Intergenerational Land Transfer: Were We Ready?

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Ginny Nipper, Landowner Legacy Communication Services, Addis, LA writes, 

"I grew up in Central Louisiana knowing that my family had been involved in the timber business for many years. My great-great- and great-grandfathers were loggers and sawyers in southwest Mississippi, and my great-grandfather eventually moved to central Louisiana and owned and operated E. S. Duck Lumber Company. That occupation continued through my father with the business becoming Duck Bros. Lumber.  

My husband’s family has been involved in agriculture and land ownership for many generations. In fact our new granddaughter will be the fourteenth generation of family landowners dating back to the 1670s in what is now the Commonwealth of Virginia.

While neither family owned large tracts, Allen and I realized at some point we would have the opportunity to own and manage some of those lands. Our families had acquired land through intergenerational transfer of farming and timber operations over many years. Two tracts have now been in our immediate family for over 100 years, and one of the greatest legacies for us is that special feeling when the same dirt gets under their fingernails that was under our ancestors’.

SETTING THE STAGE

Neither of us have any formal training in forestry; I was trained as a professional office administrator and Allen as an animal nutritionist. We decided to start with phase I and II of the Southern Regional Extension Forestry Master Tree Farmer program, which was extremely beneficial in providing us, not only useful information, but also professional contacts. The long term involvement and commitment of the family to successfully manage the land and timber was an important lesson learned.

Not long after completing the Master Tree Farmer programs, both our fathers passed away, and we suddenly became responsible for several tracts of land. Since that time, we have purchased additional tracts and now own five separate tracts covering over 400 acres, and help manage two other family tracts of about 200 acres –all in central Louisiana and southwestern Arkansas.

Because intergenerational transfers provided the majority of our land holdings, we experienced numerous issues that arose as a result of those transfers. We know we are not unique in experiencing these issues Because of these experiences, we have chosen to change how our land and timber legacy will be passed to our heirs. Three areas which we feel are important, and in which we put a lot of effort, are discussed below:

Communication: New communication technologies have increased communication opportunities, but direct face-to-face family discussions remain critical.  

Because I am the youngest of four there was a lot I was not told about my father’s business. In addition, the oldest siblings were males so it was just accepted that they would be the ones to be informed. My husband was a part of that same culture because he was the oldest, but his sisters knew more about their family lands than I did about my family’s lands. However, because of their lifestyles and distance issues, communication in Allen’s family was generally “catch as catch can.” Consequently, not everyone had the same familiarity with all aspects of the land and timber. When everyone does not meet as a family, it is harder to develop interactions, determine where squabbles will likely arise later, develop a means to maintain information and details, and be ready to address potential problems that will arise.

Management: Neither of our families had any written plan — management, financial, or otherwise — as to what had been done and should be done to manage the land and timber. Without a road map it was hard to know where our ancestors had been and where they planned for us to go. When our fathers were gone, and without any written directions, many of the essential details were lost. There have been numerous times when both of us have wished for just one more conversation with our fathers to ask questions and take notes for reference in the future.  

Financial: As indicated above, limited management records were available, and essentially no financial records were available to establish land or timber basis, timber depletion allowance if needed, or to determine the internal rate of return for timber investments we now owned.  

CLOSING THE GAPS 

Because of the gap in our forestry knowledge and in our knowledge of how the tracts had been previously managed, we had to accomplish many things quickly. Some tracts had to be located and boundaries identified. Professional forestry consultants were hired to develop management and cash-flow plans for all stands. An attorney familiar with land, forestry, and family succession was identified as well as a CPA familiar with forestry and land taxes. All these individuals were made a part of our management team and are still used routinely. We placed all our tracts in the American Tree Farm System to meet expected sustainability certification requirements and as a way to identify we were socially and environmentally responsible.  

