This section summarizes voluntary actions that private landowner may take to conserve land. The alternatives described below emphasize arrangements that involve a land trust or public agency because these groups can ensure that your land is permanently conserved. Private agreements between neighbors (covenants) will last only as long as the parties care to enforce them.

• Why do you want to provide protection for your land?
  
• Do you wish to protect all or part of it?
  
• How do you want it cared for in the future?
  
• Do you want the land to be protected in private ownership or would you consider transferring title to a conservation organization, your town, or a public agency?
  
• Should you consider a sale or a donation?
  
• Are tax (income, property, estate, gift) implications important to you?
  
• Do you wish to act immediately, over a period of years, or through your will?
  
• How would your actions affect your family?
  

Conservation Easements

Conservation easements are the land protection tool most commonly used by the Upper Valley Land Trust because they are powerful, permanent, and can be tailored to meet varying goals and situations.

If you want to provide protection for your land and to retain ownership of it, then a conservation easement may be the option for you. A conservation easement is a way for a landowner to voluntarily place permanent restrictions on the future use of the land, thereby protecting its particular natural attributes. A conservation easement is permanent and binds all present and future owners of the eased land. It is recorded like any other title interest and goes with the land whether it is transferred by sale, by gift, or devise.

The restrictions in a conservation easement are tailored to suit a particular property and situation. Generally, the restrictions are designed to retain the land’s natural, scenic, historic, or open space characteristics and to protect against intentional or inadvertent destruction of those features. A conservation easement may be placed on all or a portion of your property.

Monitoring and enforcement of the restrictions are the responsibility of the conservation agency holding the easement. You may continue to use and enjoy the land the same way that you always have as long as you are in compliance with the terms of the agreement. Easements are written to encourage good land stewardship practices.

People grant conservation easements primarily because they wish to protect land, which they value and which will be important for its natural features in the future. However, the financial benefits of granting a conservation easement in perpetuity can also be important. Depending on your own financial situation, a conservation easement may provide positive, economic benefits in terms of income, estate, gift, and property taxes.

Conservation easements may be used in combination with the other land protection tools described below. For instance a landowner may convey a conservation easement to one conservation group, but give the land outright to another. Landowners may donate or sell conservation easements, or convey an easement through a bequest.

For more information on conservation easements, see Conservation Easements Explained.


Donating a Conservation Easement by Bequest
A conservation easement can be donated through your will. You won’t receive the income tax benefits that you might had you donated the easement during your lifetime, but estate taxes will be reduced just as they would with a lifetime donation.

Like an easement donated during life, a conservation easement to be donated by bequest should be negotiated between you and the recipient organization. This not only helps assure that the easement is crafted in such a way that it will achieve your land protection goals, it also avoids placing the organization in a position of having to refuse an easement that does not meet its conservation objectives or that it can’t adequately monitor. (An organization is under no obligation to accept a bequeathed easement and take on the responsibility of monitoring it.) In addition, UVLT will discuss with you the stewardship endowment required for your easement.

Because an easement can take some time to negotiate, in the meantime you may want to add a codicil to your will stating your intention to grant the easement. In the event of your death before its completion, the executor is instructed to complete the easement. It is always advisable to attach as complete an easement document to the will as is available, granting the executor discretion to make usual and customary modifications required by the recipient organization.

For landowners who face financial uncertainties or family circumstances that make it difficult to give an easement during life, writing a conservation easement into a will can serve as a good interim measure.


Donation of Land

Outright Donation
A donation of land to a conservation agency is simple. In an outright donation, you give full title and ownership to the land now and receive tax benefits in the form of income tax deductions, potential estate tax benefits, and relief from property taxes. A donation of land offers the maximum tax advantages because you may take a charitable gift deduction based on the full fair market value of your property.

However, you should consider your goals and the agency’s plans carefully before making the gift. Your gift of land may not prevent later development unless the property is also secured by a conservation easement. A landowner who wishes to provide both long term land protection and financial support for an agency’s conservation objectives may be comfortable with the resale of the donated property subject to a conservation easement. If you expect the agency to own the property in the long term, you should inquire about how it will be managed and how the agency will cover the carrying costs of ownership. Some agencies will require an endowment if long term ownership is expected.

To calculate the economic consequences of donating land you should have an appraiser determine the value of your gift. The income tax procedures and requirements are similar to a donation of a conservation easement. You would no longer pay property taxes on the donated land and estate taxes for this land would be eliminated. If you intend to make your gift subject to conditions limiting the agency’s future use or conveyance of the property you should consult carefully with your financial advisor to ensure that this is done in a manner that does not reduce the financial value of your gift.

Donation by Devise and Donation with Reserved Life Estate
Under some circumstances you may wish to donate your land but not give up the use of it immediately. In this case two options are available: donation by devise or donation with reserved life estate.

Donation by Devise: A gift of land through your will is a donation by devise. You retain full use and control over your land while you are alive and ensure its protection after you are gone. In this case you do not receive an income tax deduction, but your estate taxes are reduced and your heirs may benefit from reduced inheritance taxes.

If you intend to use your will to convey your land or a conservation easement on land, you should discuss these plans with the recipient agency. The organization should understand your objectives and be prepared to accept your gift. Make sure your wishes are clear to your executor if he or she will be negotiating the terms of an easement and making arrangement for the long term stewardship of your property after your death.

Donation with Reserved Life Estate: The reserved life estate option provides for your donation of the land to a conservation agency now. You would retain use of all or part of the donated land during your lifetime or the lifetime of designated immediate family members. The value of your donation for tax purposes is based on the fair market value of the property less the estimated value of your life interest in the property according to Internal Revenue Service tables based on your age and life expectancy. The tax advantages are less than with an outright donation but greater than with a donation by devise.




Sale of Land or Sale of a Conservation Easement

If you need to sell your property, you may prefer to sell to a conservation agency for a number of reasons. You might wish that the land be used by the public or by a certain group, you may feel that a conservation agency is better able to manage or protect it, or the taxes may have risen too high for you to continue to own it or protect it. In considering a sale, you have the option of selling at fair market value, at a bargain sale, or installments.

Similarly, landowners may choose to sell conservation easements at fair market value or less using the techniques described below. In this way you may realize some of the value of your real estate assets (providing funds retirement or reinvestment) while retaining ownership of your home and land.

Sale at Fair Market Value
In this case you would receive the full fair market price of your land as determined by a qualified appraisal following required guidelines for government agencies. Keep in mind that many conservation agencies have limited funds available for purchasing land and must set priorities for land acquisition. If you sell your land for its full value and it has appreciated since you originally purchased it, you will be liable for income tax on the capital gain. This may significantly affect your net profit from the sale.

Bargain Sale
In a bargain sale you would sell your land to a conservation agency at less than the fair market value. The difference between the selling price and the appraised fair market value is considered a donation. You may then be eligible for a charitable income tax deduction equal to the difference between the full price and the bargain price.

For example, suppose you have land with a fair market value of $35,000, which you bargain sell to a conservation agency for $20,000. You would receive $20,000 and a charitable deduction of $15,000 for the land value you donated. Also, because of selling at less than fair market value there would be a smaller capital gain to be taxed. Depending on your financial situation a bargain sale may be advantageous. As always, you should consult a tax advisor for your best option.

Installment Sale
In an installment sale you would sell a portion of your land with an option to sell the remainder in successive years thereafter. You would be spreading the income from the sale over several years, thereby helping to reduce your capital gains tax.

Sale with Reserved Life Estate
You may sell your property to a conservation agency and retain the right of lifetime tenancy for you or your immediate family. The capital gains tax would depend on whether the sale is at fair market value, at bargain sale, or installments.

Right of First Refusal
Perhaps you would like to sell your land to a conservation agency, but it is unable to purchase it immediately. You could sign a right of first refusal. This agreement does not obligate the agency to purchase your land and it does not set a price for it. However, it does guarantee the conservation agency the opportunity to purchase your land. If another party offers to buy your land, you are legally bound to allow the conservation agency the chance to match the offered price.