The most traditional tool for conserving private land, a “conservation easement” is a legal agreement between a landowner and a land trust that permanently limits a property's uses in order to protect its conservation values. It allows landowners to continue to own and use their land, and they can also sell it or pass it on to heirs. The agreement is very flexible and is tailored to protect the land's conservation values and meet the financial and personal needs of the landowner. An easement may apply to all or a portion of the property, and need not require public access. Another example – you might give up the right to build additional structures, while retaining the right to grow crops.
Future owners will also be bound by the terms of the easement. The land trust takes on the responsibility and legal right to enforce the easement. If a future owner or someone else violates the easement the land trust will work to have the violation corrected. The land trust is also responsible for making sure the easement’s terms are followed, for example ensuring the ongoing health of a wetland. This is managed through land “stewardship” by the land trust.
If you donate a conservation easement that meets federal tax code requirements, the value of the easement can be treated as a charitable gift and deducted from income tax (to the extent your particular tax situation allows). The value of the easement is the difference between the land's value with the easement and its value without the easement. Because a conservation easement lowers the property's fair market value, it can also result in lower property taxes.
Dealing with Estate Taxes
If you own land with substantial value you may not be able to pass it on intact to your heirs. When you die, your children may find that the federal estate tax, which is based on the land's current fair market value and is levied at rates as high as 55%, is in the hundreds of thousands or millions of dollars. Selling all or part of the land for development may be the only way to pay the estate tax. But if you place an easement on the land restricting future development, its fair market value will, in most cases, be reduced, resulting in lower estate taxes. A conservation easement can also be donated by will. It has the same effect on estate taxes as a lifetime donation.