Estate-Donation of forest

I - What is an inheritance or a gift of forest estate?
II - How to execute a forest inheritance or gift?
III - Why execute a forest inheritance or gift?
IV - Why Planfor ?

I - What is an inheritance or a gift of forest estate?

The estate is transferred between people, either when they are still alive or after someone’s death. In the first case it is called an inter vivos gift, in the second case, it is called inheritance.
When a person dies, the transfer of the estate is done according to the inheritance rules or the testamentary dispositions.

For a gift between living people, there are three possibilities:

• The simple gift (transfer of goods to one particular person).
• The intervivos shared gift (parents share their goods between all their children).
• Gift with a reservation of usufruct (the giver keeps the usufruct of his goods and give only bare ownership of land to his children).

When proceeding with a gift, a forestry group (legal status of a civil company) can be created and one person, or more, is responsible for its management. This group is then integrated into the family forest estate as a whole, and not plots by plots. The advantage of this is the fairness between heirs. Gathering the whole forest estate avoids differences of value between the plots. The heirs no longer own plots, but shares. The value of these shares is determined from the entire estate estimation.

After an inheritance or a gift where there are several heirs, the estate is generally parcelled out or managed in joint ownership. In this case, all the members must agree unanimously to undertake any action on the estate. On the contrary, with a forestry group, the managers can take their decisions alone.
However, estates may be managed alone. When there is only one donee or if the original forest has been shared between heirs, only one person decides what interventions can be done on the estate.

Finally, many other legal entities can be found in the forestry sector after an inheritance or a gift, with their own management rules (Civil Real estate Company, Rural Land tenure Organisation, etc.).

The following goods can be subject to an inheritance or a gift:

• Woods and forests (including heath land, forest service road, firebreak zone, pond, hunting cabin).
• For undivided forest, parts of the joint ownership.
• The bare ownership of a forest estate reserved with usufruct.
• Shares of a forestry organisation (when owned for more than 2 years and acquired for valuable consideration), shares of a forestry savings company or of a rural land tenure organisation owning forest estates.
• Money deposited on a Forest Investment and Insurance Account (French: CIFA – compte d’investissement forestier et d’assurance).

II - How to execute a forest inheritance or gift?

An inheritance or a gift must be done by a notary.

But, prior to that, an ESTIMATION of the estate is necessary (lien vers la fiche estimation de propriété) preferably done by a forest Professional (PFM /GFP (lien vers la fiche GFP), mainly forest experts, forest cooperatives).

For this estimation, an updated MAP must be done for all the forest plots, as well as a forest mensuration inventory, to evaluate the technical value of the given forest. This value is determined by the production capacity of the soils and the varieties of trees, according to unbiased and measurable criterions: circumference and height measurements, calculation of on-site density and soil soundings. The estimated value results from the estimation of the soil and the forest surface area.

In any case, this value does not represent the market value. The market value, even though it sometimes comes from the technical value, presents a dramatic difference which can be circumstantial, structural, or financial. These elements are independent from the forest production. The market value does not consider a convenient value either.

The estimation of the technical value is a necessary base for the notary as well as for the givers and heirs, to execute an inheritance or a gift.

III - Why execute a forest inheritance or gift?

The first objective is to transfer forestry goods in the best financial conditions for the family.

The forestry production is quite particular in that the capital is immobile, the standing timber waiting for the final cutting. In economy, it is a unique situation due to the potential risks that might occur in the meantime (storm, fire, sanitary risk).

The French government took this into account when he created a tax system adapted for the inheritance or intervivos gift of forest plots. This tax system results from the MONICHON amendment.

The transfer of estate is only taxed on the ‘soil’ capital, which value is a flat rate representing ¼ of the value of the whole forest estate, the other ¾ representing the ‘standing timber’. Thus, the taxable base is reduced by ¾ (Bulletin officiel des Finances Publiques-Impôts : BOI-ENR-DMTG-10-20-30-10-20190502).

The application of the Monichon amendment is subject to the following conditions:

• The notarial deed which certifies the declaration of inheritance or gift must be reinforced by a specific administrative certificate delivered by the Departmental Territory and Sea Directorate (French: Direction Départementale des Territoires (et de la Mer)).
• The heirs, donees or beneficiaries must make specific commitments (for themselves and their successors).
• A review of the implementation of the sustainable management document must be done every 10 years.

1) Delivery of the certificate

What is this certificate?
The certificate delivered by the Departmental Territory and Sea Directorate confirms that the concerned woods or forest are subject to a sustainable management, guaranteed by a Simple Management Plan (French: Plan Simple de Gestion - PSG), a Code of Good Practice for Sylviculture (French: Code de Bonne Pratique Sylvicole - CBPS) or Classic Management Regulations (French: Règlement Type de Gestion - RTG).

