FREQUENTLY ASKED QUESTIONS (FAQ)
ABOUT CONSERVATION EASEMENTS

What is a conservation easement?

A conservation easement is a beneficial voluntary tool for landowners to protect their land while retaining ownership. A conservation easement is a legal restriction that a landowner places on his or her property to define and limit the type of development that may take place there. Generally, conservation easements are either donated or sold to a nonprofit conservation organization like Yolo Land Trust which carries the responsibility to enforce the restrictions in perpetuity.

Why do people establish conservation easements on their properties?

• Selling an easement brings income to the landowner for reinvestment, debt reduction or operation expansions.

• A love of the land; the satisfaction of knowing that it will not be subdivided and developed.

• The desire to leave a legacy for future generations to remember and enjoy.

• Income tax savings.

• Estate tax savings.

I do not want to give up control of my land; how do conservation easements work?

We work with you to establish the terms of the conservation easement. You continue to own and manage your land, enjoy its use, and have complete control of the property within the limits of the conservation easement terms. To a considerable degree, you specify the permitted uses and restrictions that will be written into your easement.

For example, can I keep the right to have one or more additional home site(s) on my property?

Yes, some very limited development may be allowed in certain circumstances.

What are the income tax advantages of a conservation easement? Can you give an example of the income tax savings?

If you are donating an easement, you may receive a federal and state income tax deduction for the difference in the value of the property before the easement is granted and its after-easement value (often the difference between the current fair market value of the land and the fair market value of the land with fewer allowed home sites).

In August 2006, Congress passed a law that greatly expanded the tax incentive for conservation easement donations in 2006 and 2007. In brief, the new law:

• Raises the allowable deduction a donor can take for donating an easement from 30 percent of his or her income in any year to 50 percent;

• Allows qualifying farmers and ranchers to deduct up to 100 percent of their income; and

• Extends the carry-forward period for a donor to take tax deductions from five years to 15 years.

Yolo Land Trust would be happy to discuss conservation strategies and options for your property – please call us at (530) 795-3110. To learn whether you can take advantage of this new tax incentive, please consult a legal or tax professional.

What are the estate tax savings of a conservation easement? Can you give an example?

For 2006, estate taxes began at 45 percent for amounts over $2,000,000. However, under present law, the effect of the Estate Tax is being reduced annually until 2010, in which year there is no estate tax. Then in 2011 the old laws again become effective (exclusion of $1,000,000 and tax rates from 37 percent to 55 percent). The timing of a Conservation Easement may be a factor in the amount of savings you realize; you should consult with a professional to assess your situation.

A conservation easement can be a powerful tool to enable land to be passed on within a family. With the very high estate tax rates, in many families with considerable land holdings, some land may need to be sold in order to raise cash to pay the estate taxes. But if you place a conservation easement on your land, the value of the land can be reduced for estate tax purposes, perhaps reducing the taxes to zero or to a level at which no land will need to be sold in order to pay the taxes.

Will a conservation easement reduce my property taxes?

It may, depending upon how recently the property was purchased, the purchase price, the value of the land after the conservation easement is placed, and whether the land is enrolled in a Williamson Act Contract.

Is a conservation easement a permanent decision? Can I, my heirs, or future landowners overturn my easement restrictions?

It is a permanent decision; neither you nor your heirs can change it unless the conservation easement holder (e.g. Yolo Land Trust) agrees. However, it is highly unlikely that modifications would be made unless these changes would enhance the conservation easement’s conservation values.

Must my property be open to hikers and/or others?

Public access is at the owner’s discretion. The only required access on conservation easement properties is an annual monitoring visit by a Yolo Land Trust staff member or qualified volunteer.

How do I begin setting up a conservation easement?

First, we will work with you and your advisors. We will discuss with you the restrictions you wish to include in your easement. You will hire an appraiser to determine the value of the conservation easement. This will establish the purchase price of the easement and, if there is a donation involved, the amount of your income tax donation. The final steps are drafting, signing, and recording the easement. We have gone through this process many times; we will work with you and your team to meet your objectives and make the process run smoothly.

After my easement is recorded, what do I need to do?

Nothing other than welcome an annual monitoring visit from a Yolo Land Trust representative, follow the terms of your conservation easement, and enjoy the wonderful legacy you have created.

 

What costs will I incur?

Yolo Land Trust pays for the preparation of all the usual legal documents (e.g., the conservation easement itself). You pay the fees of your attorney and tax advisor to review these documents. The cost can vary. Yolo Land Trust may also pay any other incidental fees. Landowners typically make a tax-deductible contribution to Yolo Land Trust for both ongoing stewardship responsibilities and to enforce the terms of your easement from future legal challenges should they occur. Yolo Land Trust suggests a donation of 5 percent of the easement value. This contribution to our stewardship and enforcement funds recognizes the obligation of Yolo Land Trust to uphold your easement forever.

What do you mean by “enforce”? I thought you said the conservation easement was permanent?

Very occasionally, a landowner (usually not the owner who originally established the conservation easement) may attempt to challenge the easement restrictions. These challenges are virtually never successful, but in order to ensure that your desires for your land are protected in the future, our responsibility is to ensure that the terms of the easement are upheld. These actions may be costly to Yolo Land Trust.

If you have additional questions, please call the land trust at (530) 795-3110.