In
general, the value of an easement is the value of the property’s development
rights. But in practice, these financial values are far more nuanced and
flexible.
Do you know the fundamentals of
conservation easements? If not, then you might want to do your homework before
exploring this charitable tool.
Better yet, you really ought to
read a recent article in Private Wealth
magazine titled “Legacies By The Acre.”
If the concept of an easement is
new to you, think of it as an act of charity by giving away the economic
utility of the land for the greater good of preserving it. While you could sell the land to a developer who
will build a mall, you might choose to forever close off that possibility and
preserve it as a pristine forest for wildlife or recreation.
All easements, even urban “façade” easements, follow
this general pattern. However, rural or wilderness conservation easements can
get a bit more complicated and even allow for certain “economic utility” to the
owners. A prime example described in the original
article is the concept of a
“working forest conservation easement” (WFCE). This approach allows a family to
give up the full economic utility of the land and continue to embrace a
sustainable pattern of use. In other words, you do not build malls, but you do
continue to responsibly run a family timber company from trees harvested on the
land.
Conservation easements can be as
varied as the lands put up for easement. In addition, easements can be built to
allow greater or lesser utility, rather than simply all or none. By doing good,
the landowner can enjoy tax benefits to further sweeten the deal.
In the end, whether to go the
conservation easement route will hinge on many factors, to include your family’s
current land, its potential use, and specific market forces in play now and
down the road. Understanding the true value of a conservation easement will
take some experienced planning.
Reference: Private Wealth
(July 11, 2013) “Legacies By The Acre”