Q: Guidance on setting up a trust for minor's mineral rights.

A: Do the mineral rights already belong to the minor or are you (or someone else) the account owner and want to give the rights to the minor?

If the first, then the minor needs a first person special needs trust that they fund. One significant downside of this type of trust is that Medicaid can claim against the funds if the beneficiary passes away and there are funds left in the trust.

If the second, you can set up a third person special needs trust to hold the assets for the benefit of the disabled minor. This type of trust allows whoever sets up the trust to dictate who receives the funds if the beneficiary passes away and there are still assets in the trust (Medicaid cannot claim these funds).

There are other pros and cons to these types of trusts and there are specific requirements to ensure SSA doesn't count the assets or income against them.

A: You might feel overwhelmed by all the legal forms, but a supplemental needs trust under California law can safely hold your child’s mineral rights. Once you set it up, apply for a federal EIN so you never have to use the minor’s Social Security Number.

On the W‑9, list the trust’s name in the payee field and enter its EIN where it asks for a taxpayer identification number. Identify yourself as trustee in the capacity box so the oil and gas company sends royalties to the trust.

Having the father serve as trustee gives you control over timing and amount of distributions while preserving benefit eligibility. Include clear instructions in the trust document for discretionary payments that only benefit your child’s comfort and health needs.