Passing On the Land
Article #151, December 2009
By Bill Cook
What happens to your forest land after you die? Do you care? Do your heirs care? If you're among the millions that do care, then planning for the change in ownership is something that needs to be intentionally considered.
Like ecological succession, the natural course of events may not yield desirable conditions. Ownership succession will require thoughtfulness and communication to achieve desired outcomes.
Disappointing and sad stories abound.
Ownership succession in the United States will happen across about 80 million acres over the next five years, according to the USDA Forest Service. This impending ownership change represents one of the greatest threats to forests and forest management.
Concerned forest owners should sit down and think about what should become of their property. Do you want to keep the forest as forest? Do you wish that management continues? Who will best do this? Are your children interested? If not, who else might be interested? What legal and planning vehicles are available?
The first step is to decide what you would like to happen. What is your long-term vision for your property? Does your spouse feel the same way? Be sure to have this vision clearly in mind, and on paper, before approaching your children and/or other heirs. Chances are good, based on research, that everyone involved will not have the same notions about the property's future and their inheritance. Making assumptions is not usually an effective approach.
After developing a well-defined vision with your family, learn about different methods to achieve that vision. Various mechanisms will apply differently to each case, and have their own pros and cons. Talking with your friends and neighbors about their experiences may help, but their choices may, or may not, be the best route for your situation.
According to Clint Bentz, a respected authority in the area of family forest succession from Oregon State University, there are essentially five options that forest owners have available to them. Each option has its pros and cons.
One, the land can be sold. Owners or heirs can be selective in whom they sell the land to. Selection criteria is negotiable.
Two, current owners can divide the land among children or other heirs. This is commonly called parcelization.
Three, current owners can pass on the land to children or other heirs, in its entirety.
Four, current owners can give or sell the entire parcel to a single child or heir.
Five, ownership rights can be unpackaged and some of them can be sold independently from the others. For example, development rights can be sold or donated to a conservancy or other entity. Or, timber rights can also be bought and sold independently from the land.
Estate planning tools to execute a vision include various sorts of trusts, wills, S-corporations, limited liability companies (LLCs), charities, land conservancies, partnerships, easements, donations, etc. In most cases, estate planning attorneys familiar with forest assets should be consulted.
There are a number of information resources. MSU Extension is preparing a public program and related materials. The launch date will likely occur during Agriculture and Natural Resources Week on the MSU campus during the first week of March.
Oregon State University has developed a "Ties to the Land" program that focuses on family succession issues. The URL <http://www.tiestotheland.org> has a wide range of materials.
The USDA Forest Service has a pair of in-depth publications, GTR SRS-112 "Estate Planning for Forest Landowners: What Will Become of Your Timberland?" (2009) and NA-IN-04-08 "Preserving the Family Woods: tools to help guide transfer to the next generation of landowners" (2008). The following URL leads to a Forest Service estate planning website <http://www.na.fs.fed.us/stewardship/estate/estate.shtml> that has links to these documents.
Additionally, most woodland owner associations have publications that have carried articles about this topic. Membership in one of the local or regional organizations provides good information about most forestry and forest ownership issues. In Michigan, try the Michigan Forest Association <http://www.michiganforests.com> and the Michigan Tree Farm Program <http://michigantreefarm.org>.
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Bill Cook is an MSU Extension forester providing educational programming for the entire Upper Peninsula. His office is located at the MSU Upper Peninsula Tree Improvement Center near Escanaba. The Center is the headquarters for three MSU Forestry properties in the U.P., with a combined area of about 8,000 acres. He can be reached at email@example.com or 906-786-1575.
by Bill Cook, Forester/Biologist, Michigan State University Extension, 6005
J Road, Escanaba, MI 49829
906-786-1575 (voice), 906-786-9370 (fax), e-mail: firstname.lastname@example.org
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