The impacts of federal-state death and gift taxes on private nonindustrial forest owners

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Virginia Tech

The families of forest owners face potentially serious death tax problems. Increasing timberland values and demand for alternative land uses creates higher forest land and timber valuations. When coupled with federal and state death taxes, the estates of timber owners may experience a heavy financial burden.

Many states have recently changed or updated their death tax structures following the federal tax reforms. This study re-examines and details the death tax provisions in each of the 50 states. Forest management plans are integrated into the estate planning process to measure the combined federal and state death tax burden’s impact on forest continuity and sustainability.

Emphasis was placed on the interaction of the federal estate and gift tax provisions with state death taxes. Different planning techniques are illustrated with hypothetical examples in which the death tax burden in selected states is calculated. Limited and basic planning provisions, which include intestate succession, all to my spouse wills, and full use of the unified transfer credit and marital deduction, are compared and contrasted against more sophisticated planning techniques. These advanced techniques include gifting programs, special use valuation, installment payments, minority discounts, conservation easement donations and charitable remainder trusts.

estate, tax, forest, state, gift, management