by: Richard M. Malad, Attorney
You own a piece of land with woods and tillable acreage that you bought because you enjoy the outdoors and everything that goes along with it. After some years it becomes a huge part of your life– an outdoor recreational opportunity that you share with your family and friends.
Friends and family that hunted, fished, and hiked on your land now have kids and grandkids who are doing the same. Your land provides outdoor activities to kids from the city who otherwise might not have access to these experiences.
The more important this land becomes to you and your life, the more you realize that you don’t want it to change. You don’t want the property to be used in any way other than how you are currently using it. You want your children, grandchildren and even their children to enjoy the property as you do. The reality is that you won’t be on this Earth forever and can’t control how the property is used after you are gone. .
So how do you accomplish the lofty goal of keeping your land the way it is and keeping it in the family? It’s certainly not simple but it can be done.
Restricting the use of the land can be accomplished by donating a conservation easement to a qualified non-profit land trust. The land trust will have a number of non-negotiable restrictions designated to preserve the property’s general and specific conservation values such as:
- No industrial or commercial development or activity
- No mineral extraction or mining
- No raising livestock
- No dumping
- No subdividing the property
- No damming or altering waterways
Almost everything else is negotiable. This allows the landowner to preserve the conservation values by restricting uses to those that do not impair or interfere with these values. Uses such as sustainable timber harvesting, hunting, fishing, trapping, hiking and maintaining existing roads, trails and improvements are examples of activities which could be allowed.
Once the restrictions are negotiated, the property is appraised prior to and after the easement restrictions are put into place. Once the conservation easement is given to the land trust, the difference between the before and after land value is considered a charitable contribution to the land trust for tax purposes. A conservation easement is perpetual and runs with the land through any change of ownership.
This procedure accomplishes your first goal—preserving the land in its current state. Your second goal—keeping the land in your family– can be accomplished by transferring land ownership of your woodlands or farm from you to a “family” LLC. In the LLC operating agreement you can restrict transfers of ownership to family members, provide for management and generally define what is expected of members when issues such as maintenance, use, payment of taxes and insurance and other such issues that are inherent in the ownership of the land. The operating agreement is like a contract between the members and should spell out all the conditions the members support including management decisions and how disputes are handled.
Since it is anticipated that you will be giving ownership to your family, there are appraisal and gift tax issues that you will need to deal with. To accomplish both goals you should consult with an attorney experienced in these matters and an accountant who can lead you through the tax minefield inherent in both procedures. Contact us us for a free consultation.
photo credit: Brian Koprowski via photopin cc