Country Road Outdoors Feature Stories
Charting a Course
February 27, 2009 | By David Watson
Millions of acres are destined to change hands in the next several decades as the current generation of owners ages and subsequently need to hand the reigns over to the next generation of their family. These children and grandchildren may not be fully prepared for this responsibility. The individual heirs may not always see eye-to-eye with each other. Many times, they have different perspectives and different skill sets than the current owners. These real world issues add difficulty to the task of transferring a tree farm or woodland, in the manner the owner wishes to transfer it.
Development of the land, mismanagement of the timber resources, estate taxes that force a sale, financial pressures on children, and disinterested heirs are but a few of the dangers that await the unprepared. It takes real effort and work to stay on course and to successfully pass a family forest to future generations. Many family-owned forests are intended to pass to the next generation, but most owners have done little or no planning. A woodland without a succession plan is, in effect, a plan to fail.
The first step in creating a succession plan for your property is to know where you want to go – a vision statement. Sheila Murray Bethel, a noted business consultant once said, “One of the most courageous things you can do is to identify yourself, know who you are, what you believe in, and where you want to go.” A vision statement for a family-owned woodland accomplishes just that. A vision statement should be a statement about our dreams, about our passion. It should capture the essence of our desire for the woodlands that are so important to us. It should be clear and concise. A vision statement does NOT contain specific goals, or strategies. It does not tell how we are going to get there. It simply states where we want to go. It defines why we are in this business, or why we own this woodland. A vision statement becomes a compass. Examples of a properly designed vision statement could be:
* To provide hunting and recreational opportunities to our children and their families
* To maximize the long term revenue potential of the timber resources for current and future generations of our family
* To grow and harvest high quality pine and softwood timber, in a sustainable manner
A properly constructed vision statement should frame the owner’s ultimate goal for the benefit of anyone making decisions regarding the tree farm now, or in the future. It is the beginning of the blueprint for the operating decisions, as well as the estate planning decisions, later on.
Once a vision statement is in place, a mission statement, and specific goals can be identified. For example, if we take the second vision statement (above), a mission statement for that particular tree farm could be:
* To implement timber management practices that produce sustainable long-term revenues
Then, specific operating objectives (goals) flow easily from that mission statement:
1) Conduct a timber inventory this winter
2) Conduct TSI (Timber Stand Improvement) on stands 1, 2 & 3, next year
3) Conduct a professionally managed timber sale on stands 4 & 5 in the next five years
4) Establish a properly designed trust to manage the farm when we are unable to do so
5) Communicate our intentions to our heirs
The real value of a vision statement is that it provides a roadmap for the woodland owner when he/she is faced with complex and difficult decisions. For instance, suppose a husband and wife own 300 acres of prime pine timberland, which they have managed with care for decades. They want to pass their land, in tact, to their three children and grandchildren. They are concerned about the development pressures the heirs may face in the future. When they sit down with their advisory team (CPA, attorney, financial advisor, and consulting forester) to make long-term plans regarding their tree farm, they may be presented with a confusing array of choices regarding estate taxes, gifting, trust provisions, insurance, easements and the like. These choices can be complicated, and seemingly contradictory. It would be easy for this couple to lose their way, unless they are able to keep their eye on the big picture – on what is most important to them. In other words, it would be easy to get lost in the forest, by focusing only on the trees! However, a properly designed vision statement could provide the high altitude perspective they need to stay on track. It should keep them focused on the ultimate goal, and allow them to sort through the various choices in front of them, selecting the ones that best accomplish their vision.
We will all be affected by the success (or lack of success) of these intra-family transfers. The ultimate success of these ownership transfers is crucial to the future of our great woodlands, and all who depend on them. Our woodlands, and our heirs, deserve our best efforts to chart a clear course for preserving this great resource. The journey begins with identifying and articulating the owner’s vision… So, how good is your compass?
David A. Watson, is a certified financial planner with a passion for rural real estate.
