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Intergenerational Land Transfer

Recorded presentations:

We offered two online presentations, or “webinars,” this winter. Recordings are linked below.

Land Transfer for Forest and Cabin Landowners: Transferring your vision and land ethic to the next generation

land transfer 131212 screencap cropRecorded December 12, 2013:  See links below. You have a vision for your forest property or cabin. It may be as simple as keeping the forest or cabin in the family, or as complex as maintaining a working forest for future generations. Whatever your vision, a good starting point should center on family communication. This webinar will introduce you to ways of working with your family to begin a conversation about the family cabin or family forest. It will also focus on some simple ways of involving your family in developing a shared land ethic.

Recording and links:
-Complete recording of the presentation
-Slides and presenter notes
-Ties to the Land: Cautionary tales, resource list and book order (we have submitted a request to OSU to fix the order link)
-Grandma’s Yellow Pie Plate: Website and book order
-Your Land, Your Legacy: Free PDF or hard copy from UMass Extension

Land Transfer for Forest and Cabin Land Owners: Legal tools to keep your vision and land ethic alive

Recorded January 9, 2014: Having a shared family land ethic or vision for your property will help guide your decision around the use of the correct legal tool use to pass the land on to the next generation. Learn about legal tools in use in Minnesota from Allison Eklund, an attorney, Minnesota cabin owner and graduate of the Woodland Advisor Program.

Recording:
-Complete recording of the presentation
-Handout version of slides (PDF)

Land transfer:

Many family forest owners envision their land staying in the family for generations. But does your family share your dreams for the future of your land? Do you have a plan in place to keep the land intact?

This page should help you think about transferring your land to members of your family, other individuals, land trusts, or others. Planning ahead can be the difference between keeping the land intact and your heirs being forced to break it up to pay the taxes. Content on this page is based in part on Oregon State University’s Ties to the Land curriculum.

Your vision and goals

First and foremost, you need to have a clear idea of your vision for the future of your property. Is the land a priceless heirloom that you hope will always be part of the family? Or do you see it as a valuable asset that your heirs may legitimately decide to sell? How would you feel if the land were to be subdivided and sold?

Your family

Once your vision is clear, you need to know how your potential heirs feel. Do they share that vision? Are they as tied to the land as you are? Do they know enough about land stewardship to take over? Land stewardship is not easy, and if your heirs don’t share your knowledge and commitment to the land, your vision may be less likely to succeed.

Your heirs may be unaware of your vision, or about their possible roles. They may hope and dream of future land ownership but be uncomfortable approaching you about your plans for the land. Change is hard to discuss, particularly when it involves losing loved ones and cherished assets. (Read more about how to plan a family meeting.)

But, communication is key. It’s hard to overstate the importance of clear communication about your vision and how your heirs fit into it. The earlier you start, the better: Involve grandchildren in the land. Help their parents understand how important the land is to you, and help them build the knowledge and confidence they need to manage it well.

Legal and financial issues

Once your family agrees on a shared vision, it’s time to talk to a land transfer professional. Many options exist for the permanent protection and ownership of your land. Some options are as follows (modified from the Ties to the Land workbook):

  • Sole ownership / sole proprietorship: This is the simplest arrangement, but can leave the owner vulnerable to liability. Income is reported directly on the owner’s tax return. Read more.
  • General partnership: Under a general partnership, more than one individual owns the business. Each partner is individually financially liable. Income is reported on the partners’ individual tax returns relative to the share of ownership.
  • Family Limited Liability Corporation: If the family prefers to retain all ownership rights, an LLC can confer some legal and financial protection, set mutually agreed rules for future land stewardship, clarify ownership, and establish operating and decision processes. Taxation is the same as in a general partnership.
  • Family Limited Partnership: This is a partnership made up of family members. Under an FLP, the general partners can begin sharing ownership with their heirs. Taxation is the same as in a general partnership.
  • S- and C-Corporations: These are federal and state designations that combine some elements of partnerships and some of corporations.

You can read more about forms of land ownership here. Each form of ownership has advantages and disadvantages. Each family situation is different, and different forms of ownership may be better suited to some families than others. These are complicated decisions, and professional assistance is essential.

In addition to the form of ownership, many other financial and legal tools may be available to advance your family’s vision. For instance, conservation easements ensure permanent land protection.

Other sources of information

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7 Responses to “Intergenerational Land Transfer”

  1. Dale Corrington says:

    We have a problem with this in our family.

    I’ve always viewed our family’s land as an heirloom that should always be part of the family, but my siblings don’t share the same mindset and insist on selling it.

    I’m going to print this article and discuss these points with the family.

    Thanks for the info – timely and tremendous help for me!

    Dale

    Battery Rebuilds

  2. Avatar of Eli Sagor Eli Sagor says:

    Hi Dale. Glad the page was useful. We do have a few upcoming Intergenerational Land Transfer classes coming up in the winter of 2010 if your family is interested: The two-part workshop will be offered in St. Paul in February and March (still working out dates) and in Grand Rapids April 12 and 26, 2010. More info is available on our upcoming events page, http://www.myminnesotawoods.umn.edu/upcoming-events.
    -eli

  3. Avatar of MyMNwoods MyMNwoods says:

    Folks, there was an error in the December 2010 monthly email update about upcoming land transfer workshops: The land transfer workshops planned for winter / spring 2011 are in the Metro and Grand Rapids, NOT Cloquet. As always, workshop listings are on our events calendar. Sorry for any confusion.
    -eli

  4. jack ross says:

    Thought I’d let you know…..
    1) The link to “Estate Planning Options for Family Forests, an extensive and detailed publication from the US Forest Service” went to American Tree Farm System which said, “Oops. Page Not Found.
    2 This link, “The July/August 2007 issue of Tree Farmer Magazine includes an excellent article called Preserving the Family Forest.” went neither to the article nor to the 2007 issue.

    good luck

  5. Avatar of MyMNwoods MyMNwoods says:

    Thanks Jack. I just updated both links and added another one to the list as well.
    -eli

  6. John and Judy parr says:

    Thinking of saving land by putting kids names on title but want to have the say(parents want say yet). Is there a way to do this?

  7. A business structure known as a Limited Liability Company can be used to maintain control of the land. In your case you would make the management decisions and have the opportunity to teach your heirs about your goals and objectives.

    This business structure offers many advantages to families interested in keeping the forest whole and passing their values to the next generation. First, the LLC offers the owners the liability protection. The personal assets of the partners in an LLC can be protected from claims made in a lawsuit. Unlike a corporation the LLC is not taxed, rather the partners are taxed based on their ownership in the LLC. Income or losses from the management of the forest are reported on the owner’s individual tax returns as partnership income. The title to the property is transferred to the LLC. Ownership in the LLC can then be transferred to the heirs over time using the IRS gift tax rules.

    Thursday January 9, at noon, there will be webinar on legal tools to transfer the land. The LLC will be one topic presented. Go to http://www.myminnesotawoods.umn.edu to register.

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