Leaving a Legacy – Estate Planning Tools Utilizing Your Land
Your land is where your heritage and family history are rooted. Sharing that legacy, protecting it, and passing it on for future generations is your dream. Respecting the past and sharing in the future is the fine balance needed to make sure your land is protected for generations to come. Berks Nature can help you.
Berks Nature’s primary function is to serve as a land trust. With a land trust, families benefit from tax benefits and peace of mind knowing that Berks Nature will serve as a good land steward. Land trusts are experts at helping landowners find ways to protect their land.
By contacting our staff you will find answers about land conservation that will help you and your family with this important decision. There are several options available for you to protect your land and provide the solution that works best for your family. The best decision is the one that works for you.
Photo Above: Wilhelm Roscher and Anne Stewart Coldren stand at the gates of part of Wilhelm’s protected property. Wilhelm protected 336 acres of his property through a conservation easement.
Conservation Easement Program
A conservation easement is a legal agreement between a landowner and a land trust (like Berks Nature) or government agency that permanently limits uses of the land in order to protect its conservation values. It allows you to continue to own and use your land and to sell it or pass it on to heirs.
When you donate a conservation easement to Berks Nature, you restrict uses of the land pursuant to your wishes. For example, you might restrict the right to build additional structures, while retaining the right to grow crops. Future owners also will be bound by the easement’s terms. Berks Nature is responsible for making sure that existing and future landowners comply with the terms of the conservation easement.
Conservation easements offer great flexibility. An easement on property containing rare wildlife habitat might prohibit any development, for example, while one on a farm might allow continued farming and the building of additional agricultural structures. An easement may apply to just a portion of the property, and does not require public access.
A landowner sometimes sells a conservation easement, but usually easements are donated. If the donation benefits the public by permanently protecting important conservation resources and meets other federal tax code requirements it can qualify as a tax-deductible charitable donation. For Federal Income Tax purposes, the amount of the donation is the difference between the land’s value with the easement and its value without the easement. Berks Nature suggests you contact your legal and financial advisors while making this important decision.
Perhaps most important, a conservation easement can be essential for passing land on to the next generation. By removing the land’s development potential, the easement lowers its market value, which in turn lowers estate tax. Whether the easement is donated during life or by will, it can make a critical difference in the heirs’ ability to keep the land intact.
Contact our office and request a Land Protection Application Packet and Fee Schedule to find out if this option is the right one for you and your family: 610-372-4992.
Why should I grant a conservation easement to Berks Nature?
People execute a conservation easement because they love their open space land, and want to protect their land from future inappropriate development while keeping their private ownership of the property. Granting an easement to a conservation organization that qualifies under the Internal Revenue Code as a “public charity” – which Berks Nature does – can yield income and estate tax savings. Moreover, Berks Nature has the expertise and experience to work with landowners and ensure that the land will remain as permanent open space. Remember, Berks Nature is your conservancy. As a 501(c)(3) private non-profit organization, we lead conservation efforts through contributions from our membership, corporate and private contributions, grants, and partnerships. We are not a government agency and, therefore, do not pay for our operations from tax dollars. Your land and financial contributions benefit your Berks County.
Are conservation easements popular?
Yes, they are very popular. Nationally, the amount of land protected by local and regional land trusts using conservation easements exceeds 5 million acres. Landowners have found that conservation easements can be flexible tools, and yet provide a permanent guarantee that the land won’t ever be developed. Conservation easements are used to protect all types of land, including coastlines; farm and ranchland; historical or cultural landscapes; scenic views; streams and rivers; trails; wetlands; wildlife areas; and working forests.
In Berks County, over 46,000 acres have been permanently protected through the use of conservation easements by the Berks County Ag Land Preservation Board (a government agency) and the non-profit Berks Conservancy.
How many acres must I own to protect my land with a conservation easement?
Berks Nature does not prioritize our land protection projects by acreage, but by conservation values. Whether you own 10 acres or 400 acres, a conservation easement may be right for you. Berks Nature subscribes to the Berks County Comprehensive Plan – Vision 2020 and will not actively pursue the protection of land identified as future growth. Your first step is to contact Berks Nature at 610-372-4992 to see if a conservation easement is right for you.
How can a conservation easement be tailored to my needs and desires?
A conservation easement restricts development to the degree that is necessary to protect the significant conservation values of that particular property. Landowners and Berks Nature staff, working together, can create conservation easements that blend both the landowner’s desires and the need to protect conservation values.
What steps do I take to develop a conservation easement?
First, contact Berks Nature at 610-372-4992 and request a Land Protection Application Packet. At your convenience, we will work with you to explore and discuss what you want to accomplish such as the conservation values you want to protect on the land, and what development rights you may want to retain. For example, you may already have one home on your property and want to preserve the right to build another home. That is one provision that must be specifically written into an easement agreement. Always consult with other family members regarding an easement, and remember that you should consult with your attorney or financial advisor regarding such a substantial decision.
How long does a conservation easement last?
Conservation easements are permanent, perpetual agreements that “run with the land,” binding the original owner and all subsequent owners to the easement’s restrictions. Only gifts of perpetual easements can qualify for income and estate tax benefits. The easement is recorded at the Berks County Recorder of Deeds Office so that all future owners will learn about the restrictions when they obtain title reports.
What are Berks Nature’s responsibilities regarding conservation easements?
Berks Nature is legally responsible for enforcing the restrictions that the conservation easement document spells out. Therefore, the organization monitors the property on a regular basis – typically once a year – to determine that the property remains in the condition prescribed by the conservation easement document. Berks Nature maintains written records of these monitoring visits, which also provides existing and future landowners a chance to keep in touch with the organization. Berks Nature has established a Stewardship Fund to provide for long-term stewardship, monitoring, and defense of the conservation easements, and all conservation easement donors will be asked to make a contribution to this fund.
