Part 3 of our Succession Planning Series
Sometimes, relinquishing land ownership is a landowner's best means to realize his or her future land use goals. Conservation easements and land donations are creative options to consider when planning for the future.
A conservation easement protects the associated resources of a property by restricting the uses allowed on it. Easements are either voluntarily donated or sold by the landowner. These easements are legally binding agreements that follow the land in perpetuity, whether the property is passed on to heirs or sold, while the land remains in private hands.
Often conservation easements are used as a succession planning tool because they protect land for future generations while allowing owners to retain certain private property rights and potentially also providing them with tax benefits or liquidity.
In a conservation easement, a landowner voluntarily agrees to sell or donate certain rights associated with his or her property, thereby forfeiting them, and a private organization or public agency agrees to hold the right to enforce the landowner's promise not to exercise those rights.
RANCH DONATION & LEASE BACK
Joel Bernstein donated his southern Arizona ranch to his alma matter, Washington & Lee University. Prior to donating the ranch, which sits in the San Rafael Valley, Bernstein put the ranch under conservation easement. Over 80 percent of the land in the San Rafael Valley is under conservation easement. The specific easement on Bernstein's property, which primarily limits subdivision and development, allows for two six-acre building envelops. So, should they want to, the University could exercise their right to build cabins on the property per the conservation easement.
For Bernstein, the donation helped him reach his goal to create scholarship funds for Native American kids and youth from the Southwest to attend his alma matter. In the case of this donation, when property was donated, the University was able to free up the value of the donation from their endowment for scholarships. Should the University sell the ranch, the conservation easement helps insure that Bernstein's future land use goals of limiting development and protecting natural resources will be realized.
Though the conservation easement and land donation helped achieve Bernstein’s goals, it also meant that he and his family could no longer enjoy the land. To remedy this, Bernstein worked with the University to lease back the property which allows him to keep it operating. He continues to run cattle and use the ranch and house on their former ranch for his enjoyment.
DONATION TO CREATE A NATIONAL WILDLIFE REFUGE
The donation of the Wind River Ranch in north central New Mexico formally established the 4,224-acre Rio Mora National Wildlife Refuge. Prior to being donated, the Wind River Ranch was managed to maintain conservation values. The property, owned by the US Fish and Wildlife Service (USFWS), is operated by the Denver Zoo.
The property is part of a 300,000-acre watershed level conservation area called the Mora River Project Study Area. The refuge provides the opportunity for ranchers to observe firsthand the techniques used at Rio Mora and to explore which land management and restoration methods they may be able to adapt to the condition on their individual ranches and implement on their lands.
In alignment with the previous owner's goals, Rio Mora integrates innovative partnerships that coalesce around cultural, academic, and ecological values. Out of 567 refuges, Rio Mora is the only one managed the way that it is:
- Federal land managed by a non-profit (USFWS);
- Bison owned by a tribal group (Pueblo of Pojoaque); and
- Research by university (New Mexico Highlands University).
There are tax considerations when donating land. We recommend you consult your tax accountant to best assess your situation if you are considering a donation of a conservation easement or of your ranch.