Tuesday, March 17, 2009

Fresh Off the Presses: *UPDATED* Estate Planning Guide for Woodland Owners




ESTATE PLANNING FOR FOREST LANDOWNERS:
What Will Become of Your Timberland?



Newly Released Estate Tax Planning Guide

The USDA Forest Service Southern Research Station and its collaborators recently released the estate tax planning guide titled “Estate Tax Planning: What Will Become of Your Timberland?” This is the updated version of one of the most widely used tax publications for private family forest owners. The electronic version is available free at: http://www.srs.fs.usda.gov/pubs/gtr/gtr_srs112.pdf.

The publication contains 180 pages of practical estate planning techniques and estate tax laws and rules with many examples and applications specifically for woodland property. It is written to assist woodland owners and their advisors—attorneys, consulting foresters, tax preparers, financial planners, as well as state agency foresters and cooperative extension agents.

For more information contact Linda Wang at lwang@fs.fed.us or (404)272-4791, or Neal Bungard at nbungard@fs.fed.us or 603-868-7719, or John Greene jgreene01@fs.fed.us or (504) 589-7130.

Tuesday, March 3, 2009

Disturbance in the Forest- Woodland Owners in Arkansas Share Stories of Tough Times and Natural Disasters

(courtesy of our friends and affiliates at the Ozark Woodland Owners Association,
found online @ www.ozarkforestry.org)


Hell Hath No Fury…..Like Mother Nature
by Thomas E. Bryant, OWOA Past President


Like many of you I am sickened by the damage inflicted on our forests as a result of the recent ice storm. If I had planted hardwoods instead of pine…..if I had not thinned the pine a couple of years ago….if I had taken out those mature trees last year. The list goes on and on. Hindsight is 20/20 but the fact is we did do those things and we and mother nature will live with them. Mother nature can be cruel sometimes.

I was lucky compared to many. My 70 acres of 7 year old pines were high on the mountain but I only lost about 10-15% of them. My planted oaks did ok as they were in the low lands and most of the rest of my trees suffered broken limbs with minor crown damage. I’m thankful but my heart is heavy for my friends who saw wholesale destruction of parts of their forests. Entire crowns of many mature oak trees have been totally destroyed. It will be several months before an accurate assessment is made by the Arkansas Forestry Commission and we know the full extent of the damage statewide but it is in the millions of dollars.

Now is not the time to panic because with timber prices down there may be little we can do to salvage some of the downed trees but you should try. The greatest danger is probably from bugs that may get into pine trees that are destroyed and then spread into the remaining viable trees, so keep a watch on the remaining trees. The oaks with damaged crowns and limbs will likely survive. They just won’t flourish and a prolonged dry spell will take its toll on them.

For those of you who were without power and/or heat for extended periods now might be the time to assess alternative heating sources for emergency preparedness including the stockpiling of firewood for next time if you have the option of using wood heat. There will be lots of opportunities for firewood for those willing to cut it as the recovery takes place. I would also strongly recommend the use of a professional forester, now more than ever, because he is trained to be able to make a quick judgment on each tree in our forests as he cruises a stand. Knowing the impact of a destroyed crown on a particular species will determine if that tree should be removed. In the next ten years I expect to see increased removal of these large damaged trees through selected harvests. This can also be an opportunity to remove not only the damaged trees but the inferior ones we left standing last time, such as crooked and forked trees, to give more room for those younger straight and genetically superior ones.

In closing I must reiterate that using a professional forester is an investment in your forests for generations to come. Use the services of professionals who only have your best interests at heart.


Ice Storm of 2009
by Dr. Robert Craig, Private Forest Landowner


Several years ago I read in a little forestry trade journal an article titled “A Forest is a dangerous Place to Store Wood”. Iwish I had kept it to read again and to share with friends, particularly since our disastrous ice storm of January 2009. The article listed the numerous hazards to the health and wellbeing of a stand of forest trees. As I recall the foremost hazards were probably fire and insects but ice was mentioned further down. Certainly this has proven to be true here in North Arkansas.

This recent ice storm has probably brought into question some of our long employed practices. I attempt to grow primarily pine timber. When I plant I always plant improved loblolly which have much longer needles, and those needles accumulate more ice. I am not so sure I wouldn’t plant short leaf in the future. Also we hear a great deal about thinning and that all sounds and looks good until an ice storm of this magnitude comes along. My areas of greatest damage were in thinned stands. My area of least damage was stands of native short leaf that had not been thinned in the last ten years. Whereas I own and manage very little hardwood timber I was amazed at the damage to some of it. Middle aged white oaks completely uprooted. Others had their trunks shredded as though sticks of dynamite had gone off inside them.

