Volume 22, Number 3
Forestland Legacy Planning
By David Watson| D.A. Watson & Co. - a Blue Chip Consortium, LLC
I have been fortunate over the years to have had the opportunity to write and speak on the topic of "Timberland Succession Planning," a topic near and dear to my heart. My interest in this subject stems from the fact that it lies at the junction of what I doprofessionally (financial advisor), and one of my passions (managing our family tree farm in Howard County). Literally hundreds of thousands of acres will change hands in the next several decades, as the current generation of timberland owners ages. Often the next generation is simply not in a position to take over the helm and manage a somewhat complex asset such as a farm or timberland. To address this gap, I have participated in quite a few workshops with my longtime partner, Hank Stelzer - MU Extension Forester, in which we detail the issues and complexities of preparing to successfully transfer family timberland to the next generation. These workshops have been wonderful learning experiences.
Forestland legacy planning circumstances are diverse: there may be no children assigned as heirs; they may live in different parts of the country, or they may have no interest in managing the land. What might a landowner do in this situation, when protecting and preserving their lifetime of work is a priority?
Timberland owners already have experience working with less-than-ideal situations. Whether addressing site selection or TSI thinning, we figure it out. We evaluate options, think through the outcomes, and make the decision that we believe to be best for the woods. Similarly, in legacy planning, if we are faced with a complex situation, we assess our options, examine the tools we have to use, and put in motion the best plan to achieve the best possible outcome for the woods.
Assuming there are no suitable heirs in the family, the following are several options to consider to preserve your work and legacy:
Consider a buy-sell agreement with a neighbor, friend, or fellow tree-farmer who shares a similar passion for the woods, and will manage the property in a similar way. A "buy-sell agreement" is a binding contract that obligates the buyer and the seller to an agreed upon price or pricing formula), at a future date. It is triggered by death, disability or retirement, and is generally paired with a funding source (for the buyer), such as life insurance (on the present owner), or seller-financing. In effect, it guarantees the property will go to a specific buyer, under mutually agreed upon terms.
Consider a donation to an organization who can manage and maintain the property in a manner that is compatible with your vision. Be sure that the organization has the resources to sustain the management objectives you desire. Potential candidates are:
Missouri Department of Conservation
Local Land Trusts
Colleges or Universities
Consider a conservation easement on your property, and prepare to sell the property on the open market whenever you are ready. Conservation easements are customized agreements that permanently restrict the activities on the property, and guide the management of the timberland. Examples of such limitations could be restricting development and sub-division of the property, requiring that the timber be managed sustainably, requiring that cattle be fenced out of the woods and creeks, etc. Easements can be sold or donated, though most are donated. The easement is held by a 501(c) organization (typically a land trust) that agrees to enforce the terms of the agreement, in perpetuity, regardless of who owns the property. These are complex agreements that take time to negotiate. In the right situation, they can be very powerful tools in preserving the integrity of a wellmanaged property. Prominent Potential Easement Holders of Timberland in Missouri are:
The Ozark Regional Land Trust
The National Wild Turkey Federation
The Greenbelt Land of Trust of Mid-Missouri
The Nature Conservancy
It would be great if we all had heirs who shared our love of the land, our work ethic, who lived in close proximity to the farm, and who had the time and financial resources necessary. However, like all things in the woods (more often than not in my experience), they lean the wrong the way, are on an uphill slope, and usually require work. But we choose to press on because the woods and the outcomes are absolutely worth it.