Sept.3, 1980
Dear Hendrick Family*:
For the past several years we have, for one reason or other, considered incorporation of the Tree Farm. Now it seems imperative if it, upon my death, is to remain an "heirloom" without there being an inheritance tax of $100,000 to $200,000.
With incorporation, and me exchanging ownership of the TF property for corporation stock, the TF would not be in my estate. The stock which I receive can, without tax, be given to members (now 20) of the family in yearly amounts not exceeding $3000 in value each. So if I live a few years I can dispose of my "estate" stock to the point that inheritance tax is eliminated.
I am enlcosing a copy of the application which I now intend to file. It is simpler at the start to have me as the sole incorporator, director, officer, etc. After incorporation a more adequate set-up can be provided through the By-laws, which also permits future flexibility.
It seems most practical to incorporate with 1000 shares with no par value as at the start the corporation will have no assets. The state sets a minimum value of $10 per share for such stock as far as the fees are concerned. A total charge of $30. We do however need a small amount of capital at the start so I am suggesting that each family member "subscribe" for 5 shares prior to incorporation at $10 per share, total $50 each. No additional stock will be available at this price. After this corporation has secured the TF as an asset the stock will probably be considered as having a value of $200 up per share instead of $10.
Time is now highly important so that all red tape can be taken care of, state, printing of stock forms, organization etc. in time that I can make my first gifts during the income tax year of 1980, otherwise lose a year. So be as prompt as possible with your subscriptions. The money will go into the bank in the name of the Hendrick Tree Farm to be capital and available for initial expenses. The subscription will indicate your desire to own a bit of the TF and share in its operation and development. In the case of minor children, business will be handled for them by the parent that is the "blood" descendent until they are 18.
Now is the time for you to start owning a hunk of the TF. I am preparing to give it away. Most of you have seen it recently. Do not think of it as an income property. It has been my "yacht," my plaything for over 35 years. A little more that paid its way. What more can you ask for such a wonderful plaything? Probably no big income for about 50 years. Then a period of 10 years or more that at present prices could have an income of $500,000 per year. Its appraised value today would easily be $225,000. I want you to have it.
R.W. Hendrick
*HENDRICK FAMILY: direct descendant of Viola G. and Roy W. Hendrick or legal spouse of a descendant.