My sympathy goes out to all tree farmers and tree lovers that have been hit by this disaster in North Arkansas. We know the land will eventually heal and hopefully we can regain the joy we experience in tree farming. Also we hope that this storm is a one time anomaly and not a trend.



North Central Arkansas Ice Storm
By Larry Morris, Consulting Forester


North Central Arkansas has experienced a devastating ice storm. The damage to the infrastructure has been enormous. I want to focus on the damage to our trees, both in our yards and those trees in the woods. From what I have observed in northern Independence county and southern Sharp County, south of Evening Shade, between 65 and 85 percent of the trees have received some form of damage. When you cross the Strawberry River traveling North or East this percentage jumps to 90-100 percent of the trees receiving damage. From what I have been told this damage rate is to be expected anywhere along a line from Mt. View to Piggott. What needs to be done for these trees? If the damage is in your front yard there will be an influx of "fly by night tree trimmers." An old saying goes, “Anyone can trim a tree, but very few can trim a tree properly.” If you hire a tree trimmer get references and contact those references before agreeing to let the work start. Also ask for a copy of their liability insurance. If they drop a tree on your house you want their insurance to pay.

When deciding what to do, look first for hanging limbs and get those removed so they don’t fall when you are not expecting them to fall. When cutting a hanging limb be sure to make an under cut so that when the limbs starts down it doesn’t pull the bark and cambium with it as it falls creating a large scar. If possible seal these cuts with pruning paint if you have it if not, a can of spray paint is better than nothing. Next step, look for these trees which are just leaning and not uprooted. If the tree has not pulled from the roots, give it time to straighten up before deciding to cut it down. Many trees will straighten up when it gets warmer. Remember trees take a long time to grow. So don’t make a hasty decision you may regret. Ask your trimmer to not coat rack your trees. This is cutting the tree back to just stubs out from the trunk. The trimmers like to do it this way because it is “quick and dirty." A reputable trimmer will work shaping the tree and leave ample branching with buds to grow back. The important thing is not to get carried away and strip your trees doing more damage than the Ice Storm.

What to do in your woodlots is another story. The damage to the timber is catastrophic, and comes at a time when the market is very depressed. It will be hard to get your timber salvaged. There is a way to collect on a capital loss, but you need to check with your accountant on if you qualify and what you need to claim this loss. You will need to get help from a Registered Forester to make the evaluation. I have observed Pines, Maples, and Hickories were the species receiving the worst damage. I have noticed those pine plantations which have been thinned received the greatest damage. In my own pine plantations I have some areas which I will have to clear cut and replant in order to have an acceptable stand. Other areas I can selectively harvest leaving an acceptable number of trees for future growth. The problem is the ice was not selective and some of the trees I would have preferred to leave are snapped and broken.

The greatest problem we face is, at this time of year as the weather warms up, these damaged trees are in stress and they are “ringing the dinner bell for insects”. When these trees are in stress they become highly susceptible to insect attack. With all the limbs and broken green material on the forest floor the bugs will be feasting and when they come to a healthy tree they just go right on feasting. Hopefully we will have a wet spring minimizing the stress to our trees, and keep this problem to a minimum. Of course this opens those damaged tree to fungus spores. This damage will show up 20 to 30 years down the road. You must keep in mind that these trees with just the tops or large limbs broken, need to be harvested within twenty years. This will allow for diameter growth making the tree merchantable and also allowing for a better market.
One important point to make is that damage claimed must be merchantable damage. A stand may have as many as 90 percent of the trees damaged by tops broken or limbs broken, but if none of this damage is merchantable you have no loss. Yes you will have a period of reduced growth while the tree recovers but the loss experience during this time will be hard to determine, much less defend in an IRS audit. The important thing is get help from a Registered Forester before making decisions regarding you timber stands.



