Spring 2010
Volume 19 No. 1
Preserving Family Woodlands by Teena Ligman
Most woodland owners care deeply for their land and take pride in being good stewards. But over the next two decades, Indiana’s forests will be turned over to a primarily middle-aged generation. Communication is the biggest obstacle to securing family legacies. One man explained he never discussed his woodlands as part of estate planning because, “When I think of my net worth, I don’t include the forest because I think of that as already belonging to future generations.” Many people blithely assume their heirs share their values.
Since the life of a forest spans multiple owners, we owe it to our family and woodlands to develop a stewardship plan that includes transitioning to the next owner without burdens such as heavy taxes or family dissension. Each of us has choices to make about our woodland:
• Who will we leave our woodland to?
• How do we want it managed?
• Should it be sub-divided and developed?
As you think about preserving your woodlands, here are a few of your options.
Do nothing: This option leaves your woodland most at risk.
Will: Traditional wills divide assets such as stocks and bonds among heirs, but land is a nontraditional part of an estate. A subdivided forest loses its value as a functioning ecosystem if the smaller parcel land use changes.
Sell or give the forest to heirs before death: To reduce estate taxes, some forest landowners prefer to sell or gift their woodlands to heirs while they are alive. This strategy provides an opportunity to develop a shared understanding of how the land will be used.
Family partnerships: Some families put their woodland in a partnership or qualifying conservation trust. This allows the forest to stay as a functioning ecosystem.
Limited Liability Company (LLC): Family members can form a LLC to protect the family forest. The LLC can be member-managed or manager-managed.
Land trusts: Land trusts may purchase conservation easements (the rights to prohibit development) on family forests, purchase forest outright, or receive donated forest lands from an estate.
Public landholders: Forest owners abutting or near public land may consider donating or selling their land to the public landholder. This choice has the environmental benefit of keeping large, contiguous forests intact. There are five common mistakes to avoid in transferring woodland property:
If it’s working, don’t break it apart: You wouldn’t break up a piece of equipment between your children, and splitting woodlands makes no less sense! The forest functions as an ecosystem, and it needs to be intact. Yet, owners look at their woods as they would a savings account and divide the asset among heirs.
“They know what I would want and they’ll do the right thing:” If discussions don’t happen, disagreements can happen among heirs. The obvious solution is to communicate your wishes, but ultimately, for the owner to make decisions and give heirs the chance to ask questions, understand, and respect choices.
“All our children want the same thing:” In interviews with adult children of forests owners, children differ in opinion on why they value family woodlands. It’s best to have a discussion when the landowner can offer guidance and make decisions.
If you want it in the family, play out all scenarios: This is the cold reality of protecting family land legacies. Heirs are often looked at as sons or daughters and their spouses. Divorce or “right of survivorship” situations can sometimes take land out of family hands. Legal strategies ensure that land or land shares revert to blood relatives if that is important to you.
“I’m worth how much?” Landowners fail to realize the value of their forestland is a scenario that happens too often. Acreage with high development potential can mean sizeable estate taxes for heirs. Taxes in the hundreds of thousands of dollars are not uncommon. Selling the land may be the only solution for covering the debt. Get land appraised for its full development value, then run the estate tax calculations. For a complete document to help guide landowners through the process of transferring their woodland to the next generation go to: http://na.fs.fed.us/pubs/stewardship/preserving_family_woods_lr.pdf, or contact Teena Ligman at 812-275-5987 or tligman@ fs.fed.us for a copy by mail.
Teena Ligman is a Public Affairs Specialist for the USDA Forest Service, Wayne and Hoosier National Forests.