Wisconsin: Hard Work Means Estate Tax Threat
Tom and
Leslyn Jacobs never dreamed they would have to worry about the estate tax. But
by working hard and living frugally for decades, they’ve managed to acquire
enough Wisconsin land that this tax is now a major concern. Their more than 800
acres of land includes stands of cedar, hardwoods, and towering white pines;
along with ponds, a pristine spring, a beautiful creek, and a 6-acre bluestem
prairie. Both bears and timber wolves visit their property.
The couple hopes to keep the land intact, as a source of wood for the state’s timber and paper industries, and a supplier of clean water, prime wildlife habitat, and hunting grounds. But the Jacobs worry that the estate tax may make that impossible.
Land prices have increased since Tom and Leslyn bought much of their property. Their holdings are now worth millions of dollars—enough to potentially trigger a huge tax bill when their children inherit the land. “I think about the estate tax all the time,” says Tom. If Congress cuts the current estate tax exclusion level from $5 million to $1 million, “I’d ask myself, why would I ever have done this,” he says. “I might as well just sell the land and buy Corvettes or take trips to Europe.”
But that’s not the Jacobs’ nature. Tom grew up working and hunting in the forest. He earned a degree in forestry and married another forester. “All we had back then were school loans, my pickup truck with 160,000 miles and Leslyn’s old ‘72 Chevy,” Tom recalls. Buying land seemed like a distant dream. But in 1984, a banker who was a buddy of Tom’s agreed to loan the Jacobs $40,000, and they bought their first 80-acre property.
Through timber sales and years of hard work, the Jacobs paid off the loan. Then another woodland property came on the market, and the Jacobs took out another loan and got 160 more acres. The pattern repeated, and the Jacobs’ holdings grew. Their last purchase was two years ago, from a family Tom knew. The parents passed away and the children had to sell the property to pay the estate taxes—even though they wanted to keep it.
The Jacobs, certified Tree Farmers, have taken care of their holdings. They’ve built trails and access roads, planted thousands of trees, cut timber to improve the health and diversity of the forests and built a cabin with their own wood. “We’re working all the time, but we enjoy what we are doing,” he says.
The majority of the family’s wealth is in their forestlands, so they don’t have the financial resources to cover a major tax bill. Tom and Leslyn are already thinking about what land they might have to sell so their son and daughter can pay the estate taxes. But they would much rather keep their land intact. “Wisconsin has some of the greatest well-managed forests in the country,” Tom says. “We need to keep them that way.”
John Carey is a writer and editor living in Arlington, Virginia.
