CONSERVATION EASEMENTS AND THE TAOS LAND TRUST A conservation easement is a voluntary negotiated legal agreement between a landowner and the Taos Land Trust. Conservation easements protect the natural characteristics of the land by restricting its future development. An easement is a flexible management tool specifically tailored to each landowner’s situation. ADVANTAGES OF CONSERVATION EASEMENTS Conservation easements offer several advantages: • • They leave the property in the ownership of the landowner, who may continue to live on it, sell it, or pass it on to heirs. They can significantly lower estate taxes – sometimes making the difference between heirs being able to keep land in the family and their needing to sell it. Conservation easements can also provide the landowner with income tax benefits. They are flexible and can be written to meet the particular needs of the landowner while protecting the property’s resources. They are permanent, remaining in force when the land changes hands. The Land Trust ensures the restrictions are followed.
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HOW CONSERVATION EASEMENTS WORK When a landowner grants a conservation easement to the Land Trust, he/she permanently gives up some rights as owner in order to protect conservation resources. For example, the landowner might decide to give up the right to build additional residences while retaining the right to grow crops or raise cattle. Future owners will also be bound by the easement’s terms. Conservation easements can be used to protect a variety of land, including resources such as farms and ranches, scenic open spaces, forests, natural habitat for wildlife, or historic sites. Conservation easements are written up in a legal agreement that describes the conservation objectives, the rights and restrictions on the owner’s use of the property and states the responsibilities of the landowner and of the Taos Land Trust for protecting the easement. EASEMENTS ARE FLEXIBLE The landowner and the Taos Land Trust tailor the easement terms to protect the land’s conservation values and meet the financial and personal needs of the landowner. Each easement is a unique document. A conservation easement can serve as a flexible tool in a family’s financial planning. The easement may apply to just a portion of the property, leaving the option of development open on the remaining part as long as the development would not harm the conservation resources of the easement. EASEMENTS ARE ENFORCED BY THE TAOS LAND TRUST The Taos Land Trust, as recipient of the easement, takes on the permanent responsibility for enforcing the terms of the agreement. The Land Trust will monitor the easement, inspecting the land regularly and talking with the
landowner about future plans. If a future owner or someone else violates the easement – for example, by constructing a building not allowed in the terms of the agreement – the Land Trust will take whatever action is required to correct the situation. QUALIFYING FOR A FEDERAL INCOME TAX DEDUCTION Granting to the Taos Land Trust in perpetuity a conservation easement that meets certain requirements of the federal tax code can qualify as a tax-deductible gift. (Remember that the land itself is not given, only the easement on the land.) The easement must be granted exclusively for conservation purposes defined in the tax code. In essence, the income tax deduction is reserved for the protection of conservation resources that truly provide significant public benefit. However, an easement does not have to allow public access or preclude all future development in order to qualify for a charitable deduction. CONSERVATION EASEMENTS CAN SIGNIFICANTLY REDUCE ESTATE TAXES It is a fact of modern life that simply passing land on from one generation to the next may prove impossible for some families. A landowner dies, leaving land to his/her children. The children find that the land has appreciated dramatically since it was purchased or inherited. Because of its development potential, the land’s fair market value may be in the millions of dollars. The federal estate tax is based on the fair market value, not on the land’s original purchase price or its current use. Selling all of part of the land for development often is the only way heirs can pay the estate tax. If the landowner places an easement on the land restricting future development, its fair market value will, in most cases, be reduced. When the landowner dies, estate taxes – now based on the value of the land with its development potential restricted – will be reduced. DONATING A CONSERVATION EASEMENT BY WILL A conservation easement can also be donated by will. The landowner won’t receive income tax benefits that might have been possible if the easement was granted during his/her lifetime, but estate taxes will be reduced just as they would with a lifetime easement grant. Like an easement granted during life, an easement donated by will should be negotiated between the landowner and the Taos Land Trust to be sure it meets the conservation objectives of both. Writing a conservation easement into a will can also serve as a good interim measure. It can be amended in response to changed situations in the family or in finances. On the other hand, if something happens to the landowner, he/she will have at least protected the land and lowered the estate taxes on it.
For additional information about conservation easements and how they might serve your interests, or if you have any questions, please contact: Taos Land Trust Mailing Address: P.O. Box 376, Taos, NM 87571 Office Address: 482A State Highway 150, Arroyo Seco, NM 87514 Tel: 505-751-3138; Fax: 505-751-1189; e mail: info@taoslandtrust.org Visit our web site at www.taoslandtrust.org