Future Use of the Land
Determining the Future Use of Your Land
If you want to ensure that some or all of your land remains in its natural state, there are temporary or permanent tools to help you achieve this.
Temporary Land Use Options
If you want to keep all or some of the land in the family, it is important to pass on to your heirs your knowledge of the land, including your goals for the property, how the land has been managed, who you have worked with, and any programs you may be enrolled in. If you have a forest management plan, share it with your family and use it as you develop your estate plan. Communicating this information to your family can help them become good stewards of the land.
A forester is an important professional to contact regarding your land’s management, who can help you evaluate your land management options, including determining the value of your timber for a land appraisal. If you haven’t worked with a forester before, start by talking to one of the Maine Forest Service’s District Forester. They’ll get you started and offer free advice.
Current Use – Keep Land Undeveloped and Lowers Taxes
Current use tax programs, such as Tree Growth Tax Law, give landowners an opportunity to significantly reduce their property taxes in exchange for keeping land undeveloped and producing public benefits. While not the same as a permanent conservation easement, this program has steep penalties for leaving the program. It can be used in combination with other land conservation tools. A forest management plan is required so you can learn more by talking with a forester.
Permanent Land Use Options
A conservation easement (CE) is a legal agreement that extinguishes some or all of the development rights of the land forever but allows your other rights—such as farming, forestry, and recreation—to continue. With a CE, you maintain ownership of the land. A CE can be placed on all or part of your land, for example allowing you to reserve house lots.
On occasion, a CE can be sold if the land has exceptional ecological or historical value. More frequently, it can be gifted or donated, providing the landowner with a tax deduction for a charitable gift. Since the land can no longer be developed, a CE lowers its value, which can help lower your taxable estate. In these cases, landowners are required by the IRS to have the land appraised by a qualified independent appraiser to determine the value of the deduction. There are often costs for CEs, called endowments, to ensure that the terms of the easement are monitored and enforced in perpetuity.
Donating or Selling Land
Land can be permanently protected by donating it or selling it to a qualified conservation organization, such as a land trust, a state conservation agency, or a town. Donations of land may provide significant tax advantages as a charitable gift.
Landowners can sell their land or CE at a price below its fair market value. The difference between the appraised market value and the sale price to a qualified conservation organization is considered a tax-deductible charitable contribution.
A donation of land or a CE through your will is another way to ensure your land’s permanent protection and potentially reduce your estate tax burden. You can change your will at any time, and a bequest does not become effective until your death.
Landowners sometimes negotiate a gift or sale of the property while reserving the right to occupy and use the land for life, with control of the property automatically transferred to the conservation organization upon the death of the landowner. The gift of a property with a reserved life estate can qualify the donor for a charitable deduction. Landowners are responsible for upkeep and all management costs during their lifetime.
It is possible to protect the majority of the land through one of the above tools while a small portion is sold or maintained by the landowner for future development.
Finding a Conservation Organization
Many land conservation organizations seem exactly alike at first glance, but their missions and land management philosophies can vary greatly. Your property’s location, size, and natural resources all help determine which conservation organizations may be interested in working with you to conserve your land. It is important that any organization you work with shares your goals and personal philosophy about land and land management.
Text by: Paul Catanzaro, UMass-Amherst & Jessica Leahy, UMaine