Your client owns a country home with acreage that has excellent scenic views, is part of a local or state area designated as ecologically significant in some way or is home to protected species of flora or fauna. The client wishes to protect the land as well as her wallet, and you have suggested that she donate a qualified conservation easement on the property or a portion of it. A conservation easement is a voluntary, legally binding agreement between a private landowner and a public body or eligible not-for-profit corporation that restricts the development and use of the land to achieve certain conservation goals, such as the preservation of wildlife habitat or a scenic view. Through the donation, the client may retain many of the rights associated with fee simple ownership, including the right to sell, transfer or devise the property, while generating substantial tax savings.
An individual may donate a conservation easement during life or at death through a devise in his or her will or via a revocable trust. The lifetime donation results in federal income and gift tax deductions while a testamentary donation could garner an estate tax exclusion, an estate tax deduction or, in certain situations, both the exclusion and the deduction.1 Conservation easements may also generate state income and estate tax benefits and local property tax savings.
