Personal Business: REAL ESTATE
MAKING SURE THEY NEVER PAVE YOUR PARADISE
The wildflower-filled meadow that came with your house adds a lot to your view and to the quality of life for everyone who passes. You'd like the scene to be there forever. But property taxes keep going up, and even if you never sell to a developer, your offspring might.
There is a way to preserve the pastoral scene and probably get a tax break, too: by locking away that prized parcel in a land trust. It's a lot like turning over your stock portfolio to a trust. You can reap the benefits, but the trust will be there to guard the assets--in this case, the land--long after you're gone.
Basically, a land trust is a nonprofit corporation, registered with the Internal Revenue Service as a 501(c)3 organization. This status allows you to get a charitable tax deduction for the land you donate. You can set up your own trust, preferably with the help of a lawyer experienced in this area. Or you can work with one of the many regional or national organizations that have sprung up in recent years (table).
The simplest way to use a land trust is to donate your property to it and take a deduction for the fair market value. To convince the IRS that you're not overstating the value, you must obtain an independent appraisal. Draw up a "very, very realistic" subdivision plan to show what the land would be worth to a developer, advises Patricia Pregmon, an attorney with Duane, Morris & Heckscher in Philadelphia.
LIMITED USE. Instead of donating their land outright, many people give or sell a "conservation easement" to a land trust. With any easement, you forfeit some of the rights that come with owning land; a common form of easement, for instance, allows a utility to run power lines across the property. In the case of a conservation easement, a deed restriction typically declares that the property can never be developed, not by you or anyone who owns it in the future. One posthumous advantage is that "it can keep your heirs from fighting" over how to handle the land, notes Andrew Johnson, president of the Conservation Advisors consulting firm in Chadds Ford, Pa.
But the easement doesn't have to lock away all your real estate. Many people give up development rights to only part of their property, keeping some acreage available for future sale and thus gaining "economic peace of mind," says Steven Rosenberg, land-preservation director of Scenic Hudson, a Poughkeepsie (N. Y.) environmental group dedicated to protecting the Hudson River. But donating an easement brings a much smaller income-tax break than donating land outright, and it's less likely to wring any property-tax relief from your local assessor.
'VISUAL POLLUTION.' In fact, it might end up boosting your property-tax bill, but in a nice way. While the market value of protected land plunges, the guarantee of open space "really enhances the value of neighboring properties," says Eleanor Morris, a leader in Pennsylvania's French & Pickering Creeks Conservation Trust in Pottstown, Pa. Since 1967, it has arranged open-space easements on some 3,800 acres in a path of development north and west of Philadelphia and has branched into preserving historic buildings and creating hiking trails and a nature center.
Not all efforts are so elaborate. Having bought the shell of an old farmhouse on "112 beautiful acres" in upstate New York, Herbert Heaton put in a lot of work "pulling mattresses out of the blackberries" and hated the idea of seeing the place spoiled by "visual pollution." So Heaton and a few neighbors formed the Willowemoc Land Conservancy.
Instead of acquiring land or banning development, they came up with an agreement setting rules that each neighbor has the right to enforce in court. Among them are that satellite dishes must be black mesh instead of white. Houses must be in earth-tone colors and located at least 200 feet from the creek. This purely local approach, he says, "is a source of satisfaction and visual value to everyone involved."
No matter how simple they're meant to be, conservation easements have to be drafted carefully if they're to stand up in court, in the eyes of the IRS, and even to the forces of nature. Often, the easement specifies an organization that can go to court against anyone who might violate its terms.
NO LOOPHOLES. More complicated arrangements, such as a will instructing the executor of your estate to create a conservation easement, need airtight language to keep disappointed heirs from a court challenge. If it's a "recreational" conservation easement, you might have to provide for public access to satisfy the IRS. Public access isn't likely to be required, though, if your easement specifies another conservation purpose, such as protecting significant habitat for wildlife.
If you want your meadow to remain a meadow forever, you might need to provide for a caretaker to maintain the property. "Perpetuity is a long time," says Erik Axelson, a Philadelphia-based Nature Conservancy staffer. Left alone, he points out, an abandoned farm can revert to forest in just 50 years. And unless you protect it with such weapons as a trust or conservation easement, it can turn into a subdivision even faster.
WHERE TO LEARN
THE LAND TRUST ALLIANCE
900 17th St. NW, Suite 410, Washington, D.C. 20006,
THE NATURE CONSERVANCY
1815 N. Lynn St., Arlington, Va. 22209, 703 841-5300
THE TRUST FOR PUBLIC LAND
116 New Montgomery St., Fourth Floor, San Francisco, Calif. 94105, 415 495-4014
DATA: BWEDITED BY AMY DUNKIN Dick Janssen