Estate Planning for Forest Landowners

Regardless of the number of acres, woodland owners need to make arrangements for their estates while they are living and while they are competent to do so. An extensive guide is now available from the US Forest Service specifically for family-owned forests.

Estate Planning for Forest Landowners:
What Will Become of Your Timberland?
2009. General Technical Report SRS-112
Available as a pdf download at http://www.srs.fs.usda.gov/pubs/gtr/gtr_srs112.pdf

Although the report is more geared to large working timber holdings, its comparison examples of the impact of federal estate tax on family assets with and without estate planning are chilling. In the scenario (chapter 19) with no estate plan estate taxes could equal nearly one-eighth of the original estate. In the second example a simple plan leaving the estate to the surviving spouse avoids immediate estate tax. But the subsequent demise of that spouse could incur an estate tax equal to nearly one-fourth of the original combined estate. The final scenario presents three strategies that could reduce the example family estate tax bill by nearly $1.5 million compared to the simple plan. (These hypothetical examples are based on a family forest estate with assets valued at $10 million.)

The planning guide states that on the national level nearly three-fifths of all forest land is privately owned. More than four-fifths of that land belongs to nonindustrial owners. It also finds that the typical nonindustrial private forest owner is 60 years old. The importance of and urgency for timely forest estate planning should by now be evident. If you are still thinking it’s somebody else’s problem, complete the thirteen question “estate planning readiness” quiz on page 5 to better understand where you are in the process.

According to the book’s abstract, its purpose is to provide quidelines 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. The book presents a working knowledge of the federal estate and gift tax law as of September 30, 2008.