Walnut "Estate" To Benefit Heirs

Walnut "Estate" To Benefit Heirs AG WORLD 28-2-23 Some people give blue chip stocks to their grandchildren. Kenneth Lloyd plans to give something that could be very valuable, too, but it has nothing to do with chips. He's going to give them whole logs. At nearly 84 years, Lloyd knows he won't harvest any of the more than 3,000 black walnut trees he has planted on 51 acres over the past 14 years. He has, however, found a way to pass them on to his nine grandchildren. After selling off some nearby cropland, he set up a limited liability corporation (LLC) for the wooded acres. He then issued shares of stock in it to his grandchildren. While the stock has limited value today, in another 30 to 40 years, it should be worth millions. "I figured if I put the same money into stocks appreciating at 10 percent, it would take at least 60 years to equal the return on growing hardwood trees," says Lloyd. In the meantime, he has put marginal farmland to good use. The land is a valley floor with several creeks that created little chunks of land too small to be worthwhile farming, but perfect for walnut trees. Lloyd planted special highly productive tree stock developed by Purdue University. Not only do the trees grow faster, but their nuts will have a higher value, too. He recommends using tree tubes to protect the young trees and controlling competitive weeds and brush. If he were planting more trees, Lloyd says he would mulch and even drip irrigate young trees for maximum growth. Even without mulching and irrigation, he estimates his trees will increase in value by about $10 per year for the first 20 years. By 20 to 30 years of age, each tree is expected to increase in value by $50 to $70 per year, depending on growth. Best of all, there is very little maintenance to be done with them after they reach 20 years in age. Lloyd says most labor (pruning) usually takes place in years 10-12. Because he planted them in rows, mowing is easy, as will be mechanized nut harvest. Trimming on older trees can now be done from a pickup bed. Lloyd points out that numerous government programs help cover the cost of tree planting, and some involve annual subsidy payments for a number of years. There are also a number of tax advantages to tree plantings, he adds, including annual tax credits and not being taxed on the value of the "growing crop". Lloyd set his LLC up with several provisions to protect and maintain the timber. Stock can only be held by his direct blood descendents. If a grandchild has no, the stock is redistributed to other shareholders upon his/her death. Stock cannot be used as collateral in a loan, nor can a divorce action or a bankruptcy action take it. Before any land or timber can be sold, 70 percent of stockholders have to agree with the action. "I have seen what happens to family with inheritances and it can get to be a real nightmare," says Lloyd. "The land I sold covered the cost of setting up the LLC with the rest being invested to cover yearly maintenance costs." Contact: FARM SHOW Followup, Kenneth Lloyd, P.O. Box 31, Leesville, Ohio 44639 (ph 740 269-5645).

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