We decided early on that regardless of the number and size of tracts that we had or hoped to acquire, we would do everything possible to be sure our children were not surprised by and subjected to some of the same intergenerational transfer issues we had experienced. So we decided we would always attempt to maintain detailed written records, involve our children in some fashion with the management of the land and timber, continue and increase family communication, provide routine updates to all management and cash-flow plans, develop an understanding for the impact to internal return rates by varying inputs, outputs, and rotation lengths, and continue to offer opportunities to educate the entire family by participation in educational programs.  

Written records were easy to start because Allen was accustomed to keeping detailed research records from his training, and which also matched well with my administrative experiences. All our records are now electronic so copies can be stored off-site and so that computerized searches can be made looking for key words and phrases to help us remember what was done in the past.

However, we continued to search for direction on how to accomplish the improved communication, participation, and involvement by the entire family. At a day-long training session conducted by Clint Bentz, many different topics were addressed related to the “Ties to the Land” program Clint developed in cooperation with the Oregon State University Extension Service. After the training session, we realized routine and structured family meetings would help us establish and accomplish many of the goals we had.

Landowner family meetings became a routine part of the management of our properties, and we feel will assist in making the transfer of our assets to our heirs easier. Our meetings are held generally twice a year with input from everyone in the family. Each adult child has a specific role associated with management of the property related to their interests, reports on their activities, and concerns within their responsibilities at each family meeting. Emilie is a meteorologist so she is in charge of making weather decisions related to planting, harvesting, and other operations. In addition, she manages off-site storage of electronic data and works with me when we assist other landowners in developing their record keeping systems. William is a chemical engineer and is involved with soil and water quality decisions and dealing with companies working on the land that might impact either. William was instrumental in development, and now maintenance, of my blog (www.landownerlegacy.com), as well as other family webpages. Weldon, an upcoming college graduate already with a job in farm credit waiting, is in charge of maintaining boundary lines and growth plots on our tracts. In addition, he deals with planting management, hunting lease issues, and courthouse records.

Landowner family meetings were, and are, not just to report on activities and concerns. Early on, everyone provided their own short and long term goals for the family and the land. These goals are reviewed on a routine basis and modified as appropriate. Each family member had the opportunity to express their thoughts, feelings, and knowledge concerning each asset owned by the family so all others knew the importance of each one to individual family members. Not everyone valued each asset the same and those differences were considered as a family mission statement was developed and finalized.  

Open and candid discussions were also held early, related to ground rules that would guide the future meetings. Potential future operations and business structures have been discussed, and not all topics were or will be easily resolved. Some topics that were expected to generate little discussion when the agenda was developed turned into long, detailed discussions that were not resolved in one meeting.

Allen & granddaughter taking water samples

 

 

 

 

 

 

 

 

OUR PASSIONS 

Our experiences from educational training sessions and from our family landowner meetings encouraged us to develop the Landowner Legacy Communication© program, intended to help educate fellow landowners on the importance of family landowner meetings.  

Because we learned so much from others, we have a passion to remain current and interact with other landowners through membership and participation in local landowner groups, the Louisiana and Arkansas Forestry Associations, Forest Landowners Association, American Tree Farm System, and Farm Bureau in Louisiana and Arkansas. We volunteer our time to serve on several committees and boards of the various organizations. Membership is paid for all family members in many of these organizations, and they are encouraged to attend as many meetings as possible. 

WERE WE READY?

I began this discussion with that question. I hope you realize we were not, and that you are probably not ready either. But we are working towards making sure our children are ready, and I would encourage you to consider doing the same. We are experts at our own experiences with intergenerational transfer of land and timber and enjoy passing on our knowledge and the lessons we learned so that others can benefit. If your family would like to hear more about our experiences and have us work with you to discuss your options on getting started with your family meeting efforts, please contact me at [email protected] or Allen at [email protected]. If you have adult children who would like to hear from our children and their experiences, just put emilie, william, or weldon in front of [email protected],” and they will reply to any questions or comments."

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