Forming an LLC

probably not

Owns the land. About to lease it to an o&g company for possible drilling

Would he put the land under the LLC and then lease through the LLC?

There could be some benefits, tax or lawsuit, but really depends on how much he is profiting on the lease.

I’m guessing it’s probably not a boatload, so he should just take the money each month to his personal account

This is a question for a CPA. No benefit that I can logistically. LLC could be used for estate planning purposes or for possible tax benefits. If you concerned with former, get a lawyer. If latter, get a CPA.

Since the LLC would almost certainly be a disregarded entity, no tax reason for putting the land there unless you want to sell the land later. In that case, it depends on the jurisdiction, but if you sell the LLC interests rather than the underlying land, you can avoid property transfer tax.

The real reason you’d want to put it in an LLC is environmental concerns. I’m not an environmental lawyer, and I haven’t seen your lease agreement, but if there’s any wiggle room on who’s liable for land remediation in the event they screw something up, you do not want that liability in your personal capacity. The state and fed government can require you to remediate environmental damage which will bankrupt you.

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It’s not worth the time for most people because their residence is also on the property. If it’s a separate parcel it never hurts to partition it so that your cap on liability is the property itself. If there’s an environmental issue, you can bet the energy company will try to just close shop, and then the property owner is left naked for indemnification.

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To me, this makes it seem *more* worth it.

Separate your house from the O&G lease (if possible) so that if there’s a judgment/ foreclosure, it doesn’t mess with the residence.

Really, most of the protection should come from the lease agreement—which a competent attorney should review thoroughly. These corporate protections are just back-stops.