There’s a house on the street I grew up on that’s built on slightly over half an acre—more than four times the average lot size in Portland, Oregon. This piece of property has been exceptional in the neighborhood for as long as I can remember, but now the area is being trolled by developers and much smaller lots are being sliced, diced and turned into row houses.
My old neighbors have said that they don’t want something like that to happen to their property, even if it is after their death. But is there a way to prevent it?
Conservation easements are a way to protect private property from development. It can be used to ensure that farmland isn’t developed into subdivisions, that watersheds are protected and that woodland areas remain a forest. They can also be used to make sure that a city property like my neighbor's isn’t turned into row houses even after their death.
What are Conservation Easements?
A conservation easement is a legally binding restriction on land that is either donated or sold by a private landowner. The easement restricts the uses and/or prevents development for a particular piece of land, in perpetuity as long as the land is privately owned. The conservation easement remains in place even when the property changes hands, either through a sale or through inheritance.
As part of the easement, the rights you intend to protect are transferred to a third party organization such as The Nature Conservancy. That third party promises to hold and protect the development rights as long as the land is privately owned.
Conservation easements can be tailored to meet the specific needs and goals of each landowner who decides to sell or donate a conservation easement.
What Are the Benefits of Conservation Easements?
Aside from knowing that your beloved family farm won’t be turned into a subdivision, there are some practical financial reasons to consider when using conservation easements as an estate planning tool.
The primary advantage of conservation easements is related to taxes. Creating an easement can reduce federal and state taxes, including property taxes, capital gains taxes and estate taxes.
Reducing estate taxes can be particularly important if you have a large or high-value property that you intend to leave to your heirs—a conservation easement could substantially reduce or eliminate the estate tax liability.
Are There Any Downsides to Easements?
Yes. Conservation easements limit the use of the property for the forseeable future, which can reduce the value of the property in both the long and the short term.
How do I Set Up a Conservation Easement?
A conservation easement isn’t something that you can set up with a one-size-fits-all form downloaded from the internet. The first step is to find a land trust partner that works with landowners in your area. Once you’ve settled on an organization to partner with, that group will help walk you through the entire process of setting up the conservation easement, which will vary depending on your state and the specifics of what you’d like to protect.
And, remember, Tomorrow is not a law firm, and we do not provide legal advice. When in doubt, talk to a licensed attorney in your area.