Donating land for conservation purposes is truly one of the finest legacies a person can leave to future generations. It may be the best conservation strategy for you if you do not have heirs interested in the land; own property you no longer use; own highly appreciated property; have substantial real estate holdings and wish to reduce estate tax burdens; or would like to be relieved of the responsibility of managing and caring for land.
Donating land releases you from the responsibility of managing the land and can provide substantial income tax deductions and estate tax benefits. Most important, if the land is donated because of its conservation value, it will be protected by Berks Nature (although our focus is on conservation land, commercial and residential and other similar types of properties can also be donated to Berks Nature , with the understanding that the organization will sell the land to support its conservation work).
Donating a remainder interest in land
An outright donation is not the only way to give land. You can continue to live on the land by donating a remainder interest and retaining a reserved life estate. In this arrangement, you donate the property during your lifetime, but continue to live on and use the property. When you die (or sooner if you choose), the remaining life estate interest will pass to Berks Nature who will then have full title and control over the property.
By donating a remainder interest, you can continue to enjoy your land and may be eligible for an income tax deduction when the gift is made. The deduction is based on the fair market value of the donated property less the expected value of the reserved life estate.
Donating land by will
If you want to own and control your land during your lifetime, but assure its protection after your death, you can donate it by making a bequest to Berks Nature . However, it is recommended you first consult with us to make sure we are willing and able to receive the gift.
Land donations that establish a life income
If you have land you would like to protect by donating it to Berks Nature , but need to receive income during your lifetime, you might use a charitable gift annuity. In a charitable gift annuity, you agree to transfer certain property to a charity, and the charity agrees to make regular annuity payments to named beneficiaries you specify for life.
Your gift of land usually qualifies for a charitable income tax deduction at the time of the gift, based on the value of the land less the expected value of the annuity payments.
Another option for donating property and receiving regular income is a charitable remainder unitrust. You place the land in a trust, first protecting it with a conservation easement. Then the trustee sells the land and invests the net proceeds from the sale. One or more beneficiaries you specify receive payments each year for a fixed term or for life, then the trustee turns the remaining funds in the trust over to the land trust.
The gift qualifies for a charitable income tax deduction when the land is put in the trust, based on the value of the land less the expected value of the payments.
Charitable gift annuities and charitable remainder unitrusts are most useful for highly appreciated land, the sale of which would incur high capital gains tax.
Bargain Sale of Land
If you need to realize some immediate income from selling your land, yet would like the property to be protected by Berks Nature , a bargain sale might be the answer. In a bargain sale, you sell the land to Berks Nature for less than its fair market value. This not only makes it more affordable for the organization, but offers several benefits to you: it provides cash, avoids some capital gains tax, and entitles you to a charitable income tax deduction based on the difference between the land’s fair market value and its sale price. Funds for the purchase of land or conservation easements is limited. Berks Nature may have access to grant programs to fund the project.
Additional Land Protection Programs in Berks County
The Berks County Agricultural Land Preservation BoardThe Berks County Agricultural Land Preservation Board, a government agency, has been protecting farmland since 1989 through the purchase of agricultural conservation easements. The Agricultural Land Preservation Board, a nine-member board appointed by the Berks County Commissioners, is tasked with administering the agricultural land preservation program in Berks County. Agricultural easements limit the activity to agriculture and remain with the property deed in perpetuity.
Landowners receive compensation based on an appraised value of the easement rights to be granted. To date, over 50,000 acres of farmland have been preserved through this program. If you own a farm in Berks County you may qualify for this land protection program. For more information please call the Berks County Agricultural Land Preservation Board at 610-378-1844 or visit www.co.berks.pa.us/alp/site.
Agricultural Security Areas (ASA)
An Agricultural Security Area (ASA) entitles landowners and farmers to special consideration from local and state government agencies, thus encouraging the continuing use of the land for productive agricultural purposes. The local government unit may not impose ordinances that unreasonably restrict farm structures or practices within the ASA, nor may normal farming operations and practices be deemed nuisances in a nuisance ordinance. The key features of the Agricultural Security Area Law (Act 43) may be: possible farmer protection from condemnation, protection from nuisance laws, and the ability to apply to the Berks County Agricultural Conservation Easement (ACE) program. ASAs do not restrict land use or negatively impact landowners. Your municipality administers ASAs – for more information contact your municipality to inquire about this program.
Clean and Green
The Clean & Green Act of 1974 was established to offer preferential tax assessment to owners of farmland, forestland, and open space by taxing land according to its use rather than the prevailing market value. The program is administered by the Berks County Assessment Office. The program is voluntary and generally requires that a 10-acre minimum remain in designated use (agricultural use, agricultural reserve, and forest reserve). Parcels of less than 10 acres and capable of producing $2,000 annually from the sale of agricultural products are eligible for the agricultural use designation. Land taken out of the permitted use becomes subject to a rollback tax, imposed for up to seven years, and an interest penalty.
To learn more or apply to the Clean and Green program, you can request information and an application from the Berks County Assessment Office. The telephone number for this office is 610-478-6262. Clean and Green is not a permanent land protection tool. It is possible to have your land enrolled in Clean and Green and protect it with a conservation easement at the same time.
Your Next Step
Call Berks Nature at 610-372-4992 and schedule an appointment with the land protection staff to discuss your special property and your wishes. If there are others in your community who may be interested in learning more about land protection options, we welcome the opportunity to speak at a township meeting, church group, grange meeting, etc. We encourage you to involve your legal and/or financial advisors during this important decision-making process.