natural resources

§ 11-A-4.11 Minerals, water, and other natural resources

(a) To the extent that a trustee accounts for receipts from an

interest in minerals or other natural resources pursuant to this

section, the trustee shall allocate them as follows:

(1) If received as a bonus, delay rental or annual rent on a lease, a

receipt of less than one thousand dollars must be allocated to income

and a receipt of one thousand dollars or more must be allocated fifteen

percent to principal and eighty-five percent to income;

(2) If received from a production payment, a receipt must be allocated

to income if and to the extent that the agreement creating the

production payment provides a factor for interest or its equivalent. The

balance must be allocated to principal;

(3) If received as a royalty, shut-in-well payment, or take-or-pay

payment, a receipt must be allocated fifteen percent to principal and

eighty-five percent to income;

(4) If an amount is received from a working interest or any other

interest not provided for in subparagraph (a)(1), (2), or (3), a receipt

must be allocated fifteen percent to principal and eighty-five percent

to income.

(b) An amount received on account of an interest in water that is

renewable must be allocated to income. If the water is not renewable,

ninety percent of the amount must be allocated to principal and the

balance to income.

(c) This article applies whether or not a decedent or donor was

extracting minerals, water, or other natural resources before the

interest became subject to the trust.

(d) If a trust exists on the effective date of this section, the

trustee may allocate receipts from an interest in minerals, water, or

other natural resources as provided in this section or in the manner

used by the trustee before the effective date of this section. For every

trust created after the effective date of this section, the trustee

shall allocate receipts from an interest in minerals, water, or other

natural resources as provided in this section. If and to the extent that

the terms of a trust expressly provide for a different allocation of

receipts or grants the trustee discretionary authority to determine the

amount of the allocation, this section shall not apply to those

receipts.