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MASSEY, HIGGINBOTHAM, VISE, AND PHILLIPS, P.A.

Estate Planning for Ownership Interests in Hunting Clubs

by Mike Massey on December 13, 2013

There is very little in life more enjoyable than the time we spend with our family and friends at our hunting camps.  Protect that special part of your life by thinking ahead and planning both within your hunting clubs and in your own estate planning.

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Tips on How to Pass Your Equity Hunting Membership to Your Heirs

For 90% of the rest of the hunters out there, hunting is a family event.  We hunt with our fathers and uncles and our children.  We bring our kids with us to hunting camp and they become just as big a part of the camp as Dad, who is the “legal member” of the club.  Most hunting clubs provide that the immediate family of a member has the right to hunt as if they themselves were the members.  And Dad, the member, may still be bringing his grownup boys to camp several times a year as guests just like he’s been doing since they were kids.

But what happens when Dad dies? Those sons may be very disappointed to find out that when the old man passes away, they no longer have a place to hunt, that Dad’s ownership interest did not pass through his Will due to provisions in the club’s operating agreement, or shareholder agreement in the event of a corporation, that permits the hunting club to repurchase Dad’s shares upon death, maybe at his original cost.

Carefully review your limited liability company operating agreements and corporate shareholder agreements, especially provisions dealing with transfers upon death.

PondOwnership of hunting club interests can be tricky when it comes to estate planning.  A typical limited liability company (“LLC”) operating agreement will have provisions that specify when a member dies that the LLC itself, or the LLC’s members, have the right to repurchase the LLC equity interest that belonged to the deceased member.  Such a provision makes sense in a typical “business” setting, because nobody signed up in a given business to be business partners with the wife of their partner.

We have worked with hunting clubs who have considered this issue. In some instances, that’s exactly the way they want it, that the club will make the decision whether to extend an offer to a son of a departed member.  Other clubs permit their members to specify a  legatee or beneficiary of an ownership interest in a cherished hunting club ownership interest. In some instances, the club may dictate approval of the legatee on the front end or provide for some approval process in case changes need to be made by the member.

You may need to address these issues at your annual club meetings or around the campfires this hunting season before the situation arises, and it eventually will.

If your club hasn’t considered these issues, it’s time to bring the topic up. Not having a provision to deal with transfers upon death may cause unnecessary conflict or loss of rights in the future. If you address it up front, everyone knows what is and is not allowed.

Revisit your Wills and Trust agreements to ensure you have dealt with how to bequeath your ownership/membership in your hunting club. 

Not only is it important for the hunt club to address issues of transfers upon death, but it is also important for you to specifically address how to bequeath your ownership/membership in a hunt club in your Will and Trust. Typical Wills might give “everything to my children in equal shares.”  That won’t work when it comes to hunting club interests.  Normally, only one person may inherit such an interest.

First Right of Refusal: Consider what would happen to your club if the landowner/lessor of your hunting club property passes away. 

Many hunting clubs have literally gone away when the property owner who leased to them their club property dies, and the kids who inherit his property don’t share the same bond with the hunting club’s members.  It is always a good idea to try to negotiate rights of first refusal to purchase property if it ever goes on the market, or to provide long term options to release if possible.

Protect the Hunting Club with considerations for pricing for ownership interests

Recreational land tends to appreciate and these interests become investment opportunities as well.  But that also creates conflict with those who would like to sell property and those who never want to cut the first tree because they don’t want to impact the hunting.

Some clubs put into place provisions that tend to devalue the ownership interests (cost basis repurchases for instance instead of fair market value appraisals) because they do not want to create incentives for members to sell the hunting camp property and timber.  In those instances, however, it is even more important to find a way to keep such interests in the family.  Otherwise, the surviving members stand to gain a windfall if they can repurchase ownership interests from departed members at artificially depressed prices.  A more fair solution may be to allow that club ownership interest to remain in the departed member’s family and at least benefit from the increasing value of the property.

In the South, there are hunting clubs that lease property and there are clubs which own huge tracts of property, some of which have been around for generations.  Ownership can be very exclusive and hard to come by.  We once helped an estate planning client who specifically addressed their place in line for Green Bay Packers season tickets, because in Wisconsin you can literally bequeath your “place in line” to your descendants.  That place in line is that valuable.  In the same way, hunting club interests demand special attention in your estate planning, not a cookie cutter approach.

Contact me for estate planning services for hunt club members.

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