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Forest Stewardship

Estate Planning Options for Family Forests


Resources

  <empty> A new Thanksgiving tradition for woodland owners
     
  Your Family Land: Legacy or Memory?
     
  Preserving the Family Woods: Tools to help guide transfer to the next generation of landowners
     
 
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Tax and Estate Planning Links
 
 
  Black bullet point. UMASS/The Green Valley Institute
 
 
 
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Oregon State University Ties to the Land 
     
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  Black bullet point. Next Generation News Releases

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While sixty percent of the public believes the Federal government owns most of America’s forests, the fact is that families and individuals own two-thirds of our woodlands. They deserve our thanks, because their forests provide great, unheralded public benefits beyond the personal meaning of owning forestland.

However, our country’s private forests are at a critical turning point; one sixth of America’s family owned acres of forests are expected to change hands in the next five years. More than 60 percent of current forestland owners are age 55 or older and about half of them have already retired. Without proper estate planning, forced liquidation of family forests or severe disruption of planned forest management activities is a distinct possibility.


Do Nothing Will
Family Partnership Limited Liability Company
Selling or gifting to heirs Conservation Easement
Land Trust Public Landholders
 

One of the main threats to preserving private forests is simply lack of communication within families about estate planning. Without discussion, family forests are left at risk for conversion to house lots or other uses when the land changes hands.

Schedule a family meeting: The first step to ensuring the personal and family legacy of your land is to talk about its future. Ask “What will the family legacy look like?” Talk with co-owners, heirs, or whomever the legacy will involve. (READ HOW IT’S DONE)

Once discussion starts, consider doing some homework to learn what options are available to meet your needs. There are several options forest landowners can use for estate planning. The more common choices are listed below. Some owners and families combine and customize these options to construct a plan that fits their unique goals and situation:


Do Nothing: Experience has shown that the number one obstacle to the protection of family land is pure and simple procrastination. Few advisors support the do nothing option when it comes to estate planning. While doing nothing spares one time, expense and worry in the short term, the long term implications can be complex for a surviving spouse, or divisive among heirs. The “do nothing” option is the choice that leaves the estate and the forest most at risk. (READ MORE)

Family Partnerships: Some families choose to put their forests in family partnerships or qualifying conservation trusts. This helps keep the forest together as a functioning ecosystem. How the family land and the partnership are managed can be set by the owner when establishing the partnership, or the decisions can be shared among the owner and heirs.  (READ MORE)

Sell or Give the Forest to Heirs before Death: Some family forest landowners prefer to sell or give portions of their estate to their heirs before death to mitigate estate taxes. A basic principle here is to first develop a shared understanding of how the land will be used.   (READ MORE)

Land Trust: Land trust organizations exist across the country. They can be found at a national level, state level, and being run by friends and neighbors in small communities as well. Land trusts often purchase conservation easements on family forests, purchase forest outright, or have forest donated to them from an estate.
As with a family trust, the options here get more complex. The starting point is the same though: what do the owners want to do? Do they wish to remain on the land until they pass? Do they wish to donate all or part of the woodland, but keep the house and the fields? As in all cases, the plans for the future are the owners’ to make. From there, they can find an exact fit, negotiate an agreeable one, or look to other options. (READ MORE)

Will: A last will and testament is the simplest and least expensive method of active estate planning. While traditional wills divide assets like stocks and bonds equally among heirs, a forest is a somewhat non-traditional part of an estate. The forest holds an economic function, but also provides environmental benefits too, like being a source for clean air, clean water, and wildlife habitat. A subdivided forest loses its value as a functioning ecosystem if the use of smaller, separately owned parcels changes over time. Balancing fairness to heirs with other goals may require a serious discussion.  (READ MORE)

Limited Liability Company: Family members can join together to form a Limited Liability Company (LLC) around the family forest. All the members of the LLC become “shareholders” in the forest, just as if owning stock in a family corporation. Unlike stocks, the shares can’t move out of the family, however.  (READ MORE)

Conservation Easement: A conservation easement lets landowners maintain ownership of the land, typically in exchange for selling the development rights. Easements can be permanently or for a specified period of time (15 years, for instance). The easement is typically paid for by another party, providing the landowners some financial security, as well as peace of mind as to the future of their forest. The plans for the future are the owners’ to make. From there, they can find an exact fit, negotiate an agreeable one, or look to options other than an easement.  (READ MORE)

Public Landholders: A curious fact is that land adjacent to or within the proximity of conservation land is more at risk for development than other rural land. Forest owners abutting or near National Forests or other conserved land can consider donating their land, donating with stipulations, or selling their land to the public landholder. This choice has the environmental benefit of keeping large, contiguous forests intact, so they may continue their environmental function.  (READ MORE)

 

Next Generation News Releases

More Resources

Forest Landowners' Guide to Internet Resources - Additional help with planning for your forestlands.

Estate planning for forest landowners: what will become of your timberland? Provides guidelines and assistance to nonindustrial private forest owners and the legal, tax, financial, insurance, and forestry professionals who serve them on the application of estate planning techniques to forest properties.

Wisconsin Private Forestland Owner Offspring Study: The Wisconsin Department of Natural Resources retained The Pinchot Institute of Conservation to conduct a survey of offspring of non-industrial forestland owners in Wisconsin. This weblink gives an executive summary of that research.

These articles can also provide some background information:

Estate Planning—Maximize the Transfer of Assets To Your Heirs:

Future of Nation’s Private Forests Might Hinge on Families Talking

Forest Landowners Speak Out About Managing Land, Estate Planning

Webcasts

Estate Planning Options (presentation length 50:06)
Photo Credit: Kenneth M. Gale,  www.forestryimages.orgAttorney Roger L. Deffner presents an overview for woodland owners of wealth management, financial planning, and estate planning. He is only presenting an overview and not legal advice and viewers need to consult a personal attorney for any particular situation.


Property Ownership and Distribution: Who Will Get Grandma’s Yellow Pie Plate? (presentation length 79:07)
Photo of pie cooling.Personal property transfer is an issue frequently ignored until a crisis occurs - that is not the time to make important decisions. As Dr. Karen Goebel of the University of Wisconsin explains, transferring non-titled property brings up many important issues. The presentation encourages people to make appropriate arrangements that are fair to all parties concerned and covers tools used to accomplish the transfer of roperty.

 

For more information about Forest Stewardship and planning the use of your land, click here.

 

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Page Contact: Keith Tackett
June 13, 2011 4:48 PM