All posts by Karen

Intergenerational transfer of family farm is cyclical, not linear

“Don’t worry, I’ll take care of you” is the ultimate conversation stopper, says Steve Isaacs, UK extension coordinator for farm management, in the complex and often unpleasant and unproductive dialogue between family generations regarding what will happen to the family farm.

Steve Isaacs de-bunks popular myths about how to transfer the family farm
Photo by Billy Thomas, UK Forestry Extension

Family farm succession is about more than legal and tax implications according to Dr. Isaacs who is also director for the UK Tax Education Program. It is about the transfer of assets, management, leadership and, yes, debt in a cyclical process.

Isaacs stressed that the first priority in this cycle is assuring an adequate retirement income for the parents. The estate tax is a paper tiger for most people; “death taxes don’t destroy family farms… families do.”

According to the Bureau of Labor Statistics there are only two categories of workers that are older than farmers – school crossing guards and Walmart greeters.

Isaacs recommended engaging a transition team familiar with farmland issues that could include an attorney, accountant, financial planner, lender, extension educator and/or business consultant. This team’s function is to identify and generate ideas, technical information, evaluation and suggestions.

Isaacs recommended conducting the transition discussion at a neutral location, not at the family kitchen table. He advised treating siblings fairly, not necessarily equally and include spouses in the discussion.

A facilitator and recorder will summarize and document the items on which the family has agreed.

With some guidance and a transition plan, Isaacs says the conversation by the entire family can become “Here’s how we’re going to take care of things.”

Steve will be conducting a full day session on this subject in the near future. Check our events page for that announcement.

Items to consider when purchasing woodland property

Chris Will, Consulting Forester, advised annual meeting attendees to consider three important items when considering the purchase of a woodland property:

the tax consequences of selling a woodlands property versus holding it as an investment

protect it with a survey

develop a forest management plan and keep the plan updated.

Woodland acquistition criteria panelists, (right to left) Chris Will, Kate Robie and Matt Springer discuss what to do and what to avoid when considering a property purchase; Doug McLaren moderating.
Photo by Billy Thomas, UK Forestry Extension

Will was part of a panel discussing Woodland Acquisition Criteria at the 2017 KWOA annual meeting.

Governor signs Timber Theft Legislation SB38

Senate Bill 38 relating to timber theft passed both the Senate and the House with one amendment and was signed by the Governor.

The bill amends KRS 364.130 to specify that a person, regardless of state of mind or whether the person believes to be authorized or not, is liable for three times the stumpage value of the timber and three times the cost of any damages to property when he or she takes the timber of another without legal right or color of title.

The amendment exempts residential property owners and farmland owners maintaining their fence rows who mistakenly remove the timber of an adjoining property owner from the requirement to pay treble damages.

 

Ancient American Chestnut makes surprising appearance on Pelle tree farm

Thanks to Harry Pelle, KWOA board member, for sharing this story

While marking fifty acres for a timber stand improvement project on their property on April 23rd, Harry and Karen Pelle along with Chris Will, their consulting forester, found quite a welcome surprise. They discovered a couple of American Chestnut root sprouts. Harry admits there have been other aspiring chestnut seedlings over the thirty years the Pelle’s have been traversing their tree farm near Bradfordsville but they didn’t know what to look for.

The day before, Earth Day, they had helped plant 1200 American Chestnuts at Eastern Kentucky University’s Taylor Fork Ecological Area.

Earth Day 2016 - EKU faculty, staff, students and volunteers join The American Chestnut Foundation to plant 1200 American Chestnuts in Taylor Fork Ecological Area on Arbor Day
Earth Day 2016 – EKU faculty, staff, students and volunteers join The American Chestnut Foundation to plant 1200 American Chestnuts in Taylor Fork Ecological Area on Arbor Day

The effort with The American Chestnut Foundation seeks to restore the iconic tree as a staple in eastern forests.

April 22, 2016 – Karen and Harry Pelle volunteer with EKU American Chestnut planting
April 22, 2016 – Karen and Harry Pelle volunteer with EKU American Chestnut planting

 

That recent experience may have made the Pelle’s more aware of the chestnut’s latest effort to re-establish itself in the territory where it once reigned.

The Pelle’s marked the spot where they found the tree sprouts on Chris’s GPS and with a tee post.

April 23, 2016 – Newly discovered American Chestnut sprouts on Pelle tree farm
April 23, 2016 – Newly discovered American Chestnut sprouts on Pelle tree farm

The Pelle’s also cleared the area around the sprouts of fallen tops and brush. They intend to monitor the potential trees’ progress and just maybe these two will beat the Chestnut Blight that decimated the regions mighty giants. It may be the next generation of Pelles that will have to continue the watch over the seedlings.

The newest trees are in good company. Harry has an American Chestnut restoration grove just down the hill from the little guys. He likes to think the trees’ ancestors are looking down the hill and cheering on their new cousins in the fight to beat the blight. Harry thinks the finding of the sprouts “might have been the chestnuts’ way of saying ‘thanks for the help.’”