ICE STORM LEAVES MANY PRIVATE FORESTS IN RUIN

On January 26, 2009, the northern third of Arkansas suffered extensive damage from an ice storm that left thousands without power and the landscape in shambles. Community leaders, emergency response personnel and residents have worked tirelessly over the past weeks to clear away tons of debris from splintered and uprooted trees in populated areas. At the same time, private forest landowners throughout the area are faced with the daunting task of determining the steps they need to take to salvage as much timber as possible, remove debris to reduce potential hazards, and restore their devastated stands. Robin Moore owns 450 acres of forest land just north of the Buffalo River near Ponca in Newton County. “Twenty-five to 30 percent sustained major damage, and 90 percent sustained minor damage,” said Moore. “When I say minor, I mean the crowns are clipped off, the trees are bent over with the roots out of the ground.” Moore is a member of the Tree Farm system and participates in the Forest Stewardship program. The property was purchased in 1971, and he began managing the forest in 1983 by planting 90 acres of Loblolly pine. The remaining acreage has been kept as naturally regenerating hardwood stands. Moore compared the damage trees suffered this year as compared to the 2000 ice storms. “I think it was worse in 2000 for pines,” said Moore. “This storm was much harder on the hardwoods. I am amazed at how much damage there is. What appeared to be healthy hickory, white oak, red oak has been snapped off halfway up.” He added that maples seem to have been even more affected by the weight of the ice AFC County Forester Chris Wyatt has visited with Moore to assess the damage, but Moore notes there are few options available to salvage the trees damage. “There are a few shaving mills in the area. The trees that are damaged can be taken there, but it’s hardly worth the effort. However, I would like to see them used rather than letting them rot.”

The Arkansas Forestry Commission (AFC) encourages all landowners to have their forested property evaluated by an AFC County Forester, a consulting forester or an industrial forester. Consulting and industry foresters can provide timber marking services. Marking is a vital tool used to ensure that only trees that must come out due to damage are taken, unless others are also marked to make a timber sale worthwhile. Some forest stands have been entirely destroyed, but many may still have enough healthy trees to allow for regeneration. To find the contact information for AFC county offices, visit: www.arkansasforestry.org/districts/district_map.html or call (501) 296-1940. The AFC has an online directory of consulting foresters at: www.arkansasforestry.org/manage/consultingforesters.html, and has created a page designated to Ice Storm Damage information. The following is a sample of the information affected forest landowners should know:

Are funds available to clean up my stand through FEMA?
At this time there is no funding available through FEMA for forest landowners to remove debris from their property. At this time, the counties of Baxter, Benton, Boone, Carroll, Clay, Craighead, Franklin, Fulton, Greene, Independence, Izard, Jackson, Johnson, Lawrence, Madison, Marion, Mississippi, Newton, Searcy, Sharp, Stone, Van Buren and Washington have been declared federal disaster areas. More information about FEMA and its programs can be found at www.fema.gov.

Should I have a salvage-cut operation on my stand?
Trees with greater than 50 percent loss of the live crown or with the bole bent or butt deflected greater than approximately 45 degrees from vertical are considered severely damaged and can be cut for salvage. The most severely damaged stands should be salvaged first, and an emphasis should be placed on pine stands because they are more susceptible to pest outbreaks. Care should be taken to ensure that enough good trees per acre are left after a stand is thinned to prevent overcutting. When only a few trees per acre are damaged, it may not be worth the effort to sell them. Landowners or consulting foresters should have at least two to three bids before arranging a timber sale agreement. The agreement should be signed and have Best Management practices outlined. A sample timber sale agreement can be found online at: www.arkansasforestry.org/pdf/bidform2.pdf.

How can I tell if a tree is going to make it or not?
Pine and hardwood trees with partially destroyed crowns will be put under stress for future growth, and during the summer months they will need to have adequate rainfall to ease the stress. Small hardwood or pine trees (under 15 feet in height) usually straighten after severe bending. Taller severely bent trees should be considered for removal during the next scheduled harvest. An evaluation can be made next year to determine the number of living trees. Hardwood trees have a greater tendency to recover from partially destroyed crowns. However, hardwood trees with broken tops or branches over three inches in diameter should be considered for salvage during the next scheduled harvest. For pine, research has shown that loblolly and shortleaf pine trees bent less than 40 degrees from vertical can completely recover within two years. Trees bent 40 to 60 degrees recovered, but demonstrated varying amounts of crook and sweep. Only trees bent more than 60 degrees did not recover enough to make acceptable growing stock. Trees with broken tops but still having four or more living limbs remaining should survive until the next thinning operation. One of the lateral branches will become the terminal, and in eight to 10 years, the only sign will be a sharp crook in the bole at the point where the break occurred. However, these trees will experience growth losses. If three live limbs or less remain, the tree should be harvested as quickly as practical.

