My law practice provides Maine landowners with expert guidance in making decisions that affect their property. Often, such decisions include whether and how to preserve the ecological, scenic, agricultural, and even spiritual integrity of their land. Sometimes a landowner will hire me directly to assist them with estate planning, real estate, farm transfer, charitable giving, or conservation matters. In other situations, a family’s lawyer brings me in to work on particular conservation, historic preservation, and tax issues that relate to their clients’ land holdings. In either case, landowners benefit from my sensitivity to conservation and estate planning issues. Because of my knowledge in these areas, I offer informed, efficient, and affordable advice to landowners.
I help landowners determine a vision for the future of their land. My background in mediation and dispute resolution qualifies me to gather family members together to try to reach consensus on the very difficult decisions that they face.
Is an easement right for you? I walk landowners through various easement options, evaluating the practical and tax effects of selling or donating an easement.
True or False
False. Every conservation easement is different. It is up to the landowner and the land trust to arrive at mutually agreeable terms of the easement. Some conservation easements do require public access, but the majority do not.
False. Again, every conservation easement is unique and reflects the interests of both the landowner and the easement holder. Certain easements extinguish all development rights, while the majority allow for limited development rights, usually one or two reserved building lots. This allows family members to build a house on the property, even though it is protected by the conservation easement. At the same time, a conservation easement probably will not qualify for tax benefits if it allows too many building lots. Also, fewer reserved development rights result in greater tax savings.
False. Again, every conservation easement is unique and reflects the interests of both the landowner and the easement holder. Certain easements extinguish all development rights, while the majority allow for limited development rights, usually one or two reserved building lots. This allows family members to build a house on the property, even though it is protected by the conservation easement. At the same time, a conservation easement probably will not qualify for tax benefits if it allows too many building lots. Also, fewer reserved development rights result in greater tax savings.
False. There are a variety of federal, state and local tax benefits available to donors of a conservation easement. Give me a call if you’d like an overview of these benefits.
False. Donating or selling a conservation easement is not the same thing as donating or selling one’s whole interest in the property. The landowner continues to own the land subject to the easement. He or she has only given up the right to develop the property, in accordance with the terms of the easement.
False. Most conservation easements allow the land to be farmed or harvested for timber. There is a kind of easement called “Forever Wild” that prevents any non-natural use of the property, but these are the exceptions, and are only agreed to when the landowner has no need or wish to continue using the property for those purposes.
False. Most conservation easements are written to provide much flexibility in how the landowner manages his property. The holder of the easement has the right to monitor and enforce the easement, and will object if the landowner seeks to carry out an activity that is prohibited under the easement. However, the holder has no general right to manage the land or tell the landowner how to conduct an activity that is allowed by the easement.
False. This almost never happens. Virtually every conservation easement program is entirely voluntary. It takes a willing landowner to donate or sell an easement. If the land trust and landowner cannot agree on the terms of an easement, then the deal is never completed.
False. Certain property rights advocates like to claim that easements are not what they seem, and that the federal or state government will eventually take over ownership of the property. There is no evidence to support this statement. Although there are few statistics available, of the thousands of conservation easements granted to private land trusts over the last few decades, it is likely that no more than a tiny fraction have been involuntarily transferred to government ownership.
It depends. A conservation easement is a wonderful option for many landowners, allowing them to keep their land in its natural state and to take advantage of substantial tax benefits. At the same time, a conservation easement is not for everyone. Most importantly, if you would like to keep open the option of selling your land for development at some point in the future, an easement would probably not be wise. In this case, consider some other Conservation Stewardship Options instead.
There are two basic kinds of conservation transactions: “whole interests in land” and “conservation easements.” Just like it sounds, whole interests represent the landowner’s entire interest. When a landowner grants his whole interest, he no longer retains any ownership of the property. In contrast, when a landowner donates a conservation easement, he continues to own the property but gives up the right to develop it in certain ways.
