Many of us take pride in where we live or own land, and often worry about changes from potential development. Fortunately, conservation easements enable landowners and heirs to preserve land and water resources for a public or agricultural benefit even while retaining ownership of the property. They not only preserve habitat, farmlands, scenery and recreation, but they can also provide tax benefits to the landowner and the estate following death.
While the assistance of legal counsel is needed, the proposition is relatively simple. A landowner contractually enters into an easement agreement with a government entity or a community-based, nonprofit land trust, such as Tall Pines Conservancy, to protect the parcel into perpetuity from development. The land is still owned by the individual and can be passed down to the next generation or sold, as with any asset, but the easement will remain with the land after that transfer or sale.
Such easements can provide landowners with an income tax deduction and potentially reduce property taxes for both current and future owners. In some cases, it might keep the value of an estate below the federal estate tax exemption threshold of $5.43 million because a conservation easement reduces the economic value of the land by restricting commercial and residential development on the property.
A qualified appraiser will establish in advance how the easement will affect the property’s worth – understanding, of course, that public and environmental benefits are not factored in. For example, farmland may be more valuable as a residential subdivision. But if the easement agreement stipulates that it remain in responsible agricultural use – e.g., farmed with sustainable best practices that protect the watershed from harmful runoff – the appraised value will be limited as well. Property that includes wetlands, forests or other natural features can be similarly valued.
Your first step to investigate conservation easements is to talk to a land conservancy, then consult with legal and financial advisors and your family when appropriate. Preserving a natural resource may not only provide a substantial economic benefit, but also leaves a lasting environmental legacy.
–Nancy Bonniwell is an estate planning and business law attorney at Weiss Berzowski LLP and serves on the board of directors at Tall Pines Conservancy. Susan Buchanan is executive director of Tall Pines Conservancy.