Q: What is a voluntary conservation easement?
A: A voluntary conservation easement is a flexible tool, which allows you to permanently protect your land, while retaining title and continuing to use the land as you always have. It is a voluntary legal agreement between you and a qualified organization such as Flathead Land Trust (FLT). Voluntary conservation easements permanently prohibit unlimited residential or commercial development, subdivision, and uses or practices which would be harmful to agricultural, wildlife, scenic values, or other important values that the land currently sustains. A voluntary conservation easement is recorded with the deed to the property and remains in force regardless of future changes to ownership.
Voluntary conservation easements allow landowners to continue owning and using their land and to sell it or pass it on to their heirs.
Q: What do land trusts do?
A: Land trusts work with private landowners to protect private land through voluntary agreements such as conservation easements. Land trusts are not environmental advocacy groups in the traditional sense, and land trusts work closely with farmers, ranchers, county government, state and federal land and wildlife management agencies and local watershed groups to protect open lands.
Land trusts and landowners work voluntarily to negotiate an agreement that protects the land from future industrial, commercial or residential development. That agreement is called a conservation easement.
Q: Why place a voluntary conservation easement on your land?
A: Voluntary conservation easements leave a lasting legacy for future generations. Easements conserve the land that sustains Montana’s agricultural heritage, abundant wildlife, and unique quality of life.
Depending on your family circumstances, you may find that a conservation easement fits with both your personal values and your family’s financial planning needs. In exchange for conserving your land, which may reduce its market value, the federal tax code provides income and estate tax benefits. Throughout our region, many families have found that conservation easements are a great way to help conserve the Flathead’s rich and spectacular landscape.
Q: What are the steps and costs involved?
A: The process may take a few months to over a year from the initial discussion to recording the easement. The length and complexity of the process can vary greatly depending on factors such as whether the easement is donated or sold.
Your initial discussion with FLT will explore whether a voluntary conservation easement fits with the goals for your land and the conservation goals of FLT. Other conservation options may be available. The next step is a site visit, which gives you the opportunity to show your property to FLT staff and to discuss how an easement would be crafted. Following the site visit, some of the major steps in the process include: preliminary and final approval by the FLT Board, title work, negotiating the details of the easement document, securing subordination of any mortgage, review by the local planning authority, an appraisal if you wish to pursue tax benefits and/or the sale of development rights, and preparation of a Resource Documentation Report to document the resource values that will be protected by the conservation easement.
The transaction costs for a voluntary conservation easement, including the cost of an appraisal, are generally the responsibility of the landowner. Some of these costs are tax deductible. FLT can prepare a cost estimate for you following the initial site visit and can help determine whether there are public or private funds available to cover the transaction costs.
Q: What tax benefits may be available?
A: Under federal tax law, the value of a donated conservation easement can generally be treated as a charitable contribution. Federal income tax benefits have helped many landowners protect their land with conservation easements. For families faced with having to sell their land to pay high estate taxes, the federal estate tax benefits of conservation easements have often made it possible to pass family lands to future generations.
Because conservation easements permanently limit future development, they generally reduce the fair market value of property. This reduction in value determines the extent of federal income, estate, and gift tax benefits. This amount must be determined by a qualified appraiser.
In Montana, property taxes are based on current land use. A conservation easement will not reduce your community’s tax base because it will not affect property taxes on your land.
You may be eligible for federal tax benefits if you donate a conservation easement that meets the following federal tax code requirement:
- The easement is given to an eligible organization, such as a land trust.
- The easement protects significant conservation values or benefits including working agricultural lands, wildlife habitat, scenic open space, historic property, or public recreation or education.
- The easement is granted in perpetuity. Mortgage and/or contract holders must agree to subordinate to the easement.
- The conservation values being protected are documented before the easement is signed.
- The easement prohibits surface mining. If you do not own the mineral rights, a qualified geologist may be able to certify that the likelihood of surface mining is negligible.
An eligible conservation easement does not have to provide public access, cover the entire property, or preclude all use or development. See the Tax Incentives page for more information.
Q: Do landowners surrender any private property rights through signing a conservation easement?
A: The conservation easement agreement itself spells out exactly what the landowner is “surrendering.” The conservation easement will generally prevent the landowner from dumping toxic waste on the land; developing a surface mine; or allowing industrial, commercial or residential development. Some agreements restrict construction of non-agricultural structures.
Outside of that, the landowner farms or ranches in the same manner as before the conservation agreement was signed. The landowner still owns the property in fee title, the landowner still makes all the farm/ranch decisions, still pays property taxes, and because the goal of the easement is to preserve open lands, the goal of the easement is to preserve the elements of a working farm or ranch.
A conservation easement is an extension of private property rights and is a valuable tool for farmers and ranchers who want to retain ownership of their property.
Q: Is a conservation easement anti-property rights?
A: A landowners decision to put a conservation easement on their property is definitely a property right. Just as deciding to sell your land to a developer is a property right, so is working with a land trust to protect your land through voluntary conservation easement. Both decisions are made in perpetuity.
When a county planning board and county commission vote to allow a 50-lot subdivision, and the land fills with 50 homes, there is no doubt that land will be in residential/commercial/industrial use in perpetuity. In is a landowner’s right to decide that they would like to see their land remain in tact for years to come.
Q: Why is the easement in perpetuity?
A: Three main reasons. One, current landowners who grant or otherwise convey a conservation easement want assurances their property will be protected not just through their lifetime, but forever. Two, federal law requires the conservation easement be held in perpetuity to qualify for federal income tax and estate tax benefits. Three, there is a concern that if conservation easements granted tax deductions and were allowed for terms – say, 20 years or 100 years – landowners could be tempted to receive the federal tax deductions for decades while speculating on lands that are rising in value, then subdivide that same property later after the term of the conservation easement expires.
Also, there are many land use decisions – on both private and public lands – that are made on a regular basis that in essence are made in perpetuity. When a county planning board and county commission vote to allow a 50-lot subdivision, and the land fills with 50 homes, there is no doubt that land will be in residential/commercial/industrial use in perpetuity.
