The protagonist of the film The Descendants is the trustee of a family trust that since the 1860s has owned a 25,000 acre parcel of pristine Hawai’ian land on Kauai Island. The land is the last remaining asset of a family legacy, the proceeds of which have been distributed – and subsequently squandered by many of the heirs. The trust is due to expire on account of the Rule against Perpetuities and most of the descendants are in favor of selling the property to a developer for hundreds of millions of dollars. The trustee has his misgivings, stating "If I sign this document, it’s something that we were supposed to protect that’s gone forever."
Today, there are a number of options available to owners of significant property. A growing number of those who wish to protect their land or buildings for future generations are setting up conservation easements on all or part of their property.
What is a conservation easement?
A conservation easement is a permanent agreement between a property owner and a land trust, government agency, tribe, or other qualified organization, that ensures that the owner’s property will be used for the owner’s conservation goals, whatever they may be. The idea is that the owner not only owns their property, but also the rights associated with it – this includes the right to build on the property, subdivide it, the right to maintain it as a farm or vineyard, to extract minerals or oil from the ground, to allow animals to graze on it... or to simply leave it as is.
The benefits of conservation easements
Conservation easements have multiple benefits:
- They are powerful estate planning tools capable of keeping land in the family indefinitely
- They are permanent, meaning that all future owners of the property are obligated to use the property as stated in the original agreement (note that in some cases, amendments may be made if necessary)
- They allow landowners to continue using their land
- They permit landowners to sell the land, exchange it for other property, or leave it to their heirs
- They can result in significant public benefits, including protecting landscapes and wildlife, and maintaining traditional uses of the land
- They can also result in significant income and estate tax savings
Many easements limit commercial and other non-agricultural uses of the property, but this is not an absolute requirement.
Tax attorneys in San Francisco
The estate planning and tax attorneys at Moskowitz, LLP can help you maximize the estate and asset protections available under the law and minimize the tax consequences of your property acquisitions and holdings.
See our upcoming posts on federal and state tax benefits of conservation easement donations, 1031 exchange rules regarding easement properties, and how conservation easements can be used as a powerful estate planning tool.