Timber and bereavement: Caution and advice may be priceless

Posted on October 24, 2016 by Errol Castens under Money
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timber-photoYou won’t find me giving business advice very often.

But if you own forest land, there’s one particular bit of advice that’s worth a few minutes of your time – advice that my family (almost) learned the hard way.

It isn’t uncommon for folks who own timber to get a knock on their door a couple of weeks after saying their last goodbyes to a loved one.

Typically, a new widow is approached by a person who has looked up the land in public records and eyeballed the trees.

“Mrs. Jones? I’m John Q. Buyer, and I couldn’t help noticing the timber you have on Such-and-Such Road,” says the man standing on the porch.

“I was wondering if you might want to sell it.”

Mrs. Jones may know a great deal about timber management and marketing. But it’s possible also she knows little about the value of what she owns or how to turn it into a liquid asset. Let’s imagine that second scenario.

Mrs. Jones and Mr. Buyer sit on the porch and chat about how the community has changed in recent years. He says kind words about her loss, and then he nudges the conversation back to the timber, complimenting Mrs. Jones on how skillfully her husband had managed it.

Before long, Mr. Buyer names a purchase price. Mrs. Jones ponders how such an infusion of cash would ease concerns triggered by her husband’s death: Maybe he died suddenly and left her uninformed about their finances; perhaps his final illness was long and costly. Either way, the prospect of a substantial check from this kind man on her front porch seems a Godsend.

Mr. Buyer produces a contract promising to pay the stated amount after the timber is cut. She signs, gratefully.

A few days later, Mrs. Jones mentions her good fortune to a friend, Mrs. Smith.

Mrs. Smith notes she had a similar offer after her husband died. It sounded legitimate, but she called a registered forester to ask his opinion.

Mrs. Smith’s forester suggested a competitive bid process. For a six-percent commission of the proceeds, he walked the land and estimated how much timber of each marketable kind was on the property, then contacted several timber buyers, who each did their own survey. The highest bid came in about four times as much as Mrs. Smith was first offered, she was paid in full before the first tree was cut, and the forester oversaw the harvest so the remaining trees were protected.

“I came so close to giving away three-quarters of the value of what my husband ha d worked on for decades,” Mrs. Smith tells Mrs. Jones.

Mrs. Jones feels a wave of nausea.

It may well be that Mr. Buyer offered a reasonable price for Mrs. Jones’ timber, but she’ll never know for sure. The forester’s commission would have assured a competitive bid process with the benefit of his/her knowledge of both the timber and the markets. (Sometimes, if there’s not an immediate need for a financial boost, waiting for a significant market change could make a stand of timber worth much more.)

Such scenarios are real. Twice, close relatives of mine received unsolicited offers for small tracts of standing timber. In both cases, other bids were sought, and the eventual sale prices were drastically higher. In both cases, the difference would have meant financial hardship for the family member.

Many timber buyers are honest and wouldn’t think of taking advantage of anyone, much less someone who just lost a spouse. Nevertheless, bidding against others presents a truer picture of your timber’s actual worth. And a sale process overseen by a registered forester can protect against the occasional bad apples who may try to enrich themselves with widows’ money.

To find a Mississippi registered forester, visit www.cfr.msstate.edu/borf.

Errol Castens

Aftercare coordinator, Coleman Funeral Home of Oxford/Olive Branch

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