 

Flowering pear trees becoming the scourge of central Kentucky woodland pastures

Central Kentucky still boasts one of the largest populations of presettlement trees in the nation according to Tom Kimmerer, scientist, photographer and former UK faculty member, in his new book Venerable Trees. However, these ancient trees and the remaining woodland pastures in which they reside are in danger. Chief among the culprits threatening these ancient trees is the flowering pear tree. “We have to stop planting Callery pears” says Kimmerer in an article in the March 30th Lexington Herald-Leader.

Wild invasive flowering pear trees in a field near a subdivision near Southpoint Dr. in Lexington, Ky., Monday, March 28, 2016.
Wild invasive flowering pear trees in a field near a subdivision near Southpoint Dr. in Lexington Photo courtesy Lexington Herald-Leader

Going by various names – Bradford, Callery, Cleveland Select -these cultivars interbreed and create an invasive wild population of hybrid Callery pear trees.

Birds and wind distribute the tasty fruit of these trees across fields where new trees are crowding out natives plants and trees. Callery pears have four-inch thorns that can’t be mowed down and can be removed only by steel-tracked bulldozers.

Article excerpts courtesy Lexington Herald-Leader

KWOA and NWOA support resolution to create Timber Theft and Trespass Reduction Task Force

HCR 29 directs the Kentucky Legislative Research Commission to establish a Timber Theft and Trespass Reduction Task Force to study issues regarding timber theft and trespass and to develop consensus recommendations to address those issues.

The task force would meet three times before submitting its final report to the LRCommission by November 30, 2016. The LRC has authority to alternatively assign the issues identified in the Resolution to interim joint committees or subcommittees.

Sponsored in the House by representatives Combs, Denham, Howard, Montell, Nelson, Osborne and Riggs, the resolution passed 95-0 in February. It is now in the Senate Natural Resources and Energy Committee.

KWOA voted at its annual meeting to support the resolution with a letter from President Frank Hicks. In addition, Keith Argow, President, National Woodland Owners Association submitted a letter of support to the senate committee. In his letter Argow notes that “…Kentucky has one of the weakest positions against timber theft of any state.” He argues that, in addition to inherent flaws, Kentucky’s current statute with respect to timber theft, KRS 364.130, is a civil statute that requires timber theft victims to file civil suits, an action that is out of reach for many landowners. The result, Argow concludes, is that “logging theft is an almost risk-free crime.”

KWOA members are encouraged to call and/or write their senators on the Natural Resources and Energy Committee in support of HCR 29. The 2016 legislative session adjourns April 12.

Senate Natural Resources and Energy Committee
• Sen. Jared Carpenter [Chair]
• Sen. Brandon Smith [Vice Chair]
• Sen. C.B. Embry Jr.
• Sen. Chris Girdler
• Sen. Ernie Harris
• Sen. Paul Hornback
• Sen. Ray S. Jones II
• Sen. John Schickel
• Sen. Johnny Ray Turner
• Sen. Robin L. Webb
• Sen. Whitney Westerfield

Industry Key to Conserving Forests as Demand for Wood Projected to Triple by 2050

World Wildlife Fund (January 28) – According to the latest installment of the World Wildlife Fund’s”Living Forests Report,”paper production and consumption is likely to double in the next three decades, and overall wood consumption may triple.

“A scenario of tripling the amount of wood society takes from forests and plantations needs to motivate good stewardship that safeguards forests, otherwise we could destroy the very places where wood grows,” said Rod Taylor, director of WWF’s Global Forest Program.

USDA promotes wood in green building rating systems

U.S. Secretary of Agriculture Tom Vilsack made a major announcement March 30th strongly promoting wood as a green building material and recognizing multiple green building rating systems. According to the Sustainable Forestry Initiative, the USDA announcement was made during the International Year of Forests celebration in Washington, DC. The event was co-hosted by the American Forest Foundation, the National Association of State Foresters, and the USDA Forest Service.

According to a March 30th USDA press release Secretary Vilsack laid out a three-part plan addressing the Forest Service’s and USDA’s current green building practices. The strategy includes the following parts:
1. The U.S. Forest Service will preferentially select wood in new building construction while maintaining its commitment to certified green building standards. USDA will also make a commitment to using wood and other agricultural products as it fulfills President Obama’s executive order on Federal Leadership in Environmental, Energy, and Economic Performance.
2. The Secretary has asked the U.S. Forest Service to examine ways to increase its already strong commitment to green building by reporting to him on ways to enhance the research and development being done around green building materials.
3. The U.S. Forest Service will actively look for opportunities to demonstrate the innovative use of wood as a green building material for all new structures of 10,000 square feet or more using recognized green building standards such as LEED, Green Globes or the National Green Building Standard.
The plan explicitly recognizes the Green Globes standard and the National Green Building Standard, both of which recognize multiple forest certification standards. Opening the door to other green building rating systems increases opportunities for third party certified wood to be used and recognized in green buildings.
“This is just the market signal we need to expand markets for sustainably grown wood from ATFS,” said Tom Martin, President and CEO of the American Forest Foundation.

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.