09-20-1980
Dear Hendrick Family:
The response to my offer of preincorporation stock in Hendrick Tree Farm, Ltd. has been a disappointment to me. Only responses covering 7 out of a possible 20 participants. Each 5 shares will upon completion of incorporation and my exchange of ownership of the TF for stock in Hendrick TF, Ltd. will bring the value of the 5 shares to a value of over $1000 based on current appraised value of similar lands. The purpose of the set up is to make it possible to bring the value of my estate, before I die, to a non-taxable level. I can give each of you a gift valued at $3000 yearly without tax to you or me. This is 15 shares based on estimated current value after incorporation. To 20 participants, 300 shares per year. The incorporation calls for only 1000 shares. But the plan falls down if only a few participate. I am holding the present funds in "escrow" to be returned if the project of incorporation is not completed in which case it will be refunded. If completed it will be used to cover the incorporation expenses, any remained to be capital.
Alternatives. At present my will designates my 3 children as sole heir. My estate including the TF, the MP, and other item might total at todays values, $300,000. Possible taxes as much as $100,000. A problem for 3 children to handle. If they can't, US and state take over. At a forced liquidation the sale value might easily be halved but with the taxes in full being taken out. Probably the 3 heirs don't need it too badly. However I think some would like to hold on to the TF.
Another alternative. For me to sell the TF. I am told that I would have no difficulty, within a year, selling the TF for more than $200,000; the MP for $60,000 to $100,000 depending on its degree of completion. But beyond what I could spend in "riotuous living" I would not reduce the estate and the income tax would take care of that.
One more which I will let you figure out. I hope it wouldn't be your choice. I think you will see why I have reached the present action.
The tax laws permit the individual $3000 value gifts once each tax year. At any time each of us faces the probability of death, sooner or later. We all like to think, later. But as we grow older, the sooner aspect becomes more imminent. Hence to make my plan more certain, the sooner it is started the more sure of fulfillment. I haven't filed for incorporation yet, waiting your support. Processing will take time. Then time to make the transfer of TF ownership, title insurance, etc. Can we get this done before the end of the year 1980 or do we lose a year?
Let's go. If there are any questions, phone. (You don't very often get the chance to buy a property with a value of over $1000 for $50, for you or your children.)
R.W. Hendrick