How many “good” trees per acre should I have in my stand before I start over?
For pine, stands less than five years old should have approximately 350 trees or more per acre. As pine trees get older, fewer trees per acre are needed. Pine stands five to 15 years old may need only 150 to 200 trees per acre. Older pine stands could produce saw timber if as little as 100 trees per acre remain. Trees should be well-distributed over the property, and should be undamaged enough to grow until final harvest. Holes created by downed or broken trees may need to be replanted. When inter-planting, remember to back away from the standing trees enough so that seedlings won’t be affected by the shade of the remaining trees. For hardwoods, similar numbers of residual good trees per acre are advisable. However, fewer numbers could be adequate depending on the species and soil conditions. A professional forester should evaluate your hardwood stands to determine what is necessary.

Will insects or disease be a problem to the remaining trees in my stand if left to grow?

Insects

Pine stands — Ips beetles are attracted to slash, damaged and downed trees. Drying of material reduces attraction to these beetles. Unsalvaged, downed trees should be cut from the root system to aid rapid drying. Black Turpentine Beetles (BTB) are also attracted to damaged trees and cut stumps. Close monitoring of pine stands should be conducted several times during the summer. These beetles usually attack only a few trees at a time. www.barkbeetles.org/southernbarkbeetles.cfm
(Ips and BTB)

Hardwood stands — Stressed trees are susceptible to a host of borers that are present in the forests at all times. Close monitoring of stands and removal of heavily attacked trees is recommended.
www.barkbeetles.org (Red Oak Borer)
www.forestpests.org (White Oak Borer, Two Lined Chestnut Borer)

Diseases

Pine stands — should have no problems.
Hardwood stands — Red oak trees stressed by crown breakage may be susceptible to hypoxylon canker, a sapwood decay fungus that causes rapid red oak mortality. A more serious, long-term effect of crown breakage is opening trees to various stem and heart rots, which, while not killing trees, reduces their value over time.
www.forestpests.org (Hypoxylon Canker)

More in-depth information on each of the above agents is available by clicking on the Insects and Diseases of Trees in the South link found on each page; and www.forestryimages.org provides pictures of insects, diseases and damage.

AFC County Foresters are available for consultations at any time.

Are seedlings available to replant my stand?
Yes, the AFC nursery has pine and hardwood seedlings for sale. These seedlings are sold “bare-root” and are between eight to 18 inches in length for pine, and eight to 30 inches in length for hardwoods. Tree planting season in Arkansas normally occurs between December 15 and March 31. A list of seedlings available and pricing is available online at www.arkansasforestry.org/seedlingsales_new.htm, or by contacting your local AFC office. Orders for the next planting season should be placed early (anytime after July 1) as certain species sell out quickly.

Will there be money available to help me replant my stand?
Contact your local Natural Resources Conservation Service (NRCS), Farm Service Agency (FSA) or AFC office. Cost-share programs currently available for reforestation are the Environmental Quality Incentives Program (EQIP) and the Southern Pine Beetle Prevention and Restoration Program (SPBPRP). EQIP is administered through NRCS and provides payments to approved applicants at the rate of approximately 50 percent of total practice costs. Applicants can apply year-round, and applications are ranked annually (usually in the early spring each year.) EQIP can help replant both pine and hardwoods, help with fire lane construction, forest stand improvement and many other practices. SPBPRP is administered by the AFC who receives funding in the spring to disburse to eligible landowners. Payments are reimbursed at the rate of 40 to 75 percent to replant pine only, as well as other management practices on pine stands such as pre-commercial thinning. Applications are available at your local AFC office.

Can I deduct my loss off my taxes?
Contact a tax consultant or accountant that is knowledgeable about timber taxation rules. Forest landowners may be shocked to find out how little can be deducted when timber is destroyed or damaged due to a storm. Deductible loss is the allowable basis (value invested) in the timber minus any insurance or other compensation received. Establishing basis may help you recover reforestation costs in younger plantations destroyed. A consulting forester can help you determine the amount of basis a forest has. If the forest landowner does not have a basis, the reportable loss is zero. If your county has been declared a federal disaster area, forest landowners may elect to apply any casualty loss to the prior year’s tax return. For example,
the loss can be applied to the 2008 tax return, instead of waiting to file the loss on the 2009 return. More information can be found online at: www.arkansasforestry.org/manage/Taxtips.html

Who can I get to determine the volume loss in dollars so I can report it on my taxes?
A consulting forester or other professional forester would need to furnish this information.
Contact: Christina Fowler, (501) 944-2176, christina.fowler@arkansas.gov

The Arkansas Forestry Commission offers its programs to all eligible persons regardless of race, color, national origin, sex, age or disability and is an
Equal Opportunity Employer.