A land trust is a nonprofit organization that aims to protect land from development. Land trusts are not government entities, although they often work closely with governments. Land trusts are also not trusts in the legal sense of the word, as in a family trust. For a list of land trusts in your area, visit the Maine Land Trust Network.
A donation occurs when a private landowner gives the property to a land trust or government agency for nothing in return. In some cases, land trusts or governments will have funds available to purchase land or easements. A bargain sale is a hybrid between a donation and a purchase. A bargain sale occurs when a private landowner receives some money in return for the property, but not the fair market value. For example, let’s say you own property worth $100,00 and sell it to a land trust for $60,000. You have made a bargain sale, and may claim a deduction for the value of the property, $40,000, that was donated.
Most people grant a conservation easement while they are alive in order to benefit from the substantial income tax and property tax savings. However, some individuals are not in a position to make a gift during their lifetime. Instead, they may choose to add a codicil to their will in which they make a bequest. By doing so, they can still benefit from significant estate tax savings.
How does one go about donating or selling a conservation easement? There is no one right way to go about it. However, the following outline shows the most common steps to the process. Conveying an easement may take anywhere from a few months to a couple years, depending on a variety of factors. The landowner usually must pay for basic legal expenses, and appraisal, and in many cases is asked to make a stewardship donation to ensure that the land remains protected forever. Although the following outline discusses easements, a similar process typically applies to donations of whole interests in land as well.
The first step for any landowner is to engage in some planning and information gathering. A good place to start is your local land trust, which should have information to send you on different options for selling or donating a conservation easement.
Often, many different family members will have an interest in the property, and one or more family meetings might be useful. Some families have found it useful to hire the services of a mediator or a facilitator to help the group reach a decision. It is difficult to convey an easement if everyone does not agree on how to proceed.
Another part of the planning process may involve meeting with an adviser, such as an attorney who has experience in conservation transactions. This adviser can help you figure out how donating or selling an easement fits with your overall estate planning, financial planning, or retirement goals. Although it is recommended that landowners meet with an attorney early in the process, so as to more fully understand his or her options, some choose to hire an attorney near the end of the deal, to perform a review of the easement. Either way, it is useful and usually less expensive to hire someone who is experienced with easements.
The heart of the process involves negotiating the specific terms of the conservation easement. Although the land trust or government agency will usually start with a model easement, this document must be tailored to meet the particular goals for you and the property. Easements include a variety of provisions, and most of these are negotiable. Among the key issues to be worked out are whether any building lots will be reserved, what uses of the land will be permitted or prohibited, and whether to allow public access to the property. In addition, in certain cases there are money issues to be discussed, as the land trust or government agency may have funds available to acquire the easement.
If you will be seeking a deduction for the donation of an easement, you will need to commission an appraisal of the value of the easement. The land trust should be able to refer you to appraisers who have experience in conservation transactions. It is usually not necessary to commission a survey of the property in order to donate a conservation easement. The land trust or government agency that will hold the easement will be doing most of the work in the period leading up to the signing. For instance, a land trust representative will tour your property in order to prepare what is called a Baseline Data, which will serve as a benchmark to facilitate the trust’s monitoring efforts.
As with any real estate transaction, there comes a time for all of the parties to sit down at a closing. As a general rule, the deal becomes official at the moment you sign the easement.
Just because you have signed your easement does not mean that you automatically receive tax benefits. You must inform the proper taxing authorities of your donation. If the easement meets basic requirements, you should be able to claim a federal income tax deduction for your donation. To do so, you must file a special form with your income tax return (Form 8283). The amount of your deduction will be determined by the appraisal of the easement that you commissioned in Step 3. In addition, depending on where you live, you might be eligible to receive state and local tax savings as well. In Maine, you should ask your local tax assessor for an application to enroll in the Farm and Open Space Tax Program, which allows a reduction in your property taxes.
As the landowner, you will continue to remain in touch with the land trust after the easement is completed. Most importantly, someone from the land trust will make an annual monitoring visit to make sure that the terms of the easement are being followed.