How to obtain this certificate?
The heirs must send the application for the certificate to the Departmental Territory and Sea Directorate of the department where the forest estate is situated. When the estate has plots in several departments, the application must be sent to the DTSD where the largest plot is situated.

The application for the certificate is composed of the following documents:

• A map of the plots’ situations (Extract of IGN -National Geographical Institute- map in 1/25.000th).
• The cadastral maps of the plots (scale of edition in 1/5000th).
• Up to date extract of cadastral matrix.
• The designation of the estate (B1 Form).
• A notice of information and a commitment (A4 Form).
• An additional commitment for the reforestation of the plots which have suffered from the 2009 Windstorm (if need be).
• Certification of sustainable management guarantee.

After a (technical) visit done by an administration officer, the director of the Departmental Territory and Sea Directorate delivers the certificate confirming that the woods and forests are adequately managed. This certificate is valid for a period of six months.

2) Commitments to make

The heirs, donees and beneficiaries must make, for themselves and for their successors, the commitment to guarantee, for the concerned woods and forests and for a period of thirty years, a sustainable management with a Simple Management Plan (SMP), a Code of Good Practice for Sylviculture (CGPS) or Classic Management Regulations (CMR).
If there is no such guarantee at the time of the transfer, they commit to present one within three years (starting from the date of the transfer), and to implement it until the end of the thirty-year period. The beneficiaries of the certificate will then commit to implement the normal exploitation system to the woods and forests, until presenting one of the sustainable management guarantees.

3) Review of the implementation of the sustainable management document

The beneficiaries of this system must set up a review of the implementation of the management document, and so every 10 years (starting from the day the declaration of inheritance or the act of giving is signed). This review must be sent to the Departmental Territory and Sea Directorate within six months, after the end of the ten-year period. This formality came into effect on the 22nd May 2010.

This review contains the following information:

• The identity and address of the beneficiary of the exemption (…).
• The list of the cadastral plots concerned by the exemption, indication of what they contain, numbers of sections, and location.
• The list of works and cuttings scheduled in the sustainable management document and implemented during this same period.
• The list of works and cuttings done during the period mentioned above (…) (Extrait BOI-ENR-DMTG-10-20-30-10-20190502)

Fiscal sanctions in case of no respect of the commitment or for transgression
The partial fiscal exemption is subject to the fact that the administration (following the article 1929 of the General Tax Code) can affiliate a legal mortgage on all or on part of the good concerned by the transfer, thus guaranteeing the payment of additional or complementary rights, eventually required in case of a transgression.

When the failure of the beneficiary is proven (no respect of the commitment for a sustainable management), the favourable fiscal system is terminated. That is to say, the rights saved with this system are then required for payment, to which are added supplementary rights of 30%, 20% or 10% whether the failure is recorded before the end of the tenth, twentieth or thirtieth year. The termination can be total or partial. In this last case, the rights are required only for the concerned area.

An interest for delay is also required for payment. However, it is deducted from the monthly common right for the first five late annuities. For the next annuities, it is respectively reduced by a fifth, a quarter or a third, whether the failure is recorded before the end of the tenth, twentieth or thirtieth year following the transfer. (CGI, art. 1727, IV-7°).

Exceptions for the reconsideration of the favourable fiscal system
The beneficiary of the favourable fiscal system is not reconsidered in the following situations:

• Expropriation ;
• Transfer of woods and forest to the State or to local communities and institutions.

IV - Why Planfor ?

• PLANFOR is supported by a structured team who helps you with inheritance or/and gift procedures: Professional Forest Managers, technicians, mapmaker-geographers, an administrative manager, forestry expert, accountants.
• PLANFOR relies on real information to estimate your forest estate: dendrometric measurements, soil analysis, market price of timber.
• PLANFOR works with a lasting, upgradeable and shared GIS (Geographical Information System), which permanently produces up-to-date digital maps. This database recalls the administrative commitments, especially the due dates linked to the MONICHON amendment. This map database is also accessible online: WEBMAPPING (unlimited, subscription-free access).
• PLANFOR is equipped with DRONES to improve the technical diagnosis of the plots, even the less accessible ones.
• PLANFOR regularly works with different notaries for the INHERITANCE and GIFT procedures, even for the SALES of forest estates.
• PLANFOR has the experience of sending applications for the MONICHON CERTIFICATE, on behalf of the notaries or/and the heirs to the DTSD of the concerned departments.
• PLANFOR sets up the management documents in relation with the commitments taken after an INHERITANCE – GIFT.

Sources :

• Forêt.info
• Forêt Privée Française
• Les Nouveaux propriétaires Forestiers.com