Conservation Easements as an Estate Planning Option

 Posted on September 05,2013 in Estate Planning

A conservation easement is a legal agreement between a property owner and a conservation land trust or a government agency that specifies certain restrictions about the use or development of that land. Landowners are still permitted to use the land and are also allowed to sell or bequeath to their heirs. In addition to protecting wildlife, conservation easements can be a valuable estate planning option as well.

Conservation easements are flexible documents and can be drafted to satisfy both the property owner's needs and the wildlife protection. And the easements are permanent, meaning they stay in place even when/if the land is sold.

According to the Land Trust Alliance, there are many tax benefits, including real estate taxes and income tax deductions, associated with conservation easements.

• Property taxes - The value of the easement is calculated by taking the difference between the present value of the property and what the value of the land would be if developed. This can reduce the value of the property by 30 to 90 percent, depending on the location. This reduction in the value of the property can mean a significant savings in property taxes.
• Estate taxes - Conservation easements help lower the cost of estate taxes and can help make the difference to the heirs, who in some cases, would otherwise have to sell the inherited property just to pay off estate taxes.
• Income taxes - The land donation creates a charitable tax deduction, equal to the value of the conservation easement, on the landowner's federal and state income tax returns.

Land owners also have the option of drawing up different easements for different portions of the property, allowing different rights and restrictions for certain areas of the land being donated. For example, a land owner could donate part of the land for a wilderness conservation easement and another part of the land could be donated as an agricultural conservation easement, (also called an agricultural preservation restriction or APR), which would allow the land owner to continue to use the property as farmland.

The conservation easement process, although beneficial, can also be a complicated process. If you are considering donating land, you need to consult with an experienced DuPage County estate planning attorney to protect your interests.