What is a Conservation Easement?
A conservation easement is a voluntary legal tool that ensures a property owner’s good intentions for their land will stand the test of time. Donors of conservation easements retain ownership and use of their property, while protecting it against inappropriate future development. Each conservation easement is unique and is tailored to the specific needs of individual landowners and their families, and the agreement runs with the title to the property regardless of future ownership, allowing landowners to sell their land on the open market, or pass it on to their heirs for generation into the future.
There are many benefits for donating or selling a conservation easement, and one that has been used extensively by a great number of landowners has been the charitable tax advantages associated with the gift of all or a portion of the value to a conservation easement. Conservation easements can positively affect a landowner’s federal income tax requirements, and can be instrumental in protecting a family’s hard earned assets against loss to estate taxes.
What Are the Terms of a Conservation Easement?
A conservation easement is the tool that explains which uses are consistent and inconsistent with the “conservation values” protected on a given property. It is a voluntary agreement between a landowner and the Prickly Pear Land Trust, and no two conservation easements are alike, but are written specific to the character of the land, and the desires of the landowner. It is the “terms” of the conservation easement that lay out those desires and protections.
Examples of permitted uses generally allowed by a conservation easement:
- Continued agricultural and silvicultural use;
- Construction of fences, water improvements, some roads and buildings and other developments necessary to support the historic agricultural uses of the property;
- Transfers or sale of the property;
- Cultivation of existing hay and ag fields;
- Control of access and protection of property against theft or vandalism;
- Additional residences and utilities compatible with the conservation objectives of the easement, and;
- Wildlife and fisheries habitat improvement projects.
Examples of uses generally restricted in varying degrees by a conservation easement:
- Subdivision for residential or commercial uses;
- Construction of non-agricultural buildings outside of designated “development areas”;
- Commercial uses incompatible with the protection of the stated conservation objectives;
- Significant disturbance or alteration of sustainable and resilient native or natural plant communities (native range, woody riparian vegetation, clear-cutting);
As part of the conservation easement agreement, the landowner extends certain rights to Prickly Pear Land Trust, to monitor the uses of the conservation property, and to prevent or halt uses that run counter to the mutual agreements made in the terms.
What Is Prickly Pear Land Trust?
Prickly Pear Land Trust is not associated with any government agency. What Prickly Pear Land Trust (PPLT) is, however, is a private, non-profit corporation that assists landowners in meeting their long-term goals and visions for their properties and their families. PPLT is a homegrown organization local to the Helena Valley that provides service to the surrounding four counties of Lewis and Clark, Jefferson, Broadwater and Powell. We are guided by the expertise of an all-volunteer board of Montana residents who value and understand the importance of working ranches, open-space, wildlife habitat and recreational opportunities to the future of our home place and our children.
PPLT is a professional and accredited land trust bound by national standards and practices that cooperates with landowners who share similar values. Each conservation easement is required to be visited annually to ensure that landowners’ wishes stand the test of time, and PPLT ensures that our own staff provides that service for all the conservation easements we hold. We will not farm out this important service to any contractors not staffed by our land trust. When you partner with Prickly Pear Land Trust, you always know who you are working with.
What Are the Legal Requirements Associated with Conservation Easements?
Qualified private organizations like Prickly Pear Land Trust are authorized by Montana law to hold conservation easements. Montana law also requires that all easements be reviewed by the planning authority of the county where the easement resides, and that all easements be officially recorded in that county.
Federal law only governs the tax implications of a conservation easement as a charitable gift, nothing more. While it is important that all families interested in protecting their property consult an attorney or other professional with expertise with federal taxation, these general rules apply for donations of part or all of a conservation easement:
- The conservation easement must be granted permanently;
- The easement must provide at least one of the following public benefits:
- The protection of relatively natural habitat for fish, wildlife, plants or similar ecosystems,
- The preservation of open-space for scenic enjoyment,
- The preservation of land areas for education and/or recreation.
- The easement must be granted to a qualified organization like Prickly Pear Land Trust;
- The easement must prohibit all surface mining, not including the removal of gravel for use on the property to maintain roads, etc.;
- Resource data (a baseline report) documenting the conservation value of a property must be collected prior to the recording of the easement.
Other Conservation Options
Fee Donations: Landowners may also wish to consider donating the title to their land for conservation purposes. This is truly one of the finest legacies a person can leave to future generations. An outright donation of land to a land trust releases the landowner from the responsibility of managing the land and can provide substantial income tax deductions and estate tax benefits, while avoiding any capital gains taxes that would result from selling the property. Most importantly, if the land is donated because of its conservation values, those values will be protected.
Remainder Interest Donations: Landowners can also choose to gift title to their land, but also continue living on the property by donating a remainder interest and retaining a reserved life estate. In this arrangement, a landowner donates the property during his or her lifetime, but reserves the right for themselves or any other named person(s) to continue to live on and use the property for some defined duration.
By donating a remainder interest, the landowner can continue to enjoy his or her land and may be eligible for an income tax deduction when the gift is made. The deduction is based on the fair market value of the donated property less the expected value of the